How To Save Money In The Energy Crisis
The UK is, undeniably, in the middle of an energy crisis. The talk and the planned rise to the cost of fuel has affected everyone across the country. Ofgem, the energy regulator, has capped the rise but if you continue to use more fuel than normal you will still see a higher increase in your bills. This is because the 54% increase is per unit, it’s not a cap over your total bill.
Money Saving Expert, Martin Lewis, explains in more detail why you may find your bills are higher than the anticipated 50% increase here.
Many have found they are struggling to pay their bills, currently the fuel price rise will see them struggle more. Taking out a payday loan isn’t always the answer.
Why have energy prices risen?
Gas prices are at their highest, right across the world. This means that energy companies are paying more for their supply and that cost is also passed down to us, as consumers, leading to a crisis. The UK gas reserves have been at an all-time low. If supply is low and demand is higher, this means an increase in cost.
The Russian invasion of Ukraine has also had a negative ripple effect. Many other European countries are reducing their reliance on Russian supplies. In the past, the UK has bought extra gas from other European countries, but they too are struggling with lower than usual reserves, and are in no position to trade. This means, (you’ve got it), that prices increase.
Added to the already perfect storm, the UK has seen a colder winter in 2020/2021, including less wind and sun over the past couple of years. Therefore our renewable energy sources have seen a dip too.
85% of UK residents heat their homes with gas boilers, far higher than any other European country, so our supplies are in even more demand. Many UK energy suppliers have folded over the last few months, leaving less competitive pricing for consumers and making the crisis worse.
Unless you are on a fixed energy contract, you will have undoubtedly seen, or will see, a hike in your bills. Ofgem, the UK’s energy regulator has capped the soaring costs at 54% (per unit) and is due to issue another review in October 2022.
BREAKDOWN OF A DUAL FUEL BILL
What can I do to save money?
In the UK, we see grocery prices rising, inflation at a 30 year high, astronomical petrol prices, and National Insurance contributions increasing from April 2022. Rail travel, broadband costs and mortgage payments are all rising too. It all feels rather bleak. And now the Government has said we are entering into another recession.
Money-saving experts advise against switching suppliers because none can offer any better deals currently. On the other hand, if you are on a fixed-price contract, rather than the standard variable ones, you won’t see the energy price hikes quite so dramatically.
However, do remember that any energy increases are also dependent on the amount of gas and electricity that you use. This energy crisis price cap is per unit of fuel, not a cap on your overall bill so if you use more fuel, you will pay more. Therefore, each tweak you can make to what you use will see you paying a little less.
However, there are many things you can do to try and keep costs lower around the home.
Thermostats and radiators
- Lowering your thermostat by even just one degree can save you approximately £65 a year. The average adult can cope with 18 – 21 degrees Celcius, maybe a little higher for the very young and elderly. You could save up to £65 per year.
- If you’re feeling a little chilly, put on a jumper and thick socks before heating the whole house – that may be all you need.
- Use the thermostats on your radiators, if you have them. Some rooms you may want cooler, or consider not heating them at all if you aren’t using them for hours at a time.
- Look at having a smart thermostat, such as Hive or Nest. You can control your central heating, and more, from your smartphone. Set your heating on half an hour before you arrive home. Doing this means it’s already warm for you and you don’t have to wait for it to warm up before you can begin to feel comfortable.
- Ensure that your radiators are bled. If you notice they don’t get hot or have cool pockets, this could be trapped air. Bleeding your radiators regularly prevents this and allows the hot water to travel more efficiently.
- Turn the hot water and radiator temperature down on your boiler if you have the option. There’s no point having boiling hot water if you have to add cold water to cool it; it just wastes more energy and costs more in the long run.
Appliances
- Turn any appliances and devices off at the switch. Although modern appliances don’t drain energy as older models do, they still use some power if you leave them on standby.
- Aim to decrease your time spent in the shower, even by a minute each time. This saves heating the water for as long and saves water – a bonus if you also use a water meter.
- Try to wash laundry less often, but fill the machine each time. Where possible, use a cooler wash. Having fewer laundry cycles will undoubtedly save money over the year. The same can apply to your dishwasher.
- Your washing machine or dishwasher may have eco settings. These settings slow the speed at which they heat water, meaning you can save money there. The eco cycle will probably take longer but is more cost-effective.
- Invest in a slow cooker, one of the most energy-efficient appliances you can have in your kitchen. You can have a meal ready as soon as you get home from work, and it saves preheating the oven and cooking in it. Your microwave can also be friendlier on the purse strings and is also much quicker.
- When you make a hot drink, use and boil only the water you need. Fill the kettle using water in the cup or mug you use to avoid overfilling.
Other tips
- Owning a smart meter in the crisis won’t cut your bills on its own, but it will help you see where you spend the most money on energy, allowing you to improve usage where you can.
- Switch older light bulbs for newer LED bulbs which are more energy-efficient and last much longer. Smart bulbs allow you to control them remotely meaning you don’t need to use unnecessary lighting.
- Identify any draughts you may have, such as around windows and doors. If your interior doors feel draughty, use a draught excluder. Block any holes that you may find. Closing your curtains at night will help keep the heat in, as will a door curtain too if needed.
Where can I get more help?
The Government has initiated some ways to help, but unfortunately, there is no magic wand to drastically change the rising costs.
Rishi Sunak, Chancellor of the Exchequer, has said –
“Right now, I know the number one issue on people’s minds is the rising cost of living.
That’s why the Government is stepping in with direct support that will help around 28 million households with their rising energy costs over the next year.
We stood behind British people and businesses throughout the pandemic and it’s right that we continue to do that as our economy recovers in the months ahead.”
The Energy Bills Rebate
The Government is providing £9.1 billion of financial aid to help struggling households. From October 2022, each domestic electricity home will receive a £200 credit on their bills. This will be repaid in equal £40 instalments over the next five years, beginning in 2023. The Government hopes the energy prices will begin to decrease by this time.
The £200 aid is not a loan, there is no interest added that you need to repay and will not affect your credit report. If you have a prepayment meter, you will not miss out. You will receive vouchers to secure what is due.
Each household in council tax bands A through to D will also receive a £150 rebate. This will be provided by your local authority from April 2022, and will not be repaid by the eligible household. This one-off payment should help over 28 million individuals and families across the country.
The £150 rebate should be paid into your account in April if you pay by direct debit. If you pay by another method, your local authority will contact you to arrange a way to pay you the rebate. This is a payment to you in a lump sum, not a discount on your council tax bills.
The Government has produced a factsheet with all the Energy Bills Rebate details, which you can view here.
The energy prices and crisis show no sign of decreasing just yet, and experts believe that by October 2022, at the next 6 month review, we will see another increase in the price caps.
All things considered, if you find you are struggling, there are organisations that may be able to help.
Here at Pixie, we may be able to help find you an emergency £300 loan, for example. A payday loan could help you with a quarterly bill.
Firstly, speak with your energy provider to inform them that you are having problems. Ofgem has a comprehensive guide on how to begin getting any help you may need. Citizens Advice has a wealth of information available if you aren’t sure where to start or need any other advice.
