MILLIONS of bill payers will be stung by a £149 hike to energy bills when Ofgem’s new price cap comes into force in weeks.
On October 1, around 29million customers on their supplier’s standard variable tariff will see their bills rise from £1,568 a year to £1,717 a year.
The regulator’s energy price cap changes every three months, setting a ceiling on what suppliers can charge households on default or variable tariffs.
It limits the maximum amount suppliers can charge for each unit of gas and electricity used and caps daily standing charges.
However, the headline figure that households will see their bills rise to – £1,717 a year from October – is just an estimation.
The figure is calculated based on what Ofgem thinks an average household will use.
It assumes that a typical household uses 2,700 kWh of electricity and 11,500 kWh of gas across a 12-month period and uses the average UK-wide price cap rates to come to this conclusion.
Those who use less will pay less, and those who use more will pay more.
In reality, the exact amount you’ll pay will depend on several factors.
Your exact unit rates and standing charges will vary based on your supplier, where you live and how you pay for your gas and electricity costs.
There are 14 different “distribution network operators” across Great Britain, each having the power to dictate your energy costs.
For example, from October 1, the average London-based household’s annual energy bill will rise from £1,539 to £1,689.
However, typical costs will be lowest in the East Midlands, with the average home paying £1,666 a year.
Those in the South West will pay the most, with the average annual bill costing £100 more at £1,766 a year.
These discrepancies arise because generating electricity or gas in certain areas is cheaper than others.
Dr Craig Lowey, principal consultant at analysts Cornwall Insight, added: “Varying regional costs hail back to pre-privatisation of the industry.
“Following privatisation, the basis for regional charges was determined by each of the 14 network operators submitting their view of the costs of maintaining their networks to the regulator, which remains the approach today.
“Each of the 14 regional networks have different infrastructure, which is reflected in their respective network costs and therefore what they are allowed to charge customers through their bills.”
Transportation costs also influence your regional standing charge – the daily fee you pay to stay connected to the grid.
For example, those living in the northern region (North East England) currently pay the highest standing charge in the country.
A typical household here pays £375 a year just for the privilege of staying connected to the grid, and this will rise to £379 from October 1.
Those living in London pay the least, at around £266 a year.
The typical household standing charge in London will rise to £269 a year from October 1, but it will still be £110 cheaper than the average standing charge in the Northern region.
Richard Neudegg, director of regulation at price comparison site Uswitch.com, said: “Regions with more rural locations may pay a higher amount due to the higher price of the necessary infrastructure.”
BELOW we reveal how you can calculate your own energy bill.
To calculate how much you pay for your energy bill, you must find out your unit rate for gas and electricity and the standing charge for each fuel type.
The unit rate will usually be shown on your bill in p/kWh.The standing charge is a daily charge that is paid 365 days of the year – irrespective of whether or not you use any gas or electricity.
You will then need to note down your own annual energy usage from a previous bill.
Once you have these details, you can work out your gas and electricity costs separately.
Multiply your usage in kWh by the unit rate cost in p/kWh for the corresponding fuel type – this will give you your usage costs.
You’ll then need to multiply each standing charge by 365 and add this figure to the totals for your usage – this will then give you your annual costs.
Divide this figure by 12, and you’ll be able to determine how much you should expect to pay each month from April 1.
Five million households opt to settle their energy bills via their bank card, a standing order or cheque — and they shoulder higher costs for both unit rates and standing charges.
It costs more because energy suppliers need to recoup the administrative costs associated with these types of payments.
These households could see their standing charge climb up to £420 a year.
Switching to direct debit will reduce your standing charge — and unit rates, too.
THERE'S a number of different ways to get help paying your energy bills if you're struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don’t think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have grant schemes available to customers struggling to cover their bills.
But eligibility criteria varies depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don’t need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill, and some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you’re struggling.
Get in touch with your energy firm to see if you can apply.
