It might not feel like it, but the prices families in the North East pay for their energy are among the lowest in the country and this will continue after July 1.
Regulator Ofgem last month confirmed that the energy price cap will fall below the Energy Price Guarantee (EPG) from July, which means most households will once again pay the rates set by the price cap. The average bill will drop by 17% but what you actually pay will depend on your usage, where you live and how you pay.
Currently, the EPG, a state-subsidised discount off the price cap rates, keeps a typical household bill at £2,500/year. But 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, as the cap just fixes the tariff you pay, not the size of your bills.
Read more: Save more than £100 by changing the way you pay your energy bill
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,
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. According to Uswitch, there are three main reasons why energy prices are different across UK:
- Limits on how much gas and electricity companies can sell in any given region;
- Variations in the cost of energy sold by the National Grid;
- How much the local energy distributors charge suppliers for that energy.
How much you pay also depends upon how you pay your bills. Ofgem's price cap was set at an average of £2,074 a year for direct debit customers and £2,077 for prepayment customers - but those who wait for their bills to come in before they pay will have to find £2,211 - an extra £137 a year or more than £10 more each month after June 30.
Prepayment rates will drop in July by a larger amount than direct debit rates as for the first time, the prepayment price cap will be at about the same level as the direct debit cap. Up to now, those on pay-as-you-go (PAYG) meters often ended up paying more a year for their energy bills than those paying by direct debit. However, in the Spring Budget, Chancellor Jeremy Hunt said that from July 1, the prepayment meter price will be the same as those who pay via direct debit.
Here is the full rundown on how much North East families will pay per unit, depending upon how you pay your bill.
Direct debit
Current average Energy Price Guarantee rates until June 30:
Gas: 10.24p per kWh (average 10.31p)
Electricity: 31.92p per kWh (average 33.21p)
New energy price cap from July 1:
Gas: 7.43p per kWh (average 7.51p)
Electricity: 29.29p (average 30.11p)
Prepayment meter
Energy Price Guarantee rates until June 30:
Gas: 10.48p per kWh (average 10.55p)
Electricity: 30.79p (average 32.05p)
New energy price cap from July 1:
Gas: 7.05p per kWh (average 7.11p)
Electricity: 28.25p (average 29.06p)
Pay on receipt of bills
Energy Price Guarantee rates until June 30:
Gas: 10.9p per kWh (average 10.98p)
Electricity: 34.55p (average 35.9p)
New energy price cap from July 1:
Gas: 7.83p per kWh (average 7.91p)
Electricity: 30.85p (average 31.72p)
Of course, the tariff is only part of the story, with the daily standing charge adding another chunk on to the energy bill. And unlike the tariff, there's nothing you can do to reduce it as you pay the charge every day, regardless of how much energy you use.
The standing charges are generally not changing much after July 1, and for gas, North East families pay the average standing charge depending upon how they pay their bill. However, electricity standing charges are higher than average across the board except for families who pay by prepayment meter, who will pay slightly less than the UK average for their electricity standing charge after July 1.
The price we will pay for our daily standing charges compared to the UK average are:
Direct debit
Current average standing charge until until June 30:
Gas: 29.11p (average 29.11p)
Electricity: 57.03p (average 52.97p)
New energy price cap from July 1:
Gas: 29.11p (average 29.11)
Electricity: 57.03p (average 52.97p)
Prepayment meter
Current average standing charge until until June 30:
Gas: 37.80p (average 37.80p)
Electricity: 62.13p (average 58.08p)
New energy price cap from July 1:
Gas: 37.80p (average 37.80p)
Electricity: 59.51p (average 62.13p)
Pay on receipt of bills
Current average standing charge until until June 30:
Gas: 34.34p (average 34.34p)
Electricity: 63.79p (average 59.51p)
New energy price cap from July 1:
Gas: 34.34p (average 34.34p)
Electricity: 63.79p (average 59.51p)
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Read more:
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- Confusion as £400 energy bills support for households comes to an end
- Energy supplier to wipe debts after payment glitch left customers with shock bills
- Warning that prepay energy customers need to act soon to get new price cap prices
