Fixed energy bills to receive an automatic rebate

Most fixed rate households are likely to see an automatic energy reduction applied to bills from 1 October following the energy price guarantee announced earlier this month.

New Prime Minister Liz Truss has said all energy prices will be frozen until 2024, costing the average household £2,500 a year, to help families cope with the cost of living crisis , which is largely due to rising energy prices.

According to Truss, the price freeze – dubbed the energy price guarantee – will save a typical household around £1,000. Prior to its announcement, bills for typical households were expected to rise from £1,971 to £3,549 a year on October 1, when the price cap was due to come into effect.

The typical household energy bill, for those on standard variable tariffs, will now rise from an average of £1,971 to £2,500, an increase of 27%. However, remember – how much you actually pay will depend on what you use – if you use more, you’ll pay more.

But what happens to energy customers who have a flat rate and will they automatically get an energy discount? Here’s what we know now.

I am on a fixed energy tariff – will my bills go down?

If you’re one of the 4.2 million households in the UK on a flat rate, you’ll get an automatic discount applied to your rate.

You don’t have to do anything to benefit from the reduction, your energy supplier will automatically apply the reduction to your bill.

But, there are a few caveats.

  • If you are on a fixed tariff, it can be reduced by up to 17p/kWh for electricity and 4.2p/kWh for gas until you reach a ‘floor’ unit rate.
  • On average, the “floor” unit rate will be 10.3p/kwh for gas and 34p/kwh for electricity if you pay by direct debit.
  • This means most households should pay no more than 10.3p/kwh for gas and 34p/kwh for electricity – but there are a handful of households at higher fixed tariffs who could still pay more.

If you already have a fixed rate rate that is lower than the “floor” rate, you are already getting a good deal and can continue to enjoy it until your fixed rate ends.

If you are already on a standard variable rate, you don’t have to do anything; your invoice will be adjusted automatically on October 1st.

Ongoing charges will remain in line with levels set by energy regulator Ofgem for the October price cap at 46p per day for electricity and 28p per day for gas, for a typical dual-fuel customer paying by direct debit .

CAN I DROP MY FIXED ENERGY OFFER IF IT IS MORE THAN THE GUARANTEED ENERGY PRICE?

If you’ve recently had a repair done at a cost above the new £2500 energy price guarantee, there are a few things to consider.

  • If you have subscribed to an energy tariff in the last 14 days, you can leave without penalty.
  • If you have subscribed to an expensive solution, it is up to your company to let you go without penalty. However, according to Martin Lewis of Money Saving Expert: “British Gas, Ovo (SSE), Octopus, EDF, E.on, Shell – have agreed to my request that customers who end up on patches at a rate above the guaranteed price will be allowed to switch to that company’s price guarantee tariff, without early exit penalties, until at least November 15 (some beyond).

Energy companies are still working out the details and will write to the small number of people who are set at significantly higher tariffs.

EDF, for example, told The Money Edit that it had suspended all exit charges for anyone wishing to switch from a fixed tariff to a standard variable tariff.

“Customers, including those on flat rates, will have their prices automatically adjusted to reflect the government’s price guarantee and won’t have to do anything,” he said.

EDF said around 1% of its customers who have fixed in recent months could benefit from the switch to the standard variable tariff and that it will write to these customers.

“We recommend that customers wait to hear from us in the coming weeks, as the impacts of the price guarantee will vary depending on individual consumption. Some customers may benefit from maintaining their fixed rate, so customers should wait for the letter with the details of their consumption and their prices.

He added that anyone who chooses to leave EDF will still have to pay early termination compensation.

Exit fees will be suspended until November 21.

The Money Edit also understands that British Gas has written to its customers to let them switch to a standard variable tariff if they wish, without penalty.

Scottish Power said it would be in touch with customers by September 19 with details.

Octopus Energy, said it would be in contact with customers by October 1 and its customers should “keep quiet and wait to hear” as it is still working out the finer details.

Energy supplier E.On said its customers did not have to do anything as it would implement the program across all of its tariffs.

How will the energy price guarantee affect me if I use a prepayment meter?

BEIS said the energy price guarantee will be applied to the rate you pay for each unit of energy, so the money you put on the meter will last longer than it would have. this winter.

But the unit cost to prepayment meter customers is still higher than that of many other bill payers.

What help is there for those who are not connected to the electricity grid?

We are still awaiting details for those not under standard gas or electricity contract, such as those for park houses or heating networks. They will not benefit from the energy price guarantee, but the government has said they will receive “comparable” support. We’ll let you know as soon as we know more.

What other help is available for energy bills?

Each household will receive the £400 energy grant from October.

Energy providers also have emergency funds to help their customers in need.

You may also find our article on abusive increases in direct debits helpful. Find out how The Money Edit helped a reader reduce her direct debit after her energy company reduced it from £117 to £369.

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