Energy regulator Ofgem has warned that households will see a significant rise in the price of energy next spring.
Here are all the details about the price hike warning and six crucial steps you can take to prepare yourself and your home for these incoming costs.
What’s Ofgem’s energy price hike warning?
According to the BBC, Ofgem chief executive Jonathan Brearley confirmed the news we’ve all been dreading. After a recent price cap increase, energy prices are set to rise again next spring due to an unprecedented uplift in gas prices.
I don’t know about you, but I’m pretty sick of the word ‘unprecedented’ these days!
How much will energy prices rise?
There’s no confirmation yet on exactly how much the price hike will be. Some estimates are suggesting a typical customer could end up paying an extra £400-£600 per year.
Full details will be decided by Ofgem in February 2022. But the changes won’t come into effect until April 2022.
So the good news is you’ve got plenty of time to get ahead of these significant changes.
How can you prepare for the energy price hike?
In situations like this, we’re never completely helpless. A rise in the cap on prices is out of your control, but there’s still plenty you can do to limit the damage. Here are six crucial steps you should run through before energy price rises take effect:
1. Check your current tariff
Spend a bit of time taking a good look at your energy usage and the tariff you’re on.
Depending on your usage, it might make sense to stay with your existing supplier but switch to a different tariff that works out cheaper.
This will involve a little bit of homework on your part, but a quick review could save you loads in the long run.
2. Compare suppliers
Your choice of supplier will depend on where you live. But from time to time it’s always worth shopping around and comparing your energy price with other deals on the market.
Keep in mind that some deals now aren’t going to be reflective of the upcoming changes because they haven’t taken place yet.
However, making sure you’re on the cheapest plan now will likely mean that a future cost increase has less impact on your finances.
3. Consider a fixed tariff
Some suppliers will let you lock in a fixed-rate tariff for a set period of time.
Having a set price helps you to budget better and ensures you’re not stung by unexpected energy price changes.
Doing this can also be a good way to secure a fair price. However, without knowing exactly how much the upcoming increase will be, it’s hard to gauge what a good offer looks like.
4. See if you’re eligible for support
There are reports that these changes could leave 1.5 million more people unable to pay energy bills next year.
If you’re struggling financially, you may be able to receive government support.
It’s always worth checking whether you can get any extra help with paying high energy bills.
5. Prepare your budget
If your finances are tight, then try budgeting to prepare for the price increases. If you’re unable to reduce your bills, you may have to make cuts elsewhere.
This isn’t ideal but it’s better to take measures now or put extra money aside in advance. You don’t want to find yourself on a financial cliff edge when April comes around.
6. Reduce your usage
This may seem like an obvious one and I’ve put it last for good reason.
You may already be doing everything you can to keep down the cost of your bills. But with these energy price hikes coming, it’s more important than ever to consider your usage.
Reduce how much energy you’re using where possible and make sure you have no leaks, problems with insulation or faulty devices draining your supply.
Could you be rewarded for your everyday spending?
Rewards credit cards include schemes that reward you simply for using your credit card. When you spend money on a rewards card you could earn loyalty points, in-store vouchers airmiles, and more. MyWalletHero makes it easy for you to find a card that matches your spending habits so you can get the most value from your rewards.
Was this article helpful?
YesNo
About the author
George is a writer and qualified financial adviser focused on educating others in personal finance & investing.
Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.
This post was originally published on Motley Fool
