HOUSEHOLDS will see their energy bills drop in a matter of days based on how they pay.
It comes as Ofgem announced that typical gas and electricity bills will be capped at £2,074 a year from July 1.
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The fall in Ofgem’s price cap will reward households battling the cost of living with a £426 annual saving.
This will take effect when the government’s Energy Price Guarantee, which limits the typical domestic energy bill to £2,500, expires at the end of this month.
But the exact amount your bill will drop by depends on how you pay for your energy.
Around 4.3million UK consumers use a prepayment meter, according to Uswitch.
If you have one, you pay for your gas and electricity before using it by topping up a meter at a shop or online.
Those on prepayment meters often end up paying more a year for their energy bills than those paying by direct debit.
That’s because the cost of setting up and maintaining prepayment meters is higher for suppliers.
However, from July 1, the prepayment meter price will be the same as those who pay via direct debit.
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But those who pay on receipt of their bill still face paying more.
Latest Ofgem figures show that around 2million households pay their energy bills quarterly by cash or cheque.
Up to 3million more are also thought to pay their bill with a standing order.
These households face higher unit rates and standing charges – meaning that a typical household in these groups pays an extra £160 a year more for their energy bills than necessary.
How much will my bills drop by?
The average amount you’ll pay will depend on the way in which you pay your bills.
Below we’ve outlined the differences.
Average costs for those who pay by direct debit
From July, a typical household will pay the unit rates and standing charges below but check with your energy supplier as the figures may slightly differ.
A typical household will pay £2,073.98 a year from July if they pay the following rates:
- 7.51p per killowatt hour (p/kWh) for gas
- 30.11p/kWh for electricity
- A standing charge of 29.11p per day for gas
- A standing charge of 52.97p per day for electricity
Average costs for those who don’t pay by direct debit
A typical household that doesn’t pay their bills by direct debit will see costs rise to £2,211.63 from July 1, based off the following average rates:
- 7.91p per killowatt hour (p/kWh) for gas
- 31.72p/kWh for electricity
- A standing charge of 34.34p per day for gas
- A standing charge of 59.51p per day for electricity
Average costs for those on prepayment meters
The average household on a prepayment meter will see their bills drop to £2,045.90 in July, based off the following average charges:
- 7.11p per killowatt hour (p/kWh) for gas
- 29.06p/kWh for electricity
- A standing charge of 37.80p per day for gas
- A standing charge of 58.08p per day for electricity
Meanwhile, households paying by direct debit are being urged to take a meter reading to ensure they aren’t overcharged.
An updated meter reading will mean your supplier has a more accurate idea of your usage and bill you accurately.
Consumer champion Martin Lewis tweeted today: “Submitting a reading within a few days of the change (many let you backdate a few days too) reduces the risk of their ‘estimating’ going against you (though there’s always a chance a discrepancy could end up in your favour).”
Martin also urged households to take a photo of their meter reading in case they can’t submit it to their provider on the same day.
If you’re not sure how to do it, read our guide here.
