On 23rd November, energy regulator Ofgem declared the latest Energy Price Cap for the first quarter of 2024. Under this price cap, energy prices for consumers are set to rise by 5% on average. From January to March 2024, the price for dual-fuel households paying by direct debit will be limited to £1,928. This is slightly higher than the average price of £1,834 between October and December 2023.
The latest price cap denotes an increase of £94 over a year—around £7.83 a month. According to Ofgem, this increase in energy prices comes in response to wholesale prices soaring due to geopolitical and economic turbulence. What you actually pay will depend on your energy consumption, where you live, and how you pay.
Impacts of the Recent Energy Price Cap
Energy bills are predicted to dip down to £1,853 from the second quarter of the following year. However, they are not likely to fall below today’s level until July 2024, according to Energy consultancy Cornwall Insight.
Additionally, taking the current state of the energy crisis and the soaring cost of living into account, it’s evident that energy prices will not be returning to pre-pandemic levels any time soon. Energy bills may have come down from their peak. But, they will still be around £1,000 for typical consumption under the cap. As a result, almost 7.2 million people—making up about 35% of UK households—will see their energy bills shooting upwards this winter.
Now, typical households can’t control the energy price cap or the increasing wholesale energy prices. However, adopting some realistic measures can help them keep their energy bills low.
How to keep Energy Bills Low
Pay by Direct Debit
UK residents are urged to pay their energy bills by direct debit. It ensures they don’t miss paying the bills while also enabling them to slash a significant amount off their bills. The direct debit system also safeguards your payments. It allows for faster refunds by the energy firms in case of an error.
Also, the scheme is much cheaper—around 6%—compared to the traditional process where residents are provided with energy bills.
90% of households in England, Scotland, and Wales are affected by the price-capped standard tariff. For these residents, it is possible to verify if the bill charged through direct debit is accurate. However, this facility is not available for consumers on a fixed tariff.
Check Your Energy Consumption
Experts suggest households who fear grappling with soaring energy bills ahead of cold snaps should reduce their energy consumption reasonably. Checking energy consumption where possible reduces energy bills. It also helps consumers contribute to the target of hitting the country’s energy self-sufficiency goal. For example, turning appliances off standby mode can help save roughly £55/year, according to Energy Saving Trust.
Also, washing machines are common appliances classified as moderate to high power consumption devices. They can significantly add up the bill while in operation. For instance, a 7 kg washing machine, operated 220 times a year, can cost almost £29-35/year to run. According to Energy Saving Trust, reducing the machine operation only by one cycle/week can help consumers slash around £8 a year off their bills.
Take Control of Your Heating
In a typical UK household, over half of the fuel bills are paid for heating or hot water. Consumers who want to cut down on their heating costs should install a programmer, a room thermostat, and thermostat radiator valves. Installing these low-cost control devices can help save around £75/year.
Lowering the room thermostat by 1°C can save around 7% of heating energy, equal to £60/year.
Use Energy-efficient Appliances
Energy-efficient appliances can offer the same functionality as traditional devices, consuming less energy. Especially designed to optimise energy usage, these devices help save on energy bills over time. For example, smart refrigerators, equipped with high-end compressors and insulation, consume around 40% less electricity than traditional older models.
Similarly, smart LED light bulbs use significantly less electricity and have longer lifespans compared to traditional incandescent bulbs. Installing an energy-efficient boiler is another smart approach that can result in significant energy-saving in the long term. For example, upgrading to a new A-rated boiler can help reduce energy bills by up to £840/year. Before installing a new boiler, make sure to check the efficiency rating of your current boiler as well as the environment of your home.
Besides emphasising driving energy consumption down, the Government has declared some schemes and grants to help households squeezed with rising energy costs. Some notable schemes are:
- Warm Home Discount: Low-income households or those eligible for the Guarantee Credit element of pension credit (core group) have been offered a one-off £150 discount on their energy bills between October and March. However, they need to meet their energy supplier’s criteria for the scheme. This scheme is specially designed to alleviate the financial burden on retired and low-income households.
- Winter Fuel Payment: UK residents born before 2nd September 1957 are eligible for “Winter Fuel Payment“. That amounts to between £250 and £600. This scheme aims to help households pay their energy bills during the impending winter. This financial aid also includes a “Pensioner Cost of Living Payment,” amounting to between £150 and £30. This additional amount will be provided for the eligible households for winter 2023 to 2024.
- The Energy Company Obligation (ECO): Provided as a grant, ECO is a government-funded energy efficiency programme. It aims to help residents tackle fuel poverty while reducing their carbon footprint. The grant is available to low-income households or British citizens living in social housing who claim specific benefits. They can ask for help to upgrade the energy efficiency of their homes. Under the current ECO4 scheme—the fourth phase of the ECO programme—participating energy companies are set to offer a grant of £4 billion to roughly 450,000 homes. These upgrades, for example, upgrading heating controls, installing home insulation, and boiler repair by high-end services such as Mulgas, help address energy inefficiencies, enabling households to mitigate the impact of rising energy costs over time. However, homes with an energy efficiency rating of D, E, F, or G are eligible for this government-funded scheme. For rented properties, consent from the homeowner is required to carry out the upgrades.
Sohela is an electrical engineer and a self-professed writer with a keen interest in all things tech. When she’s not writing killer content pieces, you’ll find her enjoying tempting foods in her favourite restaurants.
