How to reduce your energy bill before the next direct debit deadline
The price cap on energy bills is set to rise by a further £1,000 in early October, according to a new prediction from Cornwall Insight. The latest data from energy analysts suggests a 51% increase