2021 Energy Price Cap Increase – Saving Tips
What does the UK energy cost increase mean for you and your finances? Find out more about the price cap increase and get expert financial advice.
It is no secret that the last 18 months have been challenging for people across the UK. The COVID-19 pandemic has taken a hold on the country’s finances, and now more than ever the financial burden of the pandemic has come to a head.
On 1st October 2021, a lot of people’s energy bills are likely to increase. This is because the energy price cap is increasing. According to Ofgem, you can expect to see your energy price cap deal increase by roughly £139 per year. Understandably, this may cause you significant stress, however, we ask that you try not to worry.
Here we will discuss the key information you need to know so that you are informed on what this price change means for you and your finances. We will also offer you some advice on how you can save money on your energy bills this winter.
What is an energy price cap?
The energy price cap is a limit on the annual cost of gas and electricity bills. It applies to customers on default tariffs or customers using prepayment meters. The price cap is reviewed once every 6 months, once in summer and once in winter. The cap price for each season is set by the underlying costs to supply energy. This ensures prices are fair to suppliers and reflect any changes in cost.
In previous years the energy price cap for default tariffs was £1,138 per year, however from 1/10/2021 this will increase to £1,277 per year. Additionally, the prepayment tariff will increase from £1,156 per year to £1,309 per year.
This is the highest price cap increase since the price cap launched in February 2019.
Although it is difficult not to worry about this national energy cost increase, you must remember that there are millions of people who are in the same position as you. Therefore, you are not alone with your stress, and there is help available for you. We recommend you contact your energy provider to discuss these changes and discuss a payment plan that is suitable for you.
If you are looking for additional financial support, we may be able to help you to reduce your debt repayments into one monthly repayment that is affordable to your circumstances, this may leave you in a more financially stable position to make the price cap increase less financially stressful.Consolidate Your Debts
Why is the energy price cap increasing?
Energy prices are due to rise in the UK due to an increase in wholesale gas prices. Already, the cost of gas for suppliers has risen a massive 50% since August 2021, which has, in turn, pushed up electricity and heating prices for the public.
Will the energy price cap increase affect you?
As previously mentioned, the price cap increase will affect you if you are on a prepayment meter or a default tariff. The increase will not affect you if you are on a fixed-term energy contract or a standard variable green energy tariff.
If you are unsure of your current energy deal, you can find this out easily from your recent energy bill or by contacting your energy provider.
The increase in your bill is dependent on a range of factors such as where you live, your chosen payment method, your type of energy meter, and your energy usage. For more information on how the changes may affect you please visit Ofgem or, for more personalised advice, reach out to your energy provider.
Should you switch energy providers?
Currently, it is recommended not to switch energy providers, as rates are rising across the board and there are very few good quality deals on the market. This is why many sites such as Compare the Market have decided to freeze their “switch provider” facilities. However, there is no harm in searching to see if you can find a better deal.
It is often 12-month fixed-term contracts that will save people the most money, so try searching this type of energy deal.
For further help with choosing the right energy tariff for you please visit Citizens Advice.
Tips to save money on your energy bills
1) Switch off things that you are not using at the plug socket. Leaving electrical items on standby is a waste of energy and money.
2) Only fill the kettle with the amount of water you need, Energy Saving Trust suggest this could save you nearly £30 per year.
3) Only put the heating on in the rooms you need it in, most of the time there is no need to heat your entire home at once.
4) Switch to LED lights throughout your home, they use less energy which could save you money in the long run.
5) If you can try to take showers instead of baths, they use less water which in turn uses less energy.
Financial support is available
We know this will be tough news for many families, but there is financial support available to those who need it.
The first thing you should do if you cannot pay your bills is contact your energy provider, as they may be able to help you and ease the pressure on your finances.
If you need help with managing your finances and existing debts, you can contact us. We may be able to offer you a debt consolidation loan to combine your unsecured debts into one monthly payment that is affordable for you.Consolidate Your Debts
By: Leah Cusick.
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Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.
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