Millions of households across the UK are bracing for another energy price cap increase, set to take effect on 1 April 2024. The rise, announced by Ofgem, will push the average dual fuel household bill up by £111 per year, adding further strain on already stretched budgets.
As reported by Manchester Evening News, this increase follows a series of consecutive hikes, raising concerns about long-term affordability. While rising energy costs seem inevitable, consumers still have options to minimise their bills and avoid unnecessary overpayments—but time is running out.
Energy price cap increase: What changes on 1 April?
From 1 April, the Ofgem price cap will increase by 6.4%, raising the typical annual bill for a household paying by direct debit from £1,738 to £1,849. Households using pre-payment meters will see their average annual costs climb from £1,690 to £1,803, while those paying upon receipt of a bill will face an increase from £1,851 to £1,969.
This marks the third consecutive price cap increase, following a 10% rise in October 2023 and a 1.2% increase in January 2024. The ongoing surge in costs is attributed to wholesale price increases, policy cost hikes, and inflationary pressures.
Who Will Be Affected?
The energy price cap directly affects households on a standard variable tariff, estimated to include 28 million homes across the UK. These customers are typically those who have not switched to a fixed-rate deal or whose previous fixed tariff has expired.
A standard tariff adjusts with the market, meaning consumers are exposed to price fluctuations. While this can lead to lower bills when wholesale prices drop, it also means immediate exposure to price hikes when costs increase.
How to Minimise the Impact: The Importance of Submitting a Meter Reading
One key step consumers can take to avoid being overcharged is to submit a meter reading before 1 April.
Why is this important?
If a household does not submit an updated meter reading, energy suppliers estimate usage based on projected data. If an estimated bill is based on pre-increase rates, the consumer could end up paying the higher April rates for previous energy use.
As experts advise :
Submitting a meter reading ensures you are only charged for the energy you have actually used before the price cap rise. This small step could prevent unnecessary overcharges
Who Needs to Submit a Reading?
This step is crucial for those on a standard variable tariff. However, households with smart meters do not need to submit readings manually, as these devices automatically update the supplier.
Customers can submit readings through their supplier’s website, mobile app, or customer service line. It is also advisable to take a photo of the meter as proof of the reading in case of disputes. The process for reading a meter depends on the type installed in the home. Smart meters do not require any action since they automatically send data to the supplier.
For standard digital meters, consumers should record the first five numbers from left to right, ignoring any red digits. Economy 7 meters display two sets of numbers, both of which must be recorded. Dial meters, which have five dials from left to right, require reading each dial carefully and rounding down if necessary.
If a dial is between nine and zero, it should be rounded down to nine. Those struggling to read their meter can refer to step-by-step guides available on most energy providers’ websites.
Will Energy Prices Change Again?
Ofgem revises the energy price cap every three months, meaning the new rates will remain in effect until 30 June 2024. After that, the cap will be reviewed again based on market conditions.
While some analysts predict potential reductions later in the year, fluctuations in wholesale energy prices and government policy changes remain key factors in determining future costs.
Beyond short-term actions like submitting a meter reading, households can consider long-term energy-saving measures. Switching to a fixed-rate tariff may offer cost stability, as some providers have competitive deals.
Improving home insulation can significantly reduce energy consumption, leading to lower bills over time. Investing in energy-efficient appliances, such as modern heating systems, can help reduce overall usage.
Exploring renewable energy options like solar panels or heat pumps could further decrease reliance on the grid, making bills more predictable.
