Energy prices – answering your questions
Householders across the UK are facing a rise in energy bills, as well as the possibility their supplier could go out of business. To support residents in this difficult time, Octavia has prepared some answers to frequently asked questions to help.
The guidance is for residents who buy electricity and gas from private utility companies. It does not apply to residents who buy energy from Octavia, for example from a heat network (also known as communal heating).
Will my energy bills rise rise?
This depends on what kind of deal or tariff you have with your energy company. You may be on a ‘standard variable tariff’, sometimes known as the ‘default tariff’. Standard variable means the prices you are charged for energy go up and down with changes in the market. If you’ve never switched supplier, or your last switch was over a year ago, you’ll have usually defaulted to a standard variable tariff. The energy price cap (set by Ofgem) limits the cost of energy (pence per kWh) on a variable tariff. However, the price changes every six months and this too is due to go up.
If you are on a fixed tariff, your energy prices will not change for the duration of your contract (usually 12 months from the start of the contract). If your contract is coming to an end shortly, you may well have to change to a more costly deal. Fixed tariffs are not protected by the energy price cap.
What type of tariff am I on?
There are several different tariffs available on the market. Uswitch have provided a useful summary of these:
If you are unsure which tariff you are on, your supplier can tell you or you can check your last energy bill. If in further doubt, a Green Doctor consultation can help you understand.
What is the energy price cap?
The cap is the maximum your supplier can charge you for a unit of energy. It was designed to protect customers that end up on a supplier's standard variable tariff, which were historically more expensive. From 1 October 2021, Ofgem says that for a typical direct debit customer it will work out at 21p per kWh for electricity and 4p per kWh for gas. However, households who pay in a different way have different price caps – pre-payment customers have the highest.
The cap is set by Ofgem, the energy regulator, and is reviewed twice a year based on changes in the energy sector. For a household with average gas and electricity consumption, from October 2021 the new charges will work out at £1,277 a year – higher-using households could easily see their bills rise to £2,000 a year. For pre-payment customers with average usage the new cap will equate to an annual bill of £1,309.
The energy price cap won’t apply if:
- you are on a fixed-term energy tariff
- have chosen a standard variable energy tariff that Ofgem has exempted from the cap
Ofgem have a helpful page to explain the energy price gap and guidance on whether you will be affected:
Should I switch my supplier, or find a better deal?
Historically, if you are on a standard variable tariff you were likely paying more than you need for each unit of gas and electricity (when compared to a fixed tariff). However, the recent volatility in the market means that many new fixed tariffs deals may be more expensive than the variable tariff. This is because the energy price cap only limits the standard variable tariff. The best situation for each home will depend on a number of factors. Octavia recommends calling the Green Doctor for a free advice consultation to understand your situation and options.
There are many Ofgem-accredited tariff comparison websites which are listed below. If you do not have access to the internet, you can call these comparison companies for advice over the phone.
- Energy Helpline - 0800 074 0745
- Energy Linx - 0800 849 7077
- Money Supermarket - 0333 123 1972
- My Utility Genius - 0203 468 0461
- Simply Switch - 0800 011 1395
- Switch Gas and Electric - 03333 700 600
- UK Power - 0800 320 2000
- uSwitch - 0800 688 8557
- Which? - 0800 410 1149
What happens if my supplier goes bust?
If your energy provider goes out of business, you won't stop receiving gas and electricity. Your account will be moved to a new supplier by energy regulator Ofgem - although this may take a few weeks. Unfortunately, you may end up on a more expensive tariff with a new supplier.
Citizens Advice recommends making a note or taking a photo of your meter reading and downloading any bills while you wait for your new supplier to contact you. There's no need to cancel any direct debits straight away. Instead, you can wait for your new account to be set up before cancelling the existing arrangements. The new supplier will contact you to set up a new payment.
If you're in credit with your old supplier, your money is protected and you'll be paid back. If you're in debt, you'll still have to pay the money you owe.
You can find more information on the following links:
What if I’m on a prepayment meter?
If you’re on a prepayment meter, it’s worth seeing if you can move to a standard credit meter. This would mean you could pay for your energy by direct debit, which is cheaper than paying for your energy as you use it. Prepayment tariffs are usually the most expensive tariffs, so switching could save you money.
If you were forced to start using a pre-payment meter because of previous financial problems, your record may have improved to the extent that you can return to a credit meter. If you inherited a pre-payment meter, check if you can switch to a standard credit meter. You can save £40 a year by switching from a prepayment meter.
What government schemes can I apply for to support to support with my fuel bills?
There are a number of government led scheme’s which can help with your fuel bills. More information on these schemes and how to apply to them is given below. To understand if you are eligible and for support with an application, please contact the Green Doctors.
1. Warm Homes Discount
You could get £140 off your electricity bill for winter 2021 to 2022 under the Warm Home Discount Scheme. The scheme opens on 18 October 2021.The money is not paid to you - it’s a one-off discount on your electricity bill, between October and March. You may be able to get the discount on your gas bill instead if your supplier provides you with both gas and electricity.
If you get the Guarantee Credit element of Pension Credit, you should get the Warm Home Discount automatically. Equally, households with an income of £16,190 or less can apply. Those receiving Child Tax Credit, Income Support or Income-based Jobseeker’s Allowance, and a host of other benefits are also eligible but it’s on a first-come, first-served basis.
2. Winter fuel payments
If you were born on or before 26 September 1955 you could get between £100 and £300 to help you pay your heating bills. This is known as a ‘Winter Fuel Payment’.
You will get your Winter Fuel Payment automatically (you do not need to claim) if you’re eligible and either:
- get the State Pension
- get another social security benefit (not Housing Benefit, Council Tax Reduction, Child Benefit or Universal Credit)
If you do not get either of these, or if you live abroad, you may need to make a claim.
If you’ve got a Winter Fuel Payment before, you do not need to claim again unless you’ve deferred your State Pension or moved abroad. The deadline for you to make a claim for winter 2021 to 2022 is 31 March 2022.
3. Cold Weather Payment
You can get Cold Weather Payments if you’re getting certain benefits or Support for Mortgage Interest.
You’ll get a payment if the average temperature in your area is recorded as, or forecast to be, zero degrees celsius or below over 7 consecutive days. You’ll get £25 for each seven- day period of very cold weather between 1 November and 31 March.
To check if your area is due a payment when the 2021/2022 scheme starts, check the government website on 1 November 2021:
How can Octavia support residents?
Octavia has partnered with the Green Doctors who provide free and impartial advice on energy use. If you are confused or concerned about your utility bills and would like to understand your options, we recommend contacting the Green Doctors for a telephone consultation. Green Doctors can also provide advice on saving energy in the home, for example by setting your heating controls to heat your cost effectively. More information about Green Doctors.
Octavia’s Financial inclusion team
If you are worried about being able to manage payment of your bills or need financial help, call Octavia on 020 8354 5500 and we will make a referral to our Financial Inclusion team. The team have over 30 years’ experience of delivering benefits and money advice. More information on our Financial Inclusion service.
The energy supply situation is changing constantly at the moment. This guidance provided here is based on a review of best practice advice in October 2021. Octavia will be reviewing our advice as the situation changes. For the latest guidance, we recommend contacting the Green Doctors for a free consulation.