Saturday's the day when the new energy price cap kicks in and energy prices finally start to fall after nearly two years of ever-increasing bills.
Although most households won't really feel much benefit from the new price cap because Government cost of living initiatives have kept the prices we are currently paying lower than the current price cap, it will pay to get your energy affairs in order before the weekend to ensure you don't pay any more than you need to as soon as the lower prices click in.
The price cap dictates the rates most homes pay, although it caps the unit costs people pay, not the actual bills. The annual cost is quoted for what regulator Ofgem deems to be 'average use'. The cap is actually falling £1206 from £3280, but until now we've been on the Government's Energy Price Guarantee (EPG), which keeps a typical household bill at £2,500 a year. From July, the price cap will fall below this to £2,074/year for an average household – although what you pay will still depend on how much energy you use.
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As the price cap will fall below £2,500, we will pay the capped price instead. However, because the Government is not repeating last year's £400 Energy Bills Support Scheme (EBSS), the overall cost of the new lower price cap is more or less then same as most families are paying now.
Households pay different unit rates depending on their postcode because it costs energy suppliers and the National Grid a different amount to service different areas. The EPG capped the average price for one unit (kWh) of electricity at 33.21p and one unit of gas at 10.31p if you pay by direct debit, but families in the Northern region pay 31.92p for electricity and 10.24p for gas. When the new price cap kicks in on July 1, the rates will go down to 29.29p for electricity and 7.43p for gas compared to the new average price cap rates of 30.11p for electricity and 7.51p for gas. That puts our energy amongst the cheapest in the UK,
Here's what you need to do to get ready for July 1, depending on which payment method you use.
Pay by monthly direct debit?
Don't forget to take a meter reading, although Martin Lewis is advising to stay clear of July 1 to send in the reading as that could lead to suppliers' websites crashing and phone lines becoming jammed, as we saw in March 2022. Martin advises either giving a reading a few days before or after and any discrepancy should be minor, as some firms let you backdate your reading, you coulds take the actual meter reading on Friday 30 June or Saturday 1 July then submit it at a later date.
Taking a reading is important because unless you've got a working smart meter and pay for your energy by monthly direct debit, your energy supplier will estimate your usage and assign it to a certain period, so submitting a reading within a few days of the change reduces the risk of paying more than you need to.
Pay by variable direct debit or on receipt of bills?
You should be taking a meter reading at the end of the month anyway, as your supplier will ask for one to generate the bill
Pay by traditional prepayment meter?
It's a good idea to run your PAYG electricity meter down to as near to empty as you date before the new price kicks in, then top it up asap on July 1, as this will reset the lower price rate. There's no need to do this with gas meters as they use different technology.
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Pay by smart repayment meter?
There's no need to drain your smart electricity meter, as it works so that it is the price when you use the energy that counts so it doesn't matter if you put the money in beforehand.
