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Nottingham Post
Nottingham Post
National
Ben Hurst

Fears January 1 energy bill confusion could be caused by changes

A new report is warning that customers could be left confused by their energy supplier contacting them about changes to the price of power from January 1. Although the alterations are set to be small anyone getting notified by their electricity provider could potentially be confused.

The energy price cap is remaining in place but the BBC has reported that most of the major power companies are changing their rates - and will be contacting customers to tell them. The government says a typical annual bill will still be £2,500, but the maximum rates are being updated.

It will affect the 12 energy regions of Britain from the start of January and means suppliers are allowed to change their prices up to those new maximum levels. If you’re on a standard variable tariff the average unit price for dual fuel customers on standard variable tariffs subject to Ofgem’s price cap, paying by direct debit, is limited to: 34.0p/kWh (pence per kilowatt hour) for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October 2022 through to March 2023.

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The rates are only an average. There are different rates depending on which of the 12 regions of Britain you live in and how you pay your bills - by direct debit, from regular bills, or on a prepayment meter. Ofgem has also warned the price cap is a cap on a unit of gas and electricity, with standing charges taken into account. It is not a cap on customers’ overall energy bills, which will still rise or fall in line with their energy consumption.

The Energy Price Guarantee reduces (compared to the undiscounted price of energy) the amount you can be charged per unit of gas or electricity, to an annual equivalent of around £2,500 for a typical household in Great Britain.

The government has updated the Energy Price Guarantee rates from 1 January, so companies have been allowed to make small price changes for almost every customer. Scottish Power, Bulb, EDF, British Gas and Shell have all confirmed to the BBC that they would be passing on the changes allowed by the government in full to customers.

Octopus said it would pass on cuts, but not rises, to customers. The company said it would absorb the increases, except for “Economy 7” customers. EOn is making changes to direct debit and billed customers, but not increasing rates for prepayment customers.

Although the price cap set by the regulator Ofgem increases in January, the government guarantee supersedes that, meaning the government has to pay the difference to suppliers to cover that increase in price.

“Ofgem’s price cap changing on 1 January means some customers are receiving notifications from their energy suppliers about price changes up or down, however these changes will mostly be small,” a government spokesman said.

He added that Ofgem’s price cap was set at different levels for different regions, based on the costs to supply energy, and the Energy Price Guarantee applies a fixed discount to tariffs so these small differences continue to exist.

Households’ combined annual bills for energy, car and home insurance have surged over the past year, according to calculations from a comparison website. Compare The Market compared prices in November 2022 with those a year earlier, in November 2021.

The energy price guarantee – a temporary additional measure to protect bill-payers from significant increases in wholesale prices – limits the amount that suppliers can charge per unit of gas and electricity, taking costs to an annual equivalent of about £2,500 for a typical household in Britain.

Energy bills could still be higher or lower than this, depending on factors such as how well insulated a property is and how many people are living in a property. The typical cost under the guarantee is £1,223 higher than regulator Ofgem’s energy price cap that was in place in November 2021, at £1,277, Compare The Market said.

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