Everything we know about the energy market is almost irrelevant today, with the unpredictable world of gas and electricity having a dramatic impact on our monthly bills. In this guide, we bust six current – and most common – energy myths and offer advice to those struggling to understand the current energy situation.
- The energy price cap means my bill will never be a penny more
It’s easy to be misled by the language used and many households believe the word ‘cap’ means their annual bill will never be more than this figure.
Sadly, this isn’t true. The cap simply tells energy suppliers the maximum amount they can charge consumers for a single unit of energy. The figures published show what an annual bill may look like, based on an average household on a dual fuel deal paid by monthly direct debit. Based on the current cap, an average annual energy bill is forecast at £1,971. As of 1st October 2022, the average annual energy bill will be £3,549.
Note the cap uses an ‘average household’ for illustration purposes. People will pay for all the energy they use and there is no limit to how expensive a bill can be. The bills of a heavy gas and electricity user will be more expensive than the cap figure: it’s a simple case of ‘use more, pay more’.
- I’m on a fixed deal, so I won’t be affected by cap rises
Households on a fixed deal may feel they’re in the best position possible and this is true until their fixed period ends. Just like fixed-rate mortgages, however, the account will automatically transfer to the supplier’s standard variable tariff (SVT) when the fixed term is over. It is the SVT that is subject to rising energy price caps and a household’s bills will invariably increase as soon as the fixed term expires.
- I’ll simply take out another fixed energy deal
The energy market has performed a complete U-turn and for the first time in living memory, a supplier’s SVT is most likely to be cheaper than any of the fixed deals currently available.
Many of today’s fixed deals are offered to existing customers only or they come with caveats, such as very high early exit charges or a mandatory requirement to take out other products within the company’s business to qualify. If you’re still set on a fixed deal, you’ll need to weigh up whether a supplier’s SVT will be cheaper than the fixed price by the time the energy price cap has finished rising – an aspect even the experts are struggling with.
- I’m in control of my direct debit
Households on an energy supplier’s SVT who pay by direct debit should keep a keen eye on their bank statements. Suppliers have the right to increase the amount taken by direct debit, without consultation, in line with the energy cap increases. Any direct debit rises should, however, reflect a household’s energy usage. An overinflated direct debit can be challenged, especially by those who can prove their average usage with meter readings.
- Meter readings aren’t worth the hassle
Given that we are paying more for what we use, supplying regular meter readings is crucial to ensure you’re not overcharged. Suppliers estimate bills on past usage, so if you’re on a new energy-saving drive, your supplier needs to know about your reduction in usage. A smart meter will automatically send readings to your supplier – as frequently as every 30 minutes – but you can also submit manual readings online and over the phone so your bills are accurate.
- The best thing is to get my account credit refunded
While in the past it was sensible to request a refund of needlessly high account credit that may have built up over summer months, it is now advantageous to keep any overpayments in your fuel account to provide a buffer against future energy price rises.
With every unit of energy costing more for suppliers to buy, the best way to reduce your bills is to use less gas and electricity. Which? has a guide to practical ways of reducing your energy bill and we can help save you money with available properties that have high EPC ratings and energy-savings measures. Contact our team for moving advice.