MARTIN Lewis has explained why your energy bill could be more than the price cap.
Millions of Brits will see their energy bills rise within weeks because they are on standard variable tariffs.
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That’s because the bills are subject to the price cap which is increasing on April 1.
The current price cap of £1,277 will go up to £1,971 – an increase of nearly £700.
But this number is for the typical dual fuel bill and the exact amount you pay will depend on your use.
Responding to a viewer’s question on ITV’s This Morning, Martin explained that it’s not a cap on bill prices overall, but on the unit price of gas and electricity and standing charges.
That means your bill can be more or less than the price cap depending on the amount of energy you use.
Martin said: “What you hear talked about is the typical usage of what someone would pay, but if you use more, you pay more, if you use less you pay less.
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“There is no absolute cap on the total amount of energy that you can pay for. If you have a huge house and you’re using enormous amounts you can pay £10,000 or £20,000 a year.
“It’s a cap on the unit cost, and it actually varies regionally and the numbers that you will have heard [on the price cap], are just for someone on typical usage.”
“It’s the unit rates that are going up and [the price cap] is just an easy way to explain it.”
However, for many it’s caused confusion and the caller wanted to know why his bill would be £3,500.
He’s not the only on either. Suppliers have been sending out new bills to customers with details of how much more they will pay from April, creating confusion and anger over the amounts.
Around 22million customers are now on standard variable bills and subject to the price cap as fixed tariffs are now far higher.
For electricity the unit price is rising from £0.21 per kWh to £0.28 per kWh. And for gas it’s rising from £0.04 per kWh to £0.07 per kWh.
There’s also a standing charge on bills which is a daily fixed charge.
This is capped and is going up in April too, from £0.25 to £0.45 for electricity and from £0.26 to £0.27 for gas.
As this is a fixed charge, unfortunately reducing your energy use around the home won’t affect the cost, like with the unit price part of the bill.
Fixed cost bill rise
Standing charges cover the cost of running and maintaining the energy network, a bit like line rental with a landline phone.
It also covers the cost of failed energy firms and more than twenty have gone bust recently because of rocketing wholesale prices.
Part of it also covers the green gas levy to help reach net zero emissions by 2050 and the costs of the Warm Home Discount scheme, which offers low-income households money off bills.
On top of those costs, energy bills are also subject to VAT of 5%, which has not changed, despite calls for the tax to be scrapped temporarily.
There are also regional variations in your standing charge and unit price, though overall you can’t be charged more than the cap amounts.
Energy distribution networks run the supplies of gas and electricity to homes and this cost can vary in different areas, which energy suppliers then reflect in the price.
So the same supplier might charge a different unit price or standing charge from one are to another, even on the same standard variable tariff.
Energy bill help if you’re struggling
There are schemes offered by suppliers, local councils, charities and the government that could also help.
If you’re struggling with energy costs or other bills there are plenty of organisations where you can seek advice for free, including:
You should speak to your energy supplier in the first instance as they have schemes in place to help with bills and arrears, including hardship funds and grants.
Your local council may also be able to help with cash and grants if you are struggling with bills through the Household Support Scheme
The winter fuel payment scheme, where those getting the state pension can get between £100 and £300 to offset the cost of keeping their homes warm.
Low income households can get £25 a week to help with energy bills during the winter thanks to the cold weather payment scheme too.
The warm home discount scheme means you can a £140 payment that goes toward your heating costs – but you need to act quick as this scheme has already closed at most energy suppliers.
Chancellor Rishi Sunak announced a £150 council tax discount for millions of Brits in an attempt to ease the cost of living crisis.
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