Singapore markets close in 3 hours 11 minutes
  • Straits Times Index

    3,227.33
    -17.22 (-0.53%)
     
  • Nikkei

    28,126.39
    -156.64 (-0.55%)
     
  • Hang Seng

    17,149.21
    -424.37 (-2.41%)
     
  • FTSE 100

    7,486.67
    +20.07 (+0.27%)
     
  • BTC-USD

    16,181.87
    -377.17 (-2.28%)
     
  • CMC Crypto 200

    379.31
    -3.34 (-0.87%)
     
  • S&P 500

    4,026.12
    -1.14 (-0.03%)
     
  • Dow

    34,347.03
    +152.93 (+0.45%)
     
  • Nasdaq

    11,226.36
    -58.94 (-0.52%)
     
  • Gold

    1,749.30
    -4.70 (-0.27%)
     
  • Crude Oil

    73.99
    -2.29 (-3.00%)
     
  • 10-Yr Bond

    3.6910
    0.0000 (0.00%)
     
  • FTSE Bursa Malaysia

    1,486.54
    0.00 (0.00%)
     
  • Jakarta Composite Index

    7,037.26
    -15.89 (-0.23%)
     
  • PSE Index

    6,663.05
    +56.11 (+0.85%)
     

Energy bills rise: Five questions that need to be answered

Essential household costs have already risen by an average of £145.50 per month since the start of the year
Essential household costs have already risen by an average of £145.50 per month since the start of the year

It’s happened. We’ve been waiting in the brace position for the coming rise in energy bills and on October 1 it arrived, like an unwelcome guest who we hoped would spring a last-minute cancellation on us. Consumers are set to feel the pinch, despite the Government’s energy support scheme that provides a £400 discount on bills to eligible households this winter.

A number of questions arise from this impending consumer crisis, which follows KPMG research this week suggesting essential household costs have already risen by an average of £145.50 per month since the start of the year. Here are some of the answers.

1. Should I cancel the direct debit for my energy bills?

You absolutely shouldn’t cancel your direct debit, says Josh Jackman of The Eco Experts. “If you’re thinking of cancelling these recurring payments and instead just paying for the energy you use each month, don’t,” he warns. “You’ll lose out on the small discount you get on each bill for paying by direct debit and, on top of that, you may also have to pay a few pounds extra every month as an ‘administration fee’.”

A direct debit also makes it easier to plan your spending across the year, he points out. “And because you use less energy in the hotter months, and less money is taken out of your account as a result, it protects you against massive bill increases in the winter.”

MoneySuperMarket likewise advises that if you can, you should pay by monthly direct debit rather than quarterly payments by cash or cheque as it is cheaper and will help spread the cost.

You should make sure you take a meter reading in the next few days, MoneySavingExpert has advised, to make it clear what you’ve used before and after the price rise.

2. Can I have my money back if I am in credit with my energy supplier?

It’s reasonable to wonder why they should get to hold on to cash that’s yours. Well, the answer is you can indeed request your money back at any time and your energy supplier is obliged to return it to you.

“Just call your supplier and tell them how much you want them to send back – it can be the full amount, or any other figure,” says Jackman.

And what if your monthly payment is based on last year’s energy usage but you are planning to use less now? Can you insist the estimate is lowered? “You’re completely within your rights to change the amount you pay your energy company each month, as long as you don’t go into the red,” he says. “Just get in touch with your supplier, and they can tell you how to change your regular payment.”

3. Should I decouple my gas and electricity providers?

Using separate suppliers for your gas and electricity can sometimes be cheaper than using a dual fuel tariff – but isn’t always. To find out the cheapest way to pay for your energy, you’ll need to research what costs the least in your area. If nothing can compete with the level set by the energy price guarantee (10.3p per kWh for gas and 34p per kWh for electricity), then leave it, advises Jackman.

Getting a smart meter is advisable as it means you’re only paying for the energy you use. Smart meters come with a real-time display that enables you to track your energy use and work out where you might be able to cut down.

If you don’t have a smart meter, you should submit a meter reading every month, a couple of days before your payment date, so that your bills are accurate. If you pay quarterly, you’ll only need to do this every three months.

4. Will we have a warm or a cold winter this year?

Forecasters can’t answer this one with any certainty yet, but the Met Office can inform us of the probability of warm, cold or average temperatures for the months ahead. In its three-month outlook covering October to December, the national weather service says there’s a 10 per cent chance of the season being cold, a 70 per cent chance it will be near-average and a 20 per cent chance it will be mild.

This follows last year’s balmy autumn, the third warmest on record, with an average mean temperature of 10.8C.

5. Will people genuinely use less energy this winter?

Yes, they will. Unless you’ve been living on the moon this year, you’ll know there’s an energy crisis and many people will be consciously trying to cut their energy use as a result. They’ll do this for different reasons, says Jackman. “Some will use less energy because they’re scared of how high their energy bills will be, and some will feel a sense of responsibility to save the limited amount of energy we have in the UK. But either way, people will do everything they can to cut their energy usage.”

For millions it will be a choice between cutting back on energy use and falling into fuel poverty. And for many, both will happen, as this winter energy bills are set to cost double what they did two years ago – even with the Government’s interventions. As other prices rise too – food, fuel, mortgages – and as salaries fail to keep up with inflation, households are struggling to cope. The KPMG research found a third of consumers are dipping into savings to help pay their bills. On average, consumers who had savings at the start of 2022 have just 43 per cent remaining, while one in 10 have now spent all their savings on offsetting rising essential costs.

Separate research carried out by MoneySuperMarket in August found 15 per cent of us are borrowing from a payday lender to pay our energy bills, while 16 per cent have turned to family and friends to borrow money to meet the costs.