The new price cap will see the average household spend £1,690 per year, the lowest price in two years, down from £1,928.
The £238 fall over the year equates to around £20 saved each month for the average household in England, Scotland and Wales.
The cap does not set the maximum a household will pay for their energy but limits the amount providers can charge them per unit of gas or electricity, so those who use more energy will pay more.
To help explain more, energy efficiency expert Stephen Hankinson at Electric Radiators Direct has shared his advice on the most common questions relating to the upcoming energy price cap change, and energy bills.
This is everything you need to know.
What is the energy price cap?
Over two in five (42%) Brits aren’t sure ‘what the energy price cap is’, and more than 4,000 people a month are specifically asking Google for the answer to this question.
Stephen explains: “The energy price cap is essentially the government’s energy price guarantee. It is a cap on the cost of a unit of gas and electricity, with standard charges considered.
“This can be confused to mean a cap on your overall energy bills; however, this is not the case. The price of your bill will still rise or fall in line with the amount of energy you are consuming.”
When will my energy prices go down?
“The energy prices of households will go down on 1st April, and this energy price cap is set to last until 30th June. At some point between April and June, the next price cap will be announced.”
How much will my energy bill reduce in April?
“April’s price change now means that the energy price cap is set at £1,690, which is based on the annual electricity and gas bill of a ‘typical’ household who pay via direct debit. This is a reduction of £238 from the £1,928 cap set between 1st January and 31st March this year.”
“While the energy price cap drop will lead to an estimated 12% saving for most households, with warmer weather meaning that we’re less likely to put the heating on, households could see a further reduction in their bills in the coming months.
How do you calculate the cost of an electricity bill?
Given that over half (57%) of Brits express a lack of confidence in calculating their electricity bills, the question arises: what’s the best method for determining this?
Stephen says: “To calculate the cost of your electricity bill, you must first find a previous meter reading (and the date you took it) and a current meter reading. Subtract the current reading from the previous one to work out how much energy you used during that time period. This number will be in kWh.
“Multiply this number by the unit rate from the new energy price cap (for direct debits, this is 24.50p per kWh for electricity and 6.04p per kWh for gas).
“You’ll then need to add the standing charge, which from 1st April is 60.10p per day for electricity and 31.43p per day those who pay by direct debit. Next, multiply this by the number of days in the month.
“It’s especially important to calculate this if you think your supplier is overestimating your usage, so you’re not overpaying for your energy.”
How do I switch my energy supplier?
“Be aware that switching energy suppliers doesn’t always mean you’ll be saving money. If you’re on a standard variable tariff you can switch at any time. However, if you’re on a fixed tariff you can only switch if you have 49 days or less left on your contract – anymore than this and you will likely be charged an exit fee.
“When you have picked out a new supplier you need to contact them to switch – but don’t worry about contacting your current supplier, the new supplier will do this.”
