ENERGY bills are expected to rise by 50% from April leaving many people worried about how to pay the bills.
More than 20 energy companies have gone bust, including Together Energy earlier this week, leaving customers confused about what happens next,
And for the first time ever, Brits are being warned not to fix their energy contracts as the deals available are so much worse than the standard variable tariffs.
Unsurprisingly, people are really concerned and struggling to understand what exactly is happening, how it will impact them, and what can be done to beat the rises and keep costs down.
And with further energy price hikes ahead, it’s never been more important to get on top of your costs.
Here we answer 11 of the most common Sun reader questions when it comes to energy bills.
My energy deal is coming to an end, should I find a new fixed rate now?
In a nutshell, no. At the moment, fixed rate energy bills are so expensive that you’re better off sticking with the standard variable tariff as it’s controlled by the energy price cap.
As money guru Martin Lewis explained in a tweet: “The cheapest open market energy fix is now 76% more expensive than the current price cap.”
He added that it’s even more expensive than the expected price cap for April after rises and might even cost more than SVTs could rise to in October.
While a fixed price gives you stability, the experts are saying that at the moment you’ll be locking yourself a price that is substantially more than you’ll pay otherwise.
My energy bills are higher than I expected them to be, is there a way to tell if they’re accurate?
Getting a gas or electricity bill that’s a lot more expensive than you were expecting is always a shock.
If your bills have shot up recently, it could be a result of rising prices across the UK including two price cap rises last year.
But if you’ve got a bill that looks higher than usual, there could also be a problem – one woman even received a bill for more than £300,000.
Your bills should reflect the amount of gas and electricity you use, so if you’re suddenly paying more but your usage hasn’t changed then it’s worth investigating.
Citizen’s Advice says the first step is to check whether your bill is estimated. If it is, you can send a meter reading to your energy company to get an accurate bill instead.
Send your supplier a reading each month to make sure you only pay for what you use.
You might also want to check if there is an appliance that is costing a lot to run. Check your usage on the Centre for Sustainable Energy website.
Another thing to check is whether there is a fault with your meter. These are unusual but they do happen.
In particular, if your bills suddenly go up but the supplier hasn’t hiked the price and you’re not using more energy than usual, this could indicate a fault.
If none of the steps above have worked and you still think there’s something wrong with the bill, you can complain to your supplier.
If they try to bill you for energy used more than 12 months ago, you usually don’t have to pay under back-billing rules.
I’m struggling to access the warm homes discount – is it still running?
Yes – the warm homes discount is still available and means that households can get £140 towards their bills over winter.
The first thing to do is double-check if you’re eligible for the scheme.
There are two ways you can be eligible for the payment:
- If you get the guarantee credit element of pension credit you’ll be in what’s called the “core group”
- If you’re on a low income and meet your supplier’s criteria you’ll be in what’s referred to as the “broader group”.
If you think you are eligible for the core group and have not received a letter from the DWP by December, phone the Warm Home Discount Scheme helpline on 0800 731 0214 to check.
You must do this as soon as possible otherwise the DWP may not be able to process your claim.
If you’re in the broader group, things are more complicated because it’s up to each provider who gets the discount and each has different eligibility criteria.
Typically suppliers start letting you apply in summer, according to Age UK, but you’ll need to contact them direct to get all the information you need
Age UK says you should start working with them as soon as possible so you don’t miss out.
If you’re having difficulties you may need to contact your supplier. Read our guide to the warm homes discount to find out more.
I’m worried my energy provider will go bust – what can I do if it happens to me?
So far, 27 energy suppliers have gone bust since August 2020, unable to cope with soaring wholesale gas prices.
So, it’s understandable that people are worried their firm could be next, but the important thing is not to panic.
Most of the time you don’t need to do anything if a supplier goes bust – you won’t lose any money and you’ll still be provided with energy.
Instead, Ofgem will provide you with a new supplier and automatically switch you over.
It’s worth taking a meter reading so you can send it to your new provider when the switch has happened.
You also want to fight for the best deal. Normally you’d ask to go on the cheapest fixed-rate deal, but at the moment you should push to go onto a Standard Variable Tariff.
My energy company says I owe them loads of money and I can’t afford to pay it back – what can I do?
Energy watchdog Ofgem says you should let your supplier know as soon as possible if you can’t afford to pay your bills.
Suppliers must work with you to agree on a payment plan you can afford.
This includes reviewing any plan that you might have agreed to before.
You shouldn’t be cut off – Ofgem says suppliers must take all reasonable steps to avoid disconnecting an energy supply for debt.
The watchdog says you can ask for:
- a review of your payments and debt repayments
- payment breaks or reductions
- more time to pay
- access to hardship funds
- Priority Service registration – a free support service if you are in a vulnerable situation.
You should also check you’re getting all the benefits you’re eligible for, such as Warm Homes discounts and cold weather payments.
Read our benefits guide to see what help is on offer.
Some suppliers also have grants and schemes you can apply for, check with yours to see what is available and whether you meet the criteria.
Things are bad now, but how high will prices actually rise?
No one has a crystal ball, so it is difficult to know precisely what will happen to energy prices in the long term.
Most experts agree that the price cap is likely to increase by 50% in April, and that the same thing could happen in October if wholesale prices don’t fall between now and then.
