October 1st 2024.
Every few months, Ofgem, the government's energy regulator, sets a limit on how much energy companies can charge for each unit of energy used on a standard tariff. This is known as the energy price cap. Unfortunately, this time around, the cap has resulted in a 10% increase in gas and electricity prices for billpayers in England, Scotland, and Wales. With the average household's fuel bill rising by £149 to a whopping £1,717, people are being advised to take a new meter reading today to ensure they are paying the correct amount.
This price cap affects approximately 28 million households, except for those in Northern Ireland, which has its own energy market. Ofgem reevaluates the cap every three months for a typical dual-fuel household. This means that the maximum amount energy companies can charge per unit is capped, but the actual amount you pay depends on how much energy you use.
Global events can greatly impact energy prices, as seen when Russia invaded Ukraine in February 2022. This caused energy costs to skyrocket and the price cap reached an all-time high of £4,279. However, the government intervened with an emergency Energy Price Guarantee and reduced the cap to £2,500. This was further lowered to £2,074 in July, and then to £1,568 this July. Unfortunately, the cap has been raised again, and billpayers paying with direct debit will now face a cap of £1,717, while those paying by cash or cheque every three months will face a cap of £1,829.
It's important to note that the cap is not an actual limit on bills. It is simply an estimation of what the average household is expected to pay per unit of gas and electricity. This means that the more energy you use, the more you will pay. From October 1 to December 31, the cap for gas prices is 6.24p per kilowatt hour, while for electricity it is 24.50p per kWh.
If you are a billpayer, it is recommended to take a meter reading as soon as possible. If you wait too long, you may end up being charged the new, higher rate for energy used before the price increase. You may also be wondering if you can lock in a fixed-price deal to avoid any future price increases. While this does provide more certainty about your energy bills for a set period, it also means potentially missing out on savings if energy prices were to drop. Additionally, there may be an exit fee if you decide to leave the deal.
There is some good news for prepayment customers, as they often face higher prices than those who pay through direct debit. The new cap for prepayment customers is £1,669, which is a decrease of £147 from the last energy price cap. However, it is important to keep in mind that energy prices are volatile and can change at any time. So while there is a possibility of prices decreasing by 1% in January, it is not guaranteed.
In conclusion, the energy price cap, set by Ofgem every few months, has resulted in a 10% increase in gas and electricity prices for billpayers in England, Scotland, and Wales. It is recommended to take a meter reading and consider a fixed-price deal, but keep in mind that energy prices can be unpredictable.
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