Steps to take to lessen the blow of the energy price increase
We know lots of people are worried and wondering how to afford the additional costs.
Unsurprisingly, these increases will see a further 2 million people in fuel poverty, totalling 6.5 million in the UK. Fuel poverty is when people must spend a high proportion of their income to keep their homes warm. At the Centre for Sustainable Energy (CSE), our energy advisors often speak to people in vulnerable circumstances including those on low incomes, struggling expensive heating systems, or needing extra warmth due to illness.
Now, we’re hearing from people on relatively steady incomes who could afford their bills each month but are now anxious they can’t. Many are forced to think about their energy usage – and possible implications – for the first time.
‘Should I switch my energy provider?’
This is a question we’re asked often. In previous years, we may have suggested switching energy provider or tariff. At the moment there are only a handful of fixed-term deals on the market and they are all more expensive than the price cap. The current energy market is so unpredictable that this is no longer a guaranteed way to save money. We’re hearing stories that many providers have chosen not to take on new customers or upped their prices, exit fees and length of contracts.
Nobody knows what might happen in October when Ofgem is expected to announce the next price cap. If prices go down, switching now may leave you with a fixed higher price than if you kept with your current provider. If there are high exit fees then this is a double whammy. Standard variable tariffs are likely to be the cheapest due to the uncertainty of what will happen in the future. If you were to take on a fixed tariff now, you’d be paying much more than those on a standard variable for the next six months.
As the weather gets warmer between now and October, you’ll likely use less energy. If you pay your bill on prepayment or quarterly, you might not see an immediate effect of the price increase. But for those paying by Direct Debit, the change in energy prices will affect your bill straight away where the energy supplier splits your yearly use out evenly across 12 months. For those on a prepayment meter, remember to keep it topped up over summer even if you’re using less energy. This is to cover the standing charge. Otherwise, you’ll need to put £56 on the meter at the end of September before you can heat your home.
Although the energy cost per unit has gone up, using less energy will keep your overall cost down. While the initial price hike is worrying, if you can, using less energy in your home is one way to help adjust to the new prices.
‘Is there anything else I can do?’
Making small behaviour changes, being conscious of the amount of energy you use, and installing energy-saving measures will help lessen the blow of the increase. Here’s some options depending on your specific budget.
Think about how you can realistically cut down your energy use. Activities like washing clothes, dishwashing, showers (especially electric showers) and cooking contribute to how much energy you need. Taking steps to reduce the frequency or time spent doing these will help save money. Here’s some simple energy-saving tips in our blog.
Most energy suppliers can provide a smart meter to install in your home, free of charge. A smart meter has a digital display showing how much energy you’ve used in real-time. You’ll be able to see your costs and check if your efforts to reduce them are working. You may not be able to get a smart meter if your meter box is far away from your property, such as in blocks of flats. If you can’t get one, ensure you are providing meter readings to your supplier at least once a month.
Homes in the UK are poorly built, they lack insulation and don’t retain heat well. Wasted energy leaks through walls, windows, roofs and doors, and then you end up paying for energy you didn’t use. Insulating your whole house can be costly, but it can save money in the long run and you can install some low-cost measures yourself.
Measures like draughtproofing are relatively easy fixes. Blocking gaps around windows, doors and letterboxes will stop warm air from escaping, so your home will require less energy to heat. During summer months draughts are less noticeable but planning now for autumn and winter can help you budget expenses. If you install these measures by the next price cap announcement in October, your home will be in a better place to preserve energy when the cold weather, and potential price increase, hit. Be aware that you still need to ventilate your property to avoid and damp or mould issues, so make sure you can still open windows, use extractor fans and trickle vents.
If you’re in a position to, why not retrofit your home? Retrofit refers to any improvement work on existing buildings to reduce their carbon emissions and improve the energy-efficiency. A retrofit will make your home more sustainable for the planet and save you money by reducing your energy use in the long term.
A retrofit survey is completed to figure out what steps you can take to improve how your home generates and retains energy. You’ll receive a medium-term plan detailing the most suitable options for your home, with advice and guidance. A retrofit focuses on three primary areas:
- Changing behaviour through advice and guidance on how to use energy efficiently
- Insulating homes to limit the amount of wasted energy escaping – you typically lose 20-25% of your heat through your roof, and 35% through your walls
- Installing appropriate lower-carbon energy sources like heat pumps or solar panels. For example, installing solar panels can save you up to £440 a year.
A home retrofit does have upfront costs, but energy-saving installations pay for themselves in the long term, known as the payback period. This is the amount of time it takes to recover your cost through money saved in your energy bills, and they’re decreasing all the time. Now, domestic solar panels payback in 9 years, half of the 20 years or more that it took prior to the Government’s now closed Feed-in tariff.
Renewable energy has become a much more feasible option for those that can afford it. Last week, Rishi Sunak announced the scrapping of VAT for energy efficiency measures, and homeowners can receive money from government incentives by selling surplus energy. Installing these measures now will help protect yourself from any upcoming energy increases.