Rising energy bills: 12 things to know

Mar 31, 2022 11:52 AM

From tomorrow, 1 April, the cap on energy prices increases by 54% - the largest since it was introduced. This will affect anyone who is on a variable tariff. The changes are slightly different for people on prepayment meters – just 14% of the population, but more likely to be private renters.

The price rises are a result of increased global demand for gas towards the end of last year, which is pushing up costs of heating our homes and also the electricity that is generated in gas power plants.

The war in Ukraine started after the increased price cap was announced, so the even higher wholesale gas prices arising from the conflict are not yet reflected in the new cap. We're expecting a further increase of a similar magnitude on 1 October. 

Here are twelve things to know as a private renter.

  1. The average annual bill will be £1,971 - and industry experts predict this could hit £3,000 in October. For each of us individually, most of the cost depends on how much energy we use. More energy efficient homes require less gas or electricity to heat comfortably.
  2. Take meter readings today (31 March) and send them to your energy supplier. This will help you avoid paying April prices for energy you used in March. Money Saving Expert has more here.
  3. If you pay by direct debit, your energy supplier will already have told you how much you'll be paying. Many people have found that their monthly payments are going up by more than the 54% reported in February. If you have energy bills going back a year, you'll have a reasonable idea of how much energy you use and could calculate what you should be paying with the new prices. If you think you should be paying less per month than your energy supplier has calculated, ask your energy supplier to recalculate based on your past usage. The new charges are approximately 27p standing charge per day for gas and 7p per kilowatt-hour (kWh) of gas, and 45p per day for electricity and 28p per kWh of electricity. Before using any energy, merely having gas and electricity connections will cost you £262.80 over the course of the year – while standing charges are usually a small proportion of your bill, smaller homes don't use as much energy so get hit harder. According to Savills the average private rented home is 74 sqm and the average owner-occupied home is 105 sqm.
  4. If you pay council tax you should have received your bill from your council for the 2022-23 tax year - this does not account for the £150 rebate that people in homes with council tax band A-D get under the government's support package. This amounts to 20 million homes and 95% of rented properties. However, this won’t benefit households who don’t pay council tax, like students. Most councils will make the payment direct to the bill payer's bank account if they pay by direct debit.
  5. If you don’t pay council tax by direct debit, your council will confirm how the rebate will be paid, though you may like to register for direct debit. The flyer that came with my council tax bill added, “Please make sure that communication is from your local council before providing payment details.” In other words, watch out for scammers! 
  6. If you don't qualify for council tax support, contact your council, which has been given extra funding to provide support to vulnerable households.
  7. In October 2022 your energy company will give the bill payer £200 as a “cash discount”. It is not clear whether this will be taken off any direct debit payments in one go or if energy companies will simply reduce the monthly payment by a smaller amount. If it is spread out this could cause problems for people who move home later in the year - which might affect around one in six private renters. We are expecting a government consultation to confirm the details. 
  8. From 2023-24 a £40 levy will be added to every household’s energy bills for five years (to pay back the £200). That means people who are currently in shared homes and move out on their own, or with partners, or start a family, will pay back the full £200 even if they only benefit from a fraction of that this year. Another way of thinking about it is people living in homes that haven’t been built by this October will have to pay the full £200 as well.
  9. Even if you qualify for the full £350, this is unlikely to cover the increase in energy prices. If you are expecting to struggle, check with your energy supplier if you are eligible for the Warm Homes Discount for low-income households, which is worth £150 this year. If you are not currently receiving Universal Credit, eligibility expanded recently, so it's worth checking if you qualify for it via Turn2Us.  
  10. If you pay council tax and/or energy bills as part of your rent, your landlord is likely to ask for a higher rent to reflect the new energy prices - even with the discount and rebate their costs are likely to go up. But don't simply accept anything they propose - check your rights to challenge a rent increase here. You can check how much your council tax is going up this year on your council's website, and while understanding what your household's energy costs are is difficult when your landlord pays the bills, it's worth being aware that the average household will pay an extra £29 per month from April, once the £350 support is taken into account. 
  11. If you pay bills yourself and your landlord asks you to pay a higher rent, check out our guide to negotiation here. Remember that because energy bills and other prices including food are going up, it is a very bad time for landlords to try raising the rent. If you move out to find somewhere cheaper, the landlord may struggle to find another tenant who is willing to pay the rent they want. 
  12. If you're planning to move house, be aware that all homes advertised for rent need an Energy Performance Certificate (EPC). Homes with energy efficiency ratings A, B or C are cheaper than average to heat, Ds are average and Es are more expensive than average. Homes rated F and G are illegal to let out. EPCs are more important than ever in working out how good a deal you would be getting with a property. Once you have the address of a property to view you can check its EPC rating here.