Energy bills are rising and financial experts are warning that a reduction in costs is not going to happen anytime soon. Households could see their bills hit more than £3,600 a year this winter.
Gas and electricity bills could reach as high as £3,615 in the new year, hundreds more than previous predictions according to consultancy Cornwall Insight, but many consumers are struggling to pay their current bills amid the rising cost of living.
The energy price cap increase, enforced by energy regulator Ofgem, saw the average energy bill rise to £2,000 instead of £1,400 a year in October, 2021. The cap, which limits the rates a supplier can charge for each unit of gas and electricity you use, changes every six months, though the next review/change is due in October this year.
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To put it into context one householder has gone from paying £69 a month for her gas and electricity with E.ON but is now paying £157 a month instead, others have seen a rise by £1,000 a year or more. The rise in bills is down to wholesale gas prices soaring in recent months. Demand has further increased following the Covid-19 pandemic and Russia's invasion of Ukraine.
Consumers pay for their energy bills in different ways, and are either on a fixed-rate tariff or a standard one, or a tariff that is specialised to their supplier. Payment methods vary depending on whether consumers pay by direct debit, have a smart meter or a pre-payment meter.
Morgan Wild, Head of Policy for Citizens Advice, said: “The cost-of-living crisis is already stretching people’s budgets to breaking point and there are further price hikes on the horizon.
“Every day we hear frightening stories from families who can’t make ends meet. Most worryingly, people are coming to us because they can’t afford to top up their prepayment meter - an issue we’d typically see in winter. That means no lighting, hot water or hot food.
“The government was right to bring in support through the benefits system to help people struggling the most. It must now be ready to act again before cold weather sets in.”
But what happens to those who are struggling to pay their bill, or those who simply can't afford to pay? We've compiled some useful tips below with the help from Citizens Advice.
Talk to your supplier
If you're worried you can't afford your next bill or are falling behind in payments then the first thing you should do is speak to your supplier as soon as possible. According to the rules set out by Ofgem your supplier has to help you and this is usually done by negotiating a payment plan that you can afford.
You can tell your supplier that you want to pay off your debts in instalments, which will result in paying fixed amounts over a set period of time, meaning you'll pay what you can afford. The payment plan will cover what you owe plus an amount for your current use.
Your supplier must take into account:
- how much you can afford to pay - give them details about your income and outgoings, debts and personal circumstances
- how much energy you’ll use in future - they’ll estimate this based on your past usage, but give them regular meter readings to make this more accurate.
If you can't afford the payment plan then you can speak to your supplier again to negotiate a better deal, if you don't your supplier may make you have a prepayment meter installed.
If you're already on a prepayment meter and are struggling to pay, your supplier must help as well. All suppliers can offer small amounts of emergency credit, usually £5 on your gas and electricity meter that you can access through your meter.
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Hardship funds
Select suppliers have charitable trusts and funds that can help customers who are struggling. The funds that exist are EDF's Energy Customer Support Fund, The British Gas Energy Trust Individual and Families Fund, E.ON's Next Energy Fund, Ovo's Energy Fund, Octo Assist Fund and the Scottish Power Hardship Fund.
You have to be a customer with the providers to qualify for the fund (except with British Gas), and the application process can be fairly complex. It may be best speaking to a debt adviser before applying.
Energy grant
Former Chancellor Rishi Sunak announced in May a series of measures to help households across the UK handle the cost of living crisis. Among these was a £400 energy payment that will be delivered to every household with a domestic electricity meter in the country.
The discount, administered by energy suppliers, will be paid to consumers over six months with payments starting from October this year. But with the October price cap expected to increase again, it's not looking like this grant will have much of an impact.
Those on non-smart prepayment meters will have to take action to get the money. Monthly direct-debit customers will get the money automatically, as a deduction from their bill.
Standard credit customers, including those who pay by cash after receiving a monthly or quarterly bill will get the payment automatically in the first first week of each month between October 2022 and March 2023.
Smart prepayment customers will get the grant automatically as credit applied directly to their meter in the first week of each month. But for traditional prepayment customers this will be different, they will have to redeem it to get it and the money will be sent as six separate vouchers either via text, email or posit which can be redeemed by topping up as normal.
Further help
If you can’t come to an agreement with your supplier about repaying your debt, or you’re not happy with the option they’ve given you, contact the Citizens Advice consumer helpline for advice.
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