There has been a great deal of speculation about just how high energy bills could soar this winter.
But on Friday, we will find out the hard truth when watchdog Ofgem reveals its latest price cap increase. This will tell us what a typical household can expect to pay each year from October 1 until December 31.
Analysts predict that customers should be braced for the average annual bill to jump from £1,971 to as high as £3,700 — before increasing again to about £4,500 in January. Given the price cap was about £1,200 last year, it’s little wonder people are panicking.
Hikes: Analysts predict that customers should be braced for the average annual bill to jump from £1,971 to around £3,500 – before increasing again to more than £4,200 in January
But these average figures only tell part of the story. There is no ‘cap’ on bills — only on the price of each unit of gas and electricity.
So if you use more power — perhaps because you live in a big house or have a large family — your bills will be higher.
Those who are elderly or vulnerable are also likely to be hit harder as they spend more time at home with the heating on. And pensioners are among those least able to absorb price hikes as they are usually on a fixed income.
Even if you slash your energy consumption down to the bare bones, you cannot escape standing charges.
These fixed daily fees, which have soared over the past year, cover suppliers’ administration costs.
They are capped at around 45p per day for electricity and 27p for gas — or 50p and 37p a day for those with a prepayment meter.
While I do not envy ministers as they try to work out the best way of ensuring energy aid reaches those who need it most, we cannot afford to delay any longer
For poorer households and those who use minimal energy, these extra charges already feel particularly unfair as they make up a disproportionately large chunk of their monthly bill. And when Ofgem’s new price cap comes in, they could rise yet again.
So it was chilling to learn from The Mail on Sunday that energy firms have ordered hundreds of thousands of prepayment meters as they prepare for a record number of families to default on their bills this winter.
This type of meter is controversial because, after an emergency buffer of around £10, if you cannot afford to top it up, your power will go out — somewhat cruelly referred to in the industry as ‘self-disconnection’.
What’s even more startling is that, in many cases, firms won’t even need to seek a warrant to enter customers’ homes to make the switch, as they can do this remotely via smart meters.
Meanwhile, as we address, small businesses — which aren’t protected by the price cap — have been all but forgotten. Many have closed their doors due to spiralling bills.
So, while I do not envy ministers as they try to work out the best way of ensuring energy aid reaches those who need it most, we cannot afford to delay any longer.
Households and businesses need to know what help is on the way and when it will arrive.
Keeping tabs: Two Money Mail readers have charted the savings they have made over the years by haggling down prices and complaining when service isn’t up to scratch
Haggling stars
Money Mail readers never fail to impress me with their record-keeping. After asking for tales of your haggling successes, Elizabeth Fryer, 77, from South East Wales, presented me with a list detailing her car insurance renewal costs dating back to 2006.
There was a column stating what the insurer had quoted at renewal and another showing what she paid after challenging the price over the phone. In total she has saved nearly £600 in those 16 years by making just one call each year.
And this doesn’t include all the freebies such as key cover and, most recently, a three-month policy extension at no extra charge, as noted in her third ‘additional comments’ column.
She says: ‘When they ask if I want to proceed with the same level of cover, I say ‘Fine, but I’m wondering if there may be a bit of a discount for customer loyalty’. I tell them that as I don’t have a computer I can’t take advantage of any reductions offered online.
‘Amazingly, the call handlers have almost always offered a lower price straight away.’
Another reader also shared his spreadsheet detailing the compensation he’s been awarded for shoddy service — totalling £1,000 since the start of 2021.
I love his notes explaining why he complained to the firm. ‘Hopeless,’ ‘incompetence’ and ‘as useless as last year’ were particular highlights. But it just goes to show that if you dare to ask, you just might get!
