How to cope with Agony April as energy prices soar

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It’s already been called Agony April with three price increases set to hit millions of householders then – National Insurance going up and bank interest rates rising so leading to higher mortgages plus energy bills soaring.

Most people cannot do much about the first two, but they can do something about the third increase, said Midlands energy expert Ron Fox.

“The energy problem is that there is an ongoing shortage in the world, plus an increase in demand as countries begin to recover from the pandemic,” said Ron of Noreus Ltd. 

“Also, the rise in gas prices forced 28 energy companies to go out of business last year and the situation was made worse by renewable sources, such as wind and solar, producing less power during the winter months when many consumers turned their heating up.”

This has led to the government regulator, Ofgem, announcing that the cap, the maximum amount suppliers can charge for their energy, will go up from April 1, 2022, for more than 22 million customers.

The energy price cap was introduced in January 2019 to protect those who were paying too much for their gas and electricity and those who didn’t switch suppliers to get the cheapest deals.

The cap, which is reviewed twice a year in April and October, will see those on default tariffs paying by direct debit an increase of £693 from £1,277 to £1,971 per year in six weeks’ time. Pre-payment customers will see their payments going up by £708 a year from £1,309 to £2,017. 

It is predicted that the number of households, who won’t be able to afford to heat their homes to the temperature needed to keep them warm and healthy, will rise from the 4 million to 6 million.

For those who need help paying their energy bills this winter, Ron, of the University of Keele Science and Innovation Park in North Staffordshire, said they should first go and talk to the Citizens Advice, an independent organisation, specialising in help for those with debt and other problems.

The government says it is supporting householders cope with the energy increases in two ways. 

Firstly, households in England, which are in the council tax bands A-D will receive a £150 rebate from local authorities in April and it won’t need to be repaid. This will benefit around 80 per cent of all homes in England.

Secondly, the Energy Bills Rebate will give around 28 million domestic electricity households a £200 discount in October paid for by the government. But the discount will then be recovered from people’s bills in five £40 instalments over the next five years beginning in 2023 when gas prices are expected to come down. 

Campaigners also want the VAT on energy bills cut to help the average household save around another £90 a year and a windfall tax on the big energy companies whose profits have soared, but so far, the government is resisting those moves.

“In next week’s column,” said Ron, “I will be giving specific examples on how people can do more to reduce their bills.”

For those wanting more advice in the meantime call Ron on 01782 756995. 

Caption: Trying to keep warm – soaring energy prices will mean that the number of households who won’t be able to afford to heat their homes to the temperature needed is predicted to rise from 4 million to 6 million.

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