Energy prices have soared in recent months and reached record highs in December last year. Ofgem recently announced that there will be a further increase in the energy price cap to reflect rising wholesale prices, with the new changes coming into effect in April 2022.
We’re all feeling the pinch of rising energy prices and many households are worried about how they will afford the higher rates.
We’ve put this article together to tell you everything you need to know about the changes, with tips to help you survive the energy price increase in 2022.
What is the new energy price cap?
The energy price cap was introduced in January 2019 and outlines the maximum amount that energy companies can charge customers in the UK for gas and electricity each year.
It was introduced to stop suppliers from simply passing hikes in wholesale prices on to their customers. The price cap is reviewed by Ofcom every six months and updated according to wholesale energy prices.
Ofgem released a statement in February announcing that the energy price cap will increase by £693, meaning average household bills will increase to almost £2,000 a year. The changes will come into effect in April 2022 and affect roughly 22 million customers in the UK.
Why are energy prices increasing?
Ofgem advises that the increase is driven by a record rise in global gas prices over the last 6 months, with wholesale prices quadrupling in the last year alone. The increase is necessary as energy suppliers are unable to supply their customers with electricity for less than they have paid for it.
Tips to survive the energy price increase
Make your home energy-efficient
Making your home more energy efficient is one of the best ways to reduce your energy bills. Getting an updated Energy Performance Certificate (EPC) will help you identify energy-saving improvements and save money on your utility costs.
Your home will be given an energy rating from A-G (with A being the most efficient and G being the least), along with recommendations to improve your energy efficiency.
Here are some effective ways to boost your home’s energy efficiency rating:
- Installing a smart thermostat – this could reduce your heating costs by up to 31% according to uswitch.com.
- Upgrade to double or triple glazing.
- Replace your existing heating system with a more energy-efficient system.
- Add extra insulation to your roof, wall cavities and flooring.
Budget for the increase
The majority of homeowners in the UK are going to be affected by the price cap increase coming into effect in April. One of the best ways to prepare for the increase is by budgeting for it and saving in advance.
Putting more money aside to cover energy costs can be difficult, especially if you’re already struggling to afford your utility bills. The good news is, there are dozens of ways to save more money each month. For instance, you could cancel unused subscriptions or stop paying for takeout coffees.
Switch to a better deal
Switching to a new provider could help you secure a better deal and save you money on energy. However, you could end up paying more and it might be better to stick with your current provider amid the rising energy costs.
That said, there is no harm in shopping around and comparing prices, but make sure you weigh up the options carefully.
Reduce your energy usage
Reducing the amount of energy you use is another simple way to reduce your energy costs. Try to be mindful of how much energy you use and take steps to be more eco-friendly.
Here are 7 easy ways to reduce your energy usage at home:
- Take advantage of natural light and only turn on artificial lights when necessary.
- Switch lights and all electronic appliances off when you leave a room.
- Unplug appliances from the wall as they can drain energy if left on standby – known as ‘vampire energy’.
- Only run your washing machine and dishwasher on a full load.
- Turn the tap off when you’re brushing your teeth or shaving.
- Wear extra layers of clothing when it gets cold instead of turning your heating up.
- Take shorter showers instead of baths.
Energy prices have soared as a result of a record increase in global wholesale gas and electricity prices. Many homeowners were concerned to hear Ofgem’s recent announcement that there will be a further increase to the energy price cap in April 2022.
There is little you can do to avoid paying more for energy, but you can take steps to reduce your energy usage and keep your utility bills under control. These tips will help you stay on top of your energy costs and survive the energy price increase in 2022.