Everything you need to know about new energy price cap and how to cut your bills

ENERGY bills are set to drop by almost £500 a year as a new price cap comes into force today.

Millions of people are on variable tariffs and are subject to the new rates and future price changes.

We reveal everything you need to know about the new energy price cap

Energy bills are set to drop by almost £500 a yearCredit: PA

But suppliers are expected to launch a raft of cheaper fixed-rate ones in the coming weeks.

Some have already started offering these, but with prices expected to fall further, experts say it’s worth waiting for more competitive deals.

Annual bills for a household with typical energy use of £2,500 will drop to £2,074 under the new cap.

But the exact amount you can pay will depend on your consumption.

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Energy analysts predict bills will fall further to £1,871 in October, and then slightly increase to £1,901 from January.

FIXED TARIFFS RETURN: Current fixes are on offer for around £2,050. Customers who choose to do so now could end up paying £179 more than the cap.

Greg Marsh, of money-saving tool Nous.co, said: “For most people a fixed energy deal is simply not worth it at the moment.

“Energy suppliers have begun encouraging their customers to fix with deals that seem alluring.

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“But wholesale energy prices are still volatile and may fall further. Unless you really value certainty, fix too soon and you could end up stuck in an expensive contract.”

Anyone thinking of doing so should consider the exit fees and the contract length.

During this time, the price cap could go higher or lower depending on market conditions, so consider how long you would like to stay locked in for.

Use price comparison sites to look out for new fixed deals hitting the market and how they compare.

And keep an eye out for offers from your supplier as some deals are for existing customers only

READ YOUR METER: Experts are urging those with a traditional meter — that’s not a smart or prepay — to take a reading this weekend to ensure they benefit from new rates.

Scott Byrom of comparison site The Energy Shop, said: “Customers will want to ensure suppliers don’t overestimate how much energy they used on the older, more expensive rates.”

Some suppliers’ websites have crashed at or around key meter reading dates.

Take a photo if having trouble submitting yours, and try again in a few days’ time, he suggested.

PREPAY PREMIUM AXED: From today, customers on prepay meters no longer have to pay higher rates for the energy they use.

For a household with typical energy use, that means bills will fall from £2,545 to around £2,046.

If you have a smart pre-pay meter, it will automatically change to the new rates under the price cap that kicks in today.

But if you don’t have a smart meter, top up as soon as possible so it starts charging you the new rate.

Otherwise you’ll use up any credit you’ve got left on your meter based on the previous higher rates per kWh.

OTHERS STILL PAY MORE: Around 5.2million customers who pay on receipt of their bill — by cash, cheque, card or bank transfer — still face paying more than direct debit and pre-pay customers.

For a household with typical energy use, this means an extra £137.63 a year, taking their bill to £2,211.63.

Switching to a direct debit is the best way to save. You can pay a set amount each month, or a sum that varies with your usage.

WHAT TO DO IF YOU’RE IN CREDIT: If your meter reading is much lower than the estimate used by your supplier on bills, you can ask them to lower your monthly direct debit to a more suitable amount.

If you’re in credit, you can ask your supplier to refund you. Specify how much you would like them to pay back, but you will likely need to give an up-to-date meter reading.

If you have trouble getting your energy supplier to set your direct debits to the correct level, or if you struggle to get credit refunded, complain in writing.

If you’re not happy with their response, you can then take your case to the Energy Ombudsman — for more details, visit ombudsman-services.org.

REGIONAL VARIATION

THE amount you pay for energy depends on where you live as prices vary in different regions.

Last year, customers in some areas paid up to £122 more than others.

Households in North Wales, Cheshire and parts of Merseyside were charged the most, while homes in the North East paid the lowest.

To find out the rates in your area under the new cap see moneysavingexpert.com.

SUMMER SAVINGS

Avoid using costly appliances such as fans to keep cool this summerCredit: Getty

EXPERTS are urging households to cut energy use in the summer months and save money.

Gareth Kloet, of comparison site GoCompare, said: “Thanks to warmer weather, we are not as reliant on heating or lighting our homes, which means we naturally use less energy.”

“But avoid using costly, energy-guzzling appliances, such as fans, to keep cool.

Joanna O’Loan, of Energy Saving Trust said: “Small actions can stop rooms getting too hot, such as opening windows when the air is cooler and blocking direct sunlight.”

WHERE TO GET HELP

DON’T miss out on vital cash help if you’re struggling with bills.

Social tariffs and energy support worth more than £2.1billion goes unclaimed each year, according to analysts Policy In Practice.

Use the free tool at betteroffcalculator.co.uk to check if there is any help you can claim or speak to your energy supplier and local council.

READY TO SWITCH

MAKE sure you’re ready to switch when you spot a deal that’s good value.

Natalie Mathie, energy expert at Uswitch.com, said: “Households need to be proactive and prepared to move quickly if they want to lock in certainty over their bills with a fixed deal.”