With energy price increases and several energy firms closing as a result, it's no wonder that people are becoming increasingly worried about the impact of energy price increases on their personal finances. We're here to answer your questions on what rising energy bills mean for you and your finances including how to budget for rising energy bills and what to do if you can't afford a larger energy bill.
Sadly, all consumers are likely to see a significant rise in energy bills as a result of wholesale energy price increase.
Consumers are protected to a degree from the current soaring energy prices by the price cap. However, this cap has still risen by 12% in recent weeks and will sadly rise again in six months' time. Meanwhile, energy prices are averaged at 40% more today than they were a year ago meaning people coming to the end of fixed price contracts will also be stung with significantly higher tariffs.
If you want to find our more on whether you can avoid rising energy bills read our previous blog.
If you are on the price cap, then sadly you can expect your direct debit to rise by roughly 12%. Meanwhile, if you are coming off a cheap fix then you can expect to pay around 30-40% more. These increases are in-line with the overall energy price increases in the industry.
However, some consumers are reporting direct debit hikes that are out of proportion to these energy cost increases, even if they are in credit. If this is the case, do a meter reading to ensure your direct debt is based on accurate, up-to-date readings. Then, call your energy firm to enquire about your direct debit increase.
A direct debit is intended to spread out your energy costs evenly across the year and you are entitled to a 'fair' direct debit under energy firm licence conditions, therefore you are well within your rights to ask your supplier to justify unfair price hikes.
Countless energy suppliers, including Green, Hub Energy, Igloo Energy, Avro Energy, MoneyPlus Energy, People's Energy, PFP Energy, Symbio Energy, Utility Point and most recently Bulb Energy, have ceased trading in the past few months. And, with wholesale energy prices continuing to rise it is likely others may go bust in the coming months.
If your energy supplier goes bust, it can feel alarming. However, it's important to know that your energy supply WILL NOT be cut off. Instead, you will be automatically transferred to another supplier; your credit will also be transferred.
While you do not have to take any action, it's important to note that your new supplier may charge higher fees than your existing one, especially if you were on a low price tariff.
A sudden rise in any household bills can wreak havoc with your budget. And, with energy prices set to rise by £139 for 15 million people according to Ofgem, it's safe to say many did not budget for such a steep energy price increase.
The best advice in this situation, is to reassess your current budget taking into account your higher energy bills. Then, you'll know how much gas and electricity increases have sent you over budget. From here, you can see the amount of money you need, whether you can bring this in as extra income or whether you can cut this amount from elsewhere in your outgoings.
Click here to read more help and advice on budgeting.
The sad reality is that rising energy costs will plunge millions in the UK into financial difficulty, forcing many to choose between heating their homes and putting food on the table.
If you are struggling to pay your energy bills, there are steps you can take.
Firstly, contact your energy supplier. It may seem daunting, but by discussing your bills with your energy supplier they can work with you to establish manageable monthly payments.
You can also see if you are eligible for any benefits or government support to help with energy bills. The Government Warm Home Discount Scheme offers £140 off energy bills for low income families.
With energy price increases coinciding with the end of furlough, end of the universal credit uplift and the ongoing financial effects of the pandemic, it is sadly not surprising that people are struggling financially due to rising energy prices.
If you are struggling to pay higher energy bills or have fallen behind with your payments, you should seek debt advice straight away.
Our online debt advice tool allows you to seek debt advice for FREE, with no obligation and without having to pick up the phone. If you are struggling with energy price increases, get back on track with our free online debt advice tool.
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