But due to the energy price cap rise in October by £149, even our best efforts to cut down on how much we use on heating and hot water will make less of a dent in our bill totals than they would have done previously.
This change in the energy bills price cap - which is the maximum amount suppliers can charge customers for electricity and gas - has kept the pressure on all households already grappling with rising inflation and cost-of-living pressures.
In this blog post, we’ll look into what the energy bills cap is, delve into the implications of the price hike and explore some ways to lessen its impact before the really chilly weather arrives.
What is the energy price cap?
The energy bills price cap came into force on 1 January 2019 and was aimed at preventing millions of vulnerable people on variable tarifs from being ripped off.
Introduced by Ofgem (the Office of Gas and Electricity Markets), it sets a maximum limit on the price that suppliers can charge for each unit of energy and the standing charge. This cap applies to so-called ‘default tariffs’, including standard variable and prepayment tariffs.
But energy prices in the UK have been increasing since 2021, spiking in February 2022 when Russia invaded Ukraine. This led the government to introduce the Energy Price Guarantee (EPG) on 1 October 2022 to help reduce the impact of the energy crisis on consumers. The EPG set maximum prices for gas and electricity that were lower than the existing price cap.
Why did the energy price cap rise in October 2024?
Ofgem increased the energy price cap because of rising wholesale energy costs - that’s the amount energy businesses have to pay. The ongoing war in Ukraine has disrupted global energy supplies and driven up prices. Additionally, the cost of sourcing gas from other regions has also increased. This means the amount suppliers pay for energy has gone up, and unfortunately, that increase is being passed on to us, the consumers.
While it’s natural to worry about the energy price cap rise, especially if you feel like your household finances are already stretched, it’s important to remember that the price cap is still there to stop costs from spiralling out of control. Without it, households could be facing even steeper increases.
What is the average monthly energy bill in the UK?
As of June 2024, the average household energy bill in the UK was around £2,074 per year, or approximately £173 per month, based on typical usage for both gas and electricity. This is for a typical dual-fuel household, covering heating, hot water, and electricity use.
How will the October 2024 price cap rise affect the average UK energy bill?
The October 2024 energy price cap rise pushed average household bills higher. While exact figures depend on individual energy consumption and tariff types, OFGEM says that this means a 10% increase compared to the cap set between 1 July to 30 September 2024.
This rise means that typical households will see an increase in their monthly payments. For some families, the energy price cap rise will mean they need to make more smart spending swaps to find extra money to put towards their fuel bills.
How to save on bills amid the energy price cap rise
- Switch to a fixed tariff
If you’re on a standard variable tariff, consider switching to a fixed-rate plan to lock in your energy costs for a set period. Your energy supplier and their competitors should be clear about whether fixing will save you money based on your current tariff and supplier.
- Improve home insulation
Insulating your home can reduce the amount of energy needed for heating, lowering your bills.
- Use energy-efficient appliances
Invest in energy-efficient appliances and LED lighting to reduce consumption.
- Monitor energy use
Use smart metres to track your energy usage - it’ll help you to identify areas where you might be able to save.
5. Change energy providers
Now is the time to compare different fixed rate tariffs to see if you could save money by switching to a new energy provider.
How can HyperJar help manage the impact of the October energy price cap rise?
When money is tight, it pays to be organised. HyperJar uses the jam jar system of budgeting, so you can put your money into separate virtual pots for specific expenses. This is helpful for managing energy costs and coping with the energy price cap rise as you can:
- Create a jar for energy bills: Set up a dedicated jar for your energy bills and allocate a specific amount each month based on your expected use and the latest price cap rates. This will help you to see that you have enough set aside to cover your monthly energy payments - and highlight a shortfall so you know you need to take action
- Track spending: Regularly monitor how much you’re spending on energy versus your budgeted amount. If your bills are lower than expected, you can transfer the extra funds to other jars or savings or keep the money in there
- Share jars: If you share household expenses with family members or housemates, HyperJar allows you to budget for higher bills together. Simply set uup shared jars for communal expenses like energy bills, groceries, or rent. Everyone can contribute their share, making it easier to track and manage collective expenses.
- Set up scheduled payments: The app makes it simple to schedule payments into an Energy jar. This will help you to make sure that you are putting enough away for your bills each month.
- Use HyperJar Cashback Vouchers: You can’t get cashback on your fuel bills right now but it’s worth looking at how cashback can save you money on your other expenses that you can put towards those bigger bills. With HyperJar, you can buy ‘Cashback Vouchers’ (think digital gift cards that you buy for yourself, and that come with a nice bonus) to spend with hundreds of retailers and receive cashback instantly into your wallet. There’s no need to wait until you have a certain amount to cash out, meaning that you can start saving money to supplement your energy bill payments straight away. Perhaps start by paying for your weekly food shopping using this method and enjoy seeing the cashback notch up.
Following the October energy bills price cap increase, spending smart and saving is more important than ever. By using HyperJar to allocate funds, unmuddle your money and maximise rewards, you can better manage your finances and make your money go further.
If you’re one half of a couple and want to learn more about how to split other household bills you might want to check out this blog post.
If you want to save money on other life expenses, check out these blog posts:
How to save money on energy bills
How to save money on your cinema trip
How to save money on a family holiday
How to reduce the cost of cat or dog ownership
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