Although the weather might be warm now, winter is approaching, and with it, higher energy bills. To ensure you don’t get caught off guard, Money Saving Expert (MSE) is encouraging everyone to plan ahead. They’ve dubbed this week “meter reading week” for those who pay for energy via monthly direct debit. On July 1st, a new lower energy price cap kicks in, affecting 85% of UK homes. If you don’t have a smart meter, your supplier will estimate your usage between meter readings. Waiting too long to submit a reading after the price drop could lead to being charged at the higher rate for usage you haven’t actually used. Therefore, MSE recommends taking a meter reading on Monday (give or take a day or two) to ensure your bill is accurate.
For those using a non-smart prepay meter, the best strategy is to run down your credit until the price change or add just enough to get by until then. Top up your meter on or shortly after July 1st to benefit from the lower rates. The exact amount you’ll save depends on your usage, location, and payment method. However, based on direct debit averages in England, Wales, and Scotland, the electricity unit rate will decrease from 22.5p per kWh to 22.4p per kWh, while the gas rate drops from 6p per kWh to 5.5p per kWh. This might not seem like much, but it represents a 7% cut to the average household’s energy bill, a welcome saving during the cost of living crisis. Considering the typical energy use of a medium-sized home (two or three bedrooms with two or three residents), this translates to an average annual saving of £60. For a high energy use home (more than four bedrooms and between four and five residents), the annual saving can reach almost £90.
While this lower cap is in effect from July to September, it’s predicted to rise in October. To prepare, consider building up some credit on your account or exploring fixed deals. A fixed deal sets the rate you pay for a predetermined period, with the cheapest current fixed deal being 7% lower than the current cap. By securing a fixed deal now, you could potentially avoid the anticipated October price hike altogether.
Just like the old story of the squirrel and the grasshopper, being prudent now will pay off during the colder months. By taking proactive steps, you can save money on your energy bills and navigate the winter months with greater financial peace of mind.
