When will energy prices go down – and can I get a discount on my bill?

The Ofgem price cap is set to rise this summer as on July 1, 33 million people on standard variable energy tariffs are going to see their energy bills increase by 13% – but there are ways to lower your bill

Even though we are approaching summer, energy bill concerns are topping the list of the things readers are telling me they are worried about.

Why is this? Well on July 1, 33 million people on standard variable energy tariffs are going to see their energy bills increase by 13%.

Every three months, energy regulator Ofgem updates its energy price cap – the maximum amount your energy supplier can charge you for each unit of gas and electricity. This price goes up and down depending on how much energy costs on the wholesale markets and how much it costs to produce (though other factors can have an impact too).

We knew that the increase in July was going to be hefty, but with big debt balances still lurking on our accounts from winter, many people are worried about their bills.

So in this week’s column, I’m going to answer your questions. Keep them coming!

The price cap recap

• The average dual fuel bill (gas and electric) goes up by 13% to £1,862 a year. That’s a £221 increase or just over £18 a month
• Ofgem measures energy usage in ‘kilowatt hours’ (kWh) or units. Gas is capped at 7.33p per unit and electricity at 26.11p from July.
• Prices are up by 5% for electricity and 24% for gas. That difference is a direct result of the conflict in the Middle East. It’s more expensive to buy gas wholesale, but we also use gas to generate some of our electricity.
• Ofgem says we are using less energy now, so under their new measures the average bill is £1663 – though the price increase is still more or less the same.
• Overall, energy bills are around £600 more expensive a year than they were five years ago.

Why is gas more expensive than electricity?

According to Ofgem, wholesale gas prices have increased by a whopping 28% in the last three months. There’s also a lot more competition for these resources. Gas is also used to generate electricity, but we have a range of other resources too, like renewables and nuclear.

When will prices come down?

This is the million dollar question (literally). Even if the conflict in the Middle East is sorted out tomorrow, it will take a while to sort out prices and costs. That’s because there’s a backlog of shipping, unfulfilled orders, competition for the best deals and sheer demand to deal with.

None of the experts I’ve spoken to will risk an estimate about when prices might drop because there are too many variables. But we can assume that prices will remain at high levels for the remainder of the year and may well increase.

Do I get a discount for paying by direct debit?

You do, though it varies. For most people it’s around 8% off the bill. Bear in mind that when you see Ofgem and price comparison estimates of the price of gas and electricity, this is usually factored in already.

How do I fix a deal?

It’s still possible to fix a price per unit of energy for a year (or longer). If you can find a deal that fixes the price under the current (lower) price cap, snap it up! You can fix a set price, have a variable fix that stays a set percentage under each price cap (though this could go up) or even reduce your standing charge if you don’t pay much on energy. Check out comparison sites like MoneySavingExpert or MoneySupermarket for more info.

Always ask about the exit fee – what you pay to leave the deal early. These exit fees can be as high as £100, so make sure you are aware of the cost of leaving a fixed deal early.

What about my current deal?

If you’re on a variable tariff it should say on your bill. I suggest calling up and asking what your energy supplier’s cheapest tariff is and see if you can switch straight away if you don’t want to change suppliers. Ask your supplier to confirm this offer in writing before you commit, so you can compare and contrast.

Can I go to another supplier if I have an energy debt?

Potentially, though if the debt is over 28 days old you will be asked to pay it off. Some suppliers may allow you to transfer it over though. And you can ask for a payment plan if you can’t afford to pay the whole debt because money is tight. If you are disputing that you owe that amount of money, you may be able to move to another supplier and put the debt on hold – but be aware it may become payable if you lose your complaint.

How do I know if my bill is right?

Around four million smart meters aren’t sending readings correctly. So check your bill for the letter ‘E’ after your unit use. This means the bill is estimated. If your unit usage has increased but your lifestyle hasn’t, that also suggests a problem.

If you haven’t changed the amount of energy you use, look for an increase in the number of units of energy you’ve supposedly used compared to previous periods. I’d suggest going through your last two years-worth of bills. Work out roughly how much you’re using on average for each billing period. If there’s been an inexplicable increase, you have a valid complaint.

You can also ask your energy provider to clarify in plain English why things have changed. Ask questions like;

• Why is my energy usage higher?
• Are relying on estimated readings?
• Are you billing you for energy used over a year ago?
• Have I been put on to a more expensive tariff?

Once you’ve narrowed down what the potential problem is, you can take action.

How do I cut my energy bill?

If you can’t afford your bill, don’t stop using energy – contact the firm and ask what they can do to help. But if you want to save some cash, the Energy Saving Trust has loads of tips. In hot weather, it should only cost around 15p to have a pedestal fan running for 8 hours btw!

How do I make a complaint?

Energy businesses are obliged to address all complaints in writing unless you agree otherwise. Their ‘final response’ should set out what they’ve done to resolve your complaint and any compensation that they might be offering. This should also tell you about your right to go to the Energy Ombudsman.

The Energy Ombudsman is a completely unbiased, free service and it’s really easy to make a complaint online.

• Martyn James is a leading consumer rights campaigner, TV and radio broadcaster and journalist