Some people are set to see even more increases to their gas and electric bills this month, despite government support. Those affected are likely to see changes to their bills in January despite the UK government's energy price guarantee capping the top amount you pay until the end of March.
Introduced back in September, the price guarantee capped the cost of a typical household’s energy bill at around £2,500 a year, with the government paying anything over this amount. This is set to remain in place until March 31, when the cap will rise to £3,000, as announced by chancellor Jeremy Hunt last year.
Th guarantee means the energy price cap, announced by regulators Ofgem every three months, is less relevant than usual and means that some people will see no change to their bills in January. The price cap rose to £4,279 on January 1 but bill-payers remain protected under the guarantee. This time last year the price cap was only £1,277. To get all the latest money-saving news straight to your inbox twice a week sign up here.
Read more: People will get £900 cost of living support in three instalments this year
What does the price cap change mean?
As MoneySavingExpert explains, because the energy price guarantee, which started on October 1, is a state subsidy to reduce the typical bill to £2,500 a year, the government now needs to increase the level of support to keep bills at that level. This is because the government offsets the difference in people's bills versus this cap.
From January, the discount it applies will be 31.8p per kilowatt hour (kWh) for electricity (up from 17p/kWh), and 6.4p/kWh for gas (up from 4.2p/kWh).
What does this mean for energy bills?
The changes to the price cap and the amount of the discount mean that most people's bills will have changed slightly. For most people who pay by direct debit, there will be little to no change, but for those who pay by other means there could be.
According to MoneySavingExpert, for prepayment customers the change will amount to a £20 per year increase on average and a £39 a year rise for those who pay on receipt of bills. Based on typical use, the annual bill for a prepayment customer is £2,559 but is rising 0.8% to £2,579. For those who pay on receipt of their bill the typical yearly cost is going from £2,715 to £2,754 - a 1.4% increase.
Remember, the price cap refers to a typical bill. What you pay under the energy price guarantee depends on how much you use, where you live and how you pay for your energy. If you use more energy, you will still pay more. In south Wales, for example, the typical annual bill for prepayment customers is going up to £2,589 - a 0.8% increase - while for those paying on receipt of their bill it is going up to £2,771 - a 1.4% rise. You can find a full UK regional breakdown here.
I rely on alternative energy methods like heating oil - where is my discount?
While traditional energy customers have been seeing a reduction in their bills due to the energy support scheme which is giving £400 off bills spread over six months, thousands of people in the UK on non-mains gas who heat their homes by alternative methods such as heating oil, LPG boiler, and biomass boilers have yet to see any support. It was confirmed late last year that a £200 payment would be offered to these groups, but Martin Lewis confirmed in December that this would not be until the new year. You can read more about the £400 energy discount here.
And speaking on social media earlier this week, Mr Lewis said he was now hearing that the payment would not be given until February - four months after most energy customers started getting their discount in October. He said: "Getting info on this is like pulling teeth. Apparently it'll be automatically paid via your electric supplier (how they'll work out who's got alternative fuel is intriguing). If you're fully off grid, you'll need to apply."
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