Dr Craig Lowrey, senior consultant at Cornwall Insight said: “With wholesale gas and electricity prices continuing to rise to historic levels, it is looking increasingly likely that the summer default tariff cap will increase by around 50% to approximately £1,900 for the typical user, adding more than £600 extra on the average yearly bill.
“Assuming there is no change in the delivery of the cap, we forecast winter prices are likely to increase even more to in excess of £2,000.”
How can I tell if an energy deal is better than a standard variable tariff?
In the past, the advice has been to look for the lowest fixed rate tariff you can find, but now experts say almost everyone is better off staying on the SVT if their deal comes to an end.
If your provider offers you a deal or you shop around and find a good rate, you should compare it to the energy price cap to see if you’re actually saving money.
First, use a comparison site to find the best fixed-rate deal on the market. Comparethemarket.com has decided to show people all available tariffs including those you cannot switch to via their website – so this is a good place to start.
Next, you need to work out what your standard variable tariff is. This isn’t straightforward, as even though there is an energy price cap, there are variations in what you will pay.
Ofgem says: “Different factors also affect how much suppliers change their prices (the rate they charge you) to meet the cap:
- where you live
- how you pay (prepayment, direct debit or standard credit)
- your type of energy meter.”
The best thing is to call your supplier and ask what its SVT is.
Ofgem cautions that where figures are given, these are typically based on an average duel fuel customer, so it’s important to get information from your supplier based on your specific circumstances.
You can also ring other suppliers and ask how much you would pay on their SVT.
Once you have a cost on a variable tariff, compare this with the fixed-rate costs from the comparison site and see which is cheaper.
Alex Hasty at comparethemarket.com says: “In the majority of cases, fixed energy tariffs currently on offer are more expensive than being on a default or variable tariff.
“We urge people to check carefully before fixing any deal at this point in time.”
Some European governments have promised to help with energy bills – what is the UK government planning?
So far the UK government hasn’t confirmed any new measures to help us cope with rising energy bills.
But there have been rumours parliament is considering several measures. The PM ruled out scrapping VAT on energy bills calling it a “blunt instrument”.
But the Financial Times has reported that one consideration is that the government steps in a covers the cost under something called a “temporary price stabilisation mechanism“.
Analysts at Cornwall Insight say there are a few options open to the government.
Dr Craig Lowrey said: “The cutting of VAT has the advantage of simplicity and covers all consumers, but at around £100 a year it will be dwarfed by the scale of the bill increase, even though it would cost in the order of £3 billion.
Other options include increasing the Winter Fuel Payment, which covers about 8 million households receiving pensions and other benefits is currently worth £100-£300 a year.
He added: “If the government wanted to target say £3bn relief to this group, it would work out about £375 per household, or the government could consider extending the recipient base.
Lowrey said the government could also fund the deferral of industry costs, but it would need to defer the costs of policy, VAT and networks pretty much in entirety if it is to mitigate a £700 a year increase in fuel bills from higher wholesale cost.
“Who would pay these costs would also need to be determined,” he said.
I’ve moved house and they’re trying to put me on a fixed tariff – am I allowed to go on an SVT?
If you’ve moved house, you’ll find that there’s a provider in place, and it might try and put you onto a fixed rate tariff.
But you’re well within your rights to ask to be put on a variable rate, particularly if that works out cheaper.
In a live Twitter Q&A Money Saving Expert’s Martin Lewis said: “If you’re moving house you have a right to a deemed tariff which is a price cap tariff.
“Some people are told they have to go on a fixed tariff by providers when they move house – this is not true.
“Push providers to be put on the standard variable tariff which is price capped.”
My energy provider is offering terrible rates – can I haggle to get a better price?
Unfortunately, if you’re a consumer you’re not allowed to haggle with energy providers in the same way you might with broadband, phones or TVs.
That’s because, for domestic customers, suppliers have to offer to supply via contracts with set tariffs.
Ofgem rules require suppliers to make these tariffs public and ensure consumers are offered the best tariff for their circumstances.
In a nutshell, that means they won’t give you your own offer.
Instead, you should shop around for the best deal and compare it to the current energy price cap to see if it is worth fixing.
Switching is super easy, so when there are deals that beat SVTs, then you should opt for the provider that’s cheapest.
Businesses can and should negotiate with their suppliers to get a bespoke deal though.
My energy company wants to put me on a prepayment meter – can I say no?
Around 4.3million UK consumers use a pre-payment meter for their energy bills, according to Uswitch.
This is when you pay for your gas and electricity in advance by topping up at a shop or online.
Typically, they’re installed in households that have had problems with debt in the past or by landlords in rentals.
Moneysupermarket.com says there are pros and cons to having a prepaid meter.
- You’re in control – because you buy your allowance beforehand, you stay in total control of what you use
- You never overpay – most energy bills are calculated on expected usage and estimated readings – prepaid meters aren’t
- You can switch when you want – unless you’re in arrears to your supplier, you are can make the switch away from a meter whenever you like.
The downsides include:
- They’re not the cheapest option – prepayment meters are usually more expensive per unit of energy than most other tariffs
- They can be inconvenient – you can sometimes run out of credit at inconvenient times, or when the shops are shut
- Running out means running out – once you get to the end of your current credit allowance, your energy is shut off until you can buy more.
Because prepaid meters are tied to the energy price cap – you shouldn’t find you’re spending more at the moment.
When attractive fixed-rate deals return, you might want to consider switching to a credit meter.