Energy Bills - need to know
In the face of a 54% rise in bills in April, here are 5 things you need to know. Including how the £200 ‘discount’ in October and £150 council tax rebate may apply to you as a student. Plus read on further down for links to lots and lots of energy saving tips.
Firstly, are bills included? Check your tenancy agreement
If you’re in halls or a private rented house/flat you might be on an “all inclusive” bills included deal that turns out to have in it clauses that allow a landlord to make extra charges if energy costs increase by a certain percentage. This may be capped by units used or total spend.
It’s best to check now and try to manage your energy consumption rather than face losing your deposit or having to challenge deposit decisions over the summer. However, you might be on an “all inclusive” deal where an increase in energy costs has to be borne by the landlord.
In you’re not sure, contact SU Advice and we’ll check your agreement for you.
1. On 1 April the energy price cap rises 54% - you'll pay half again on top of what you pay now (up an average £700/yr)
The vast majority of homes are now on price-capped, default standard variable tariffs - pretty much anyone who isn't still on a fixed deal. The energy price cap rises by 54% for six months from 1 April.
Actually, there's NO MAX you can pay on energy. Use more, pay more. What's actually capped are electricity & gas standing charges and kWh rates.
To show the scale of the rise, someone with average direct debit use currently pays £1,277/yr (£1,309/yr prepay). From 1 April, they'll pay £1,971/yr (£2,017/yr prepay) - a £693/yr rise (£708/yr).
2. There are NO tariffs meaningfully cheaper than the price cap
Right now there are no tariffs meaningfully cheaper than the price cap and the cheapest open-market fixes are all more expensive than the 1 April price cap.
When the rate rises in April, as it's a cap, firms can choose to charge less, but that’s unlikely to happen unless wholesale rates rapidly drop.
3. In Oct a loan-not-loan will reduce bills by £200, then raise them by £40/yr for 5yrs from April 2023In brief though there are two elements here...
- In around October 2022: EVERY ELECTRICITY BILL will be reduced by a flat £200 (though a consultation may mean it's paid across a few months, not in one go). There is no choice - YOU CAN'T OPT OUT. Prepay users will get the money via their smart meter, voucher, cheque or similar.
For those with small bills, the flat £200 will have a big impact; for those with big bills, a little one.
- From April 2023: EVERY ELECTRICITY BILL will have a £40/yr levy added to it, and that will happen for five years to effectively repay the initial discount. And in a reverse to October, for those with small bills, the flat £40 will have a bigger impact than for those with big bills.
While many are calling this a loan, it isn't. It's automatic, not optional. It isn't linked to individuals or households or buildings, it's about bills. You have to take it if you pay for electricity this year. You have to pay extra for it if you pay for electricity in future.
While for students whose home-situation doesn't change it will feel like a £200 loan repaid at £40/yr, for others there are bizarre outcomes, eg...
- LOSERS: Five students share a house in Oct then separate. They get 1 x £200 discount off their bill. They then all move out and live alone. From the following April all five of them will have bills £40/yr higher. Similar for those moving out of parents' houses in the five years.
- WINNERS: Two students live alone in Oct, then meet and live together. They each get a £200/yr discount, then they move in together, so they've only one bill, and it'll just have one £40/yr added.
4. Households in council tax bands A to D get £150 rebate in April towards energy increases
There will be £150 council tax rebate for homes in England in bands A to D (about 80% of homes), to be paid in April. However, all-student households are exempt from council tax so won’t benefit…..
5. Not entitled to council tax discount but struggling? You may be able to get 'discretionary help'
All-student households won’t benefit but there will be a £144 million discretionary fund distributed via local authorities that should cover some of those cases and those who slip through the net, but we don't know eligibility criteria yet.
The other way to cut bills, is, obviously, to use less...
Money Saving Expert’s energy saving tips help with the simpler stuff, such as turning your thermostat down and cutting shower time.
Other ways to use less aren't as clear-cut, such as whether to leave the heating on low all day – Money Saving Expert have explored the pros and cons of this and more in their Energy mythbusting guide.
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