Ofgem have announced that from 1 October, most people will pay about £1,570 more per year for gas and electricity. This increase is because the energy price cap, set by energy regulator Ofgem , is set to jump by 80 per cent to reflect rising wholesale energy costs for energy suppliers.
What does this mean for you?
Most Londoners will currently be on a variable price contract with their energy supplier. This is currently set at around £1,971 a year for an average household paying by direct debit but is set to increase to £3,549 a year from October.
If you're currently on a fixed price contract with your energy supplier, you'll remain on that until the contract ends, after which point, your account should automatically roll over onto a variable rate.
Customers on pre-payment meters will pay £59 more at £3,608 a year for an average household.
Just remember that the price cap limits the rates you pay for the energy you use, rather than the overall bill. So, if you use more energy, you will pay more, and if you use less, you will pay less.
What help is there for higher bills?
To help households with higher energy bills, the government announced some measures to partly help with the steep rise in March 2022, with further measures announced in May 2022:
- There will be a £400 credit on electricity bills this winter through 6 monthly instalments starting in October.
- A £150 council tax rebate was paid from April for those in council tax bands A to D. This was paid automatically to those who pay by direct debit, otherwise contact your local council.
- A £144 million fund to local authorities to help low-income and vulnerable households who do not pay council tax or are in council tax bands E to H. Contact your local council if you might be eligible.
The Government has also announced additional Cost of Living payments of up to £650 for those on certain benefits. These will be paid automatically if you are eligible. Please check that you are receiving all the benefits you are eligible for.
The Warm Home Discount scheme has also been expanded so that it will now help 800,000 more households, meaning a total of three million households will benefit.
But even with these measures, higher energy prices will add more pressure to the cost of living to all Londoners, but especially to the 11 per cent of the population in London who already live in fuel poverty.
Fuel poverty occurs when too much of a household's income is needed to meet the cost of heating and powering the home.
What can you do?
There are actions we can all take to help with the rising costs:
1. Don’t switch (for now)
Usually when energy bills go up, the best advice is to shop around for a better deal. Unfortunately, better deals are simply not currently available. Right now, it is best to do nothing as switching your energy supplier could further increase your bills. But keep an eye out as prices change.
Another important thing to be aware of is that some energy firms may try to promote "fixed deals" and say it will save you money in the long run but for most people, this isn't currently the case. The best thing to do now is absolutely nothing, as the price cap protects you. Read more from Money Saving Expert.
2. Access free support
The Mayor of London has launched a Cost of Living Hub for Londoners facing financial hardship. You can get advice about benefits, dealing with debt, financial management and mental health support.
The Mayor's Warmer Homes Advice Service offers free telephone support on both the financial help that's available and on energy-saving measures, specifically for vulnerable and low income Londoners. You can arrange for a home energy visit to get tailored advice and energy saving measures, as well as help with any energy and water debt relief assistance and billing disputes.
You may also be able to get help through the Mayor's Warmer Homes programme that provides free heating, insulation and ventilation improvements for low-income Londoners who own their own homes or rent privately.
3. Speak to your supplier
If you’re worried about your energy bill, suppliers can work with you on a payment plan. They are required to take your financial circumstances into account under rules set by the regulator Ofgem. You may also be eligible for schemes, grants or benefits including the £140 Warm Home Discount bill credit, winter fuel payment, and housing support fund. Read more.
4. Save energy (where you can)
The Energy Saving Trust have lots of tips to help keep your household energy usage down without compromising your health or comfort. From removing draughts to switching appliances off standby, all measures help make a difference to reducing your bills. Read more
The Mayor is working hard to retrofit London homes to make them more energy efficient to cut energy bills and save carbon through programmes like his Warmer Homes and the Retrofit Accelerator for Homes. Read more about the Mayor’s work to tackle fuel poverty in the capital.