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What Does the Energy Price Guarantee Extension Mean for Your Bills?
Back in October 2022, Wiser discussed the government’s introduction of the energy price cap. This measure helped combat the cost of living crisis and rising energy costs brought on by war, climate, and a multitude of other factors. The cost of heating a home as well as electricity prices have been increasing and it was important to keep bills from rising out of control during times of hardship.
The government has recently announced it will extend the energy price guarantee by three months1. Now that we’re exiting Winter into the warmer months, people will generally be using less energy to heat their homes however this was a welcome affirmation. Read further to see what it means for your energy bills.
What was the energy price guarantee?
The energy price guarantee was a scheme put in place by the government to cap typical yearly energy bills to £2,500. It replaced the previous energy cap as the maximum amount energy suppliers could charge homes for their electricity and gas.
The key here is that the cap only limits the amount that can be charged per unit of energy. A household using over the yearly average thresholds of gas and electricity would be charged more with the size and style of the property also likely to affect the overall cost. Read our previous Energy Price Cap explainer for more information.
What has changed to the energy price guarantee?
When announced, the original energy price cap scheme was set to last 6 months, ending in April 2023 and the cap rising by 20% to £3000 however, the guarantee has been extended to include the months of April, May and June.
The scheduled 20% rise of the price cap is now coming into effect in July 20232.
How will the energy price guarantee affect my bills?
Household energy bills are likely to fluctuate even with the extension of the Energy price Guarantee as there are many other factors still at play. While the added three months of energy price is a welcome relief other measures such as the Winter energy support (around £66 a month to lower bills2) are ending.
Another factor is that as we’re arriving at Spring, the need to use household energy for heating the home will be less and less. Of course, this varies on the location and occupants, but warmer weather will mean less use of radiators and other heating appliances.
While it depends on your individual household usage, it can be said that average energy bills will see a drop in the next three months. Beyond July, we can expect further fluctuations in energy bills if the government continues with the price cap rise. During the hottest months of the year, heating won’t be an issue. If a repeat of last year’s heatwave is seen, the bills could be pushed onto cooling devices instead.
Stakeholders at every level will need to reassess their strategy come Autumn/Winter when energy usage rises once again. There will be the question asked whether another price cap will be required once again.
How can I reduce my energy bills further?
There are several methods to help bring down the cost of your energy bills. Firstly, one of the most straightforward methods is to reduce your energy consumption. There are simple but effective ways to use less energy including operating devices on Eco Mode, scheduling appliances to turn off using Smart Plugs, or simply lowering the temperature on your thermostat (especially as the weather gets warmer).
Secondly, managing your home energy use with smart heating continues to be one of the most effective ways to lower your bills. Wiser has demonstrated how to save up to £575 a year by using our automated heating system.
Get in touch and find the right system for you here.
1-https://www.gov.uk/government/news/energy-bills-support-extended-for-an-...
2-https://www.moneysavingexpert.com/news/2023/03/energy-price-guarantee-go...