What to expect from your energy bill this winter - Sarah Coles

Given the figures that have been bandied about, the huge number of conflicting schemes that were put on the table, and the fact that for weeks we were left facing the prospect of hideous hikes with no idea of what support might be available, it’s hardly surprising that an awful lot of us still have questions. So here are the answers to some of the big ones.

Are we going to get that huge hike in October?

In practical terms, no, because the Energy Price Guarantee kicks in on 1 October, which keeps a lid on price rises. It limits the amount you can be charged per unit of gas or electricity, so that the average user won’t pay more than £2,500. This guarantee will run for the next two years, protecting us from that massive price spike to some extent.

What do I need to do take advantage of it?

Nothing. It’s all going to happen automatically. If you’re contacted by someone claiming you need to apply, it’s likely to be a scam trying to get hold of your personal details, so don’t reply.

Does that mean my bills are fixed at £2,500?

No, it all depends on how much you us. It’s the per-unit cost which will be limited. The more you use, the more you’ll pay. It’s why this should go hand-in-hand with anything you can do to cut back energy use too.

What about standing charges?

These are rising to the levels Ofgem announced for October - 46p per day for electricity and 28p per day for gas, for a typical dual fuel customer paying by direct debit. It’s why the standing charge has come in for so much criticism: you’re paying 75p a day even if you use no energy at all.

What if I’m on a fixed rate?

It depends on the fix. The guarantee sets a floor of 10.3p/kWh for gas or 34p/kWh for electricity. If you’re paying less than that, you’ll just stick with your current deal for as long as it lasts.

If you fixed recently for something higher than the guarantee, there’s good news and bad news. You will get the same discount as everyone else – which is 17p/kWh off the cost of electricity and 4.2p/kWh off gas. However, because your starting cost was higher than the price cap, you’ll pay a higher rate than someone who was on the energy price cap. Your energy company will deal with all of this for you.

What if I use electricity but not gas?

You’ll get the price guarantee applied to your electricity bills. If this doesn’t support you with heating costs – so if for example you use oil heating – you’ll receive a £100 payment. It’ll be paid by giving you a discount on your electricity bill, so you don’t need to do anything in order to get it.

What if I don’t pay for energy directly?

If you pay bills wrapped up with your rent, your landlord will get the benefit of the guarantee. Likewise, for any other group who pay indirectly – like people in Park Homes – the organisation with the commercial relationship with the energy company gets the discount. However, the government has said it’s working through each group of people to assess how they can make sure the benefits are passed on.

Am I still going to get any lump sum cost-of-living payments I’m expecting on top of this?

Yes. There are a few still in the pipeline, including the second payment for people on means tested benefits, who’ll get £324 this autumn. There’s also an extra £300 payment for pensioners on the way from November, paid alongside the winter fuel allowance.

Am I still going to get the £400 discount?

Yes, this will go to every household with an electricity connection, and offers £66 in October and November, and then £67 a month from December to March.

If you pay by direct debit, you’ll either get a discount off your monthly direct debit, or you’ll get a refund to your bank account as soon as the monthly direct debit goes out. If you pay by standard credit or payment card, it will appear as a credit on your account, and if you have a smart prepayment meter it will be credited to your meter in the first week of each month. If you have a traditional pre-payment meter, you will get vouchers for equivalent amounts that you’ll need to redeem, or an automatic credit when you top up at your usual top up point.

As with the price guarantee, if you don’t pay your energy bill direct – so if you pay a landlord for example - they’ll get the benefit, but the government is looking at legislation to ensure it’s passed on.

What if I run a business?

You’ll get help too. The discount for businesses works by setting a rate for the estimated wholesale portion of your unit price – which is around a third of the wholesale costs that are expected this winter. So you’ll still pay according to how much energy you use. The government ran the calculations for a typical pub, shop, and restaurant, and suggested they could save between 40% and 50% on their bills. Support will run until March next year, and the government will take stock in January to see what help is needed after March.

What’s going to happen in two years?

That’s the big question. There’s always the hope that global energy prices will drop back to a more manageable level, so by the time the support runs out, we won’t need it any more. However, there’s the risk that it won’t. It’s incredibly difficult to forecast ahead, especially when it comes to geopolitical developments. An awful lot will depend on whether supplies recover, new supplies come online, and whether we will have managed a step change in energy use too. Two years may be enough time for supplies to recover somewhat, but it’s a lot to expect radical structural change over this period.

Is there going to be a test?

Sadly, with the level of the price guarantee slightly above the eye-watering levels we’re paying right now, it’s still going to be a testing time for all of us.

Summer property boom defies the gloom

HMRC revealed this week that property sales held up in August, with sales up 4.4% in a month and above pre-pandemic levels. It’s tempting to think that if we can keep buying property at a time like this, buyers can withstand anything that’s thrown at them. However, the future is looking less rosy.

Sales completing in August were largely agreed in April and May, when the pain of energy price rises was already being felt. On the one hand, this is a clear indication that those who have enough cash to see them through this crisis are still prepared to dig deep for property. On the other, it’s still early days.

We know that buyer demand only really started to fall from May, when people had time to adjust to their new outgoings, and reconsider a move up the property ladder. At the same point, agents started to report that buyers were getting increasingly cautious. It means we can expect some weakness to creep into the figures as we move into the autumn.