The final forecast from energy consultancy Cornwall Insight suggests that people across Britain are set to see the cost of each unit of electricity and gas they use soar from the beginning of April.
The Ofgem price cap on energy bills, which regulates what energy suppliers are able to charge, but not necessarily what households pay, will fall by around £1,000 to £3,295. However, due to the way the UK Government’s energy support works, households will be left paying an extra 20 per cent and will also not get monthly payments of £66 or £67 towards their bills as the £400 Energy Bills Support Scheme ends in March.
The amount that people pay for their energy is currently regulated by the UK Government’s £2,500 energy price guarantee. This limits the amount that domestic customers pay to 34p per kilowatt hour (kWh) for electricity and 10.3p per kWh for gas.
This limit is set to become less generous from the beginning of April, rising to an average bill of £3,000.
But energy suppliers are allowed to charge more, with the Government picking up the difference in each household’s bill. How much a supplier can charge is decided by a separate measure, the Ofgem price cap.
The price cap is reviewed once every three months and is currently set at £4,279 per year for the average household, meaning that the UK Government has probably been paying about £1,779 per year to energy suppliers on average for every household they serve between September and March.
But the predicted fall of the Ofgem price cap to £3,295, and the rise of the energy price guarantee level to £3,000 means the UK Government will be paying just £295 per household per year from April to June.
Cornwall Insight said that it expects the price cap to fall further, to £2,153 in July and then hit £2,161 from October. This will be well below the price guarantee, so will feed through to lower bills for customers and reduce the UK Government’s part of the bill to £0.
But even these bills are around double where the price cap had been before the energy crisis.
The forecast for April is Cornwall Insight’s final forecast before Ofgem announces its decision - the forecasts for the latter half of the year are further away and subject to more uncertainty.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Regrettably the forecast for April looks set to leave the price cap above the increased Energy Price Guarantee level, meaning average annual consumer bills will effectively jump by 20% (£500).
“However, this is before we take into account the end of the £400 energy rebate scheme in March, meaning that the cost of energy for households will increase by even more.
“While tumbling cap projections are a positive, unfortunately, already stretched households will be seeing little benefit before July. In the latter half of the year, we see a notable shift in our predictions, as the cap falls below the government support price for the first time since the introduction of the EPG in October.
“This gives us optimism as far as the wider energy debate is concerned. While prices under the cap remain considerably higher than historic norms, the combination of falling wholesale prices and an increase in the EPG could see the return of competitive tariffs, and with it the chance for consumers to take back some control over their energy bills.”
The UK Government recently launched a dedicated website aimed at helping households save money on their energy bills. A new advertising campaign has also started airing on TV screens nationwide as part of the ‘It All Adds Up’ £18 million awareness initiative.
The new microsite on GOV.UK explains: “There are lots of things you can do at home, from easy no cost actions to bigger investments, that could save you hundreds more.”
Below are seven tips to help you save money on energy bills, full details can be found on GOV.UK here.
Turn your combi boiler flow temperature down to 60C - could save up to £100 a year
Flow temperature is the temperature of the water that your boiler sends to radiators. Reducing flow temperature isn’t the same as lowering your thermostat and won’t noticeably reduce the temperature of your home but may increase the time it takes to reach the target temperature on your thermostat.
The guidance advises: “If you are over 65, or have pre-existing health conditions, you may want to set a slightly higher flow temperature of 65C to ensure your home warms more quickly.”
Nesta have more information on lowering your combi boiler flow setting - take their Money Saving Boiler Challenge.
Turn down radiators in rooms not used - could save up to £70 a year
When you’re not using rooms, turn radiator valves down to between 2.5 and 3 (roughly 18C). While you are using a room, increase the temperature to a comfortable level by turning the valve up.
Turning off radiators completely in rooms you are not using is less energy efficient as this means your boiler has to work harder to increase the temperature again than if kept at a low setting.
The guidance advises: “People over 65, children under five and those with pre-existing health conditions are more vulnerable to cold temperatures. Make sure you are warm enough and have a minimum indoor temperature of 18C to ensure you protect your health while maintaining comfort.”
Turn appliances off at the socket - could save up to £70 a year
Almost all electrical appliances in your home, such as computers, televisions, smart devices and video game consoles, draw power continuously unless unplugged. Turn off the power switch at the socket or unplug appliances from the socket when they are not in use.
Wash clothes at a lower temperature - could save up to £40 a year
Modern washing machines can clean clothes effectively at lower temperatures. Changing from 40C to 30C means you could get three cycles instead of two using the same amount of energy, depending on your washing machine.
Use your tumble dryer less - could save £70 a year
Tumble dryers are one of the most energy-intensive devices in the home.
Use your tumble dryer less frequently by ensuring you have a full load, around three-quarters of the drum. Or use a clothes airer to dry clothes outside, or inside with a window open for ventilation.
Close all your curtains and blinds at night
By closing your curtains and blinds, you can help stop warm air escaping through windows and reduce heating costs, especially if you have radiators situated below your windows.
Track your energy usage using an app
If you have a smart meter, there are apps which is free and allows you to track your hourly energy use over days, weeks, months or years. This can help you find the best ways to reduce usage and save on your energy bills in a safe and manageable way.
Read the full guidance on GOV.UK here.
To keep up to date with the latest cost of living news, join our Money Saving Scotland Facebook page here, or subscribe to our newsletter which goes out daily, Monday to Friday - sign up here.
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