How To Save Money on Energy Bills & Why You May Want To Act Now
- Adam Shaw - TheMoneyDoctor.TV
- Feb 28
- 6 min read
Updated: Mar 9
Share prices have tumbled around the world as oil prices have surged past $100 a barrel.
G7 finance ministers will be meeting to discuss a possible release of petroleum from reserves co-ordinated by the International Energy Agency in order to try and bring some order to the markets and avoid what could turn into a global recession.
Wholesale gas prices doubled in the past week or so, a jump that could lead to a sharp rise in household bills when Ofgem comes to refresh its price cap.
Now might be the time to fix....
THE LONG AND THE SHORT OF IT:
The gas market has seen huge rises in the wholesale price of gas. Households are protected from it because of the government imposed price cap - which limits what energy companies can charge.
The price cap will bring down Standard Variable and Default Tariffs on April 1st. The price cap does NOT apply to Fixed Rate Tariffs.
What's more, if the gas market really doesn't calm down, it might be that energy companies stop offering fixed rate deals. So what you do depends on how much you are worried by the cost of gas.
Fixing now will mean you remove a lot of uncertainty from the price you pay. But it also means you won't benefit from the lower price cap which applies to. variable rates. It's a decision very mnuchbased on your personal circumstances.
Q: What is happening to prices?
The biggest change to price-capped rates since last summer, is about to hit the market. That’s because when the price cap will drop by 7% from 1 April. That means that homes using a typical, medium amount of gas and electricity will pay around £1,641 a year, or £137 a month.
You'll save around £117 per year on the Price Cap, but it could be much more if you move to a market leading rate or have a bigger than average energy bill, in which case the savings will be proportionately bigger.
New competitive rates may be emerging now, so keep an eye out for them.
Q: Does everyone benefit from the Price Cap?
The change will affect you if you are on a:
Standard variable tariff.
Tracker tariff.
It does not apply to fixed tariffs.
Q: What is the new rate structure?
The new average rates for variable tariffs, for those paying by direct debit, will be:
Electricity unit rate: 24.67p per kWh (currently an average 27.69p)
Electricity daily standing charge: 57.21p per day (currently an average of 54.75p)
Gas unit rate: 5.74p per kWh (currently an average 5.93p)
Gas daily standing charge: 29.09p per day (currently an average 35.09p).
If you have a prepayment meter, you pay the same standing charge as direct debit customers but slightly cheaper rates per energy unit (KWh)
Q: Why is the price cap falling?
The price of energy has been falling on the wholesale markets, so the energy regulator is insisting these savings to the energy companies get passed on to consumers.
But there is a more structural reason prices are also falling. That’s because the costs of two government schemes will be removed from all energy bills from 1st April.
The Chancellor announced in the Autumn Budget that they would cut the cost of living, including by taking an average of £150 off the costs of energy bills from April.
This will be done by ending funding for the Energy Company Obligation scheme, as well as removing 75% of costs for the Renewables Obligation scheme from people’s energy bills.
As a result, energy regulator Ofgem has now confirmed the energy price cap for April – which limits the amount customers on standard variable tariffs pay for each unit of gas and electricity – will fall by 7%.
Q: On a separate note – how do I get a benefit from these energy schemes that are being removed from our bills?
The ECO4 Scheme (Energy Company Obligation, phase 4) offers free grants for energy-saving measures like insulation, heating upgrades, and renewable energy installations like solar panels and heat pumps – helping you reduce carbon emissions, lower energy bills, and combat fuel poverty.
The scheme mainly targets households with low EPC rating of D, E, F or G. Its primary focus is on providing funding for energy-efficient home improvements to low-income households and those living in poorly insulated homes, under ECO4 eligibility. It is expected to meet Net Zero emissions criteria.
Are You Eligible for ECO4 Scheme?
Homeowners: The ECO4 Scheme is aimed at homeowners. Tenants can apply with landlord’s permission if they qualify. Landlords can encourage their tenants to apply (both parties need to agree).
Income and Benefits: If your household has low income, and you receive qualifying benefits, you are likely to get it (no benefits? we may be able to help through other grants).
Property Type and Condition: Prioritisation is given to households living in fuel poverty or with low Energy Performance Certificate EPC rating D and lower.
Q: So, if I am already on a Fixed Price Tariff, this doesn’t affect me – is that right?
You’d think that would be the case, but it isn’t.
While the Price Cap doesn't directly apply to you if you have signed up to a fixed energy tariff,
You’d still see a cut in your bill from 1st April. That’s because the government is removing the costs of some policies which were added to your bills in the past.
Q: Should I get a fixed energy deal?
Most people are actually on variable tariffs. These are the rates that change with the price cap.
But many people can save money by switching from a price-capped tariff to a fixed-term tariff. This varies and isn’t always true and isn’t true for al people – but now is definitely time to start looking at fixed tariffs.
Q: What are some of the best rates out there?
Compared with the new price-capped rates, the cheapest would still save more than £120 per year.
According to MSE “While past performance is no predictor of the future, as our infographic below shows, at every point over the last year, on average, you'd have been better off getting the cheapest 12 month fix than going on the Price Cap.”
Look out for deals as it might be that new fixed price deals are coming out - but the latest information I have would suggest the following are worth looking at:
Outfox Energy or Fuse Energy both of which have a dual fuel deal which is around 14% below the current price cap.
Be careful though because there are exit fees if you decide to get out of the deal before the fixed period is over.
As ever, they don't make it easy. For instance - there are two fixed price deals from Outfox and you need a calculator to work out which is better for you.
As of March 9th their Family Advantage Deal is
Electricity
Standing Charge: 44.83p
Unit charge: 25.47p
Gas
SC 52.11p
Unit 5.27p
(March 9th)
Their Fixed Dual Match Deal is:
Electricity
Standing Charge 44.83p
Unti 24.85p
Gas
Standing Charge: 29.60
Unit Charge: 5.91p
The standing charge for the plain fixed deal is going on for twice the charge on the family plan. The very small difference in the unit charge however can make the family plan much cheaper if you have a big gas bill. Unfortunately they don't have a system to check which is best for you - but you can calculate it based on your last bill's usage.
There is a big exit fee!
Octopus Energy has a fixed deal which has no exit fees.
There are also discounted rates and EV rates, especially for those charging electric vehicles, which are both worth looking out for.
REMEMBER: Everything may change come the new price cap in April
Q: Is the price the only reason to switch energy providers?
According to research carried out by Which? A lower price was the most significant reason for 45% of those who switched energy suppliers and actively chose their new firm.
But it's far from the only reason customers told us they switched. The good reputation of the supplier was most significant for a third of switchers. while at least one in 10 people told us that the following were significant reasons for them switching:
To get better customer service
Having the same supplier for both fuels
Recommendation from family, friends or colleagues
Recommendation by energy experts
Having been a customer of the supplier in the past
For a more sustainable or environmentally friendly supplier or tariff.
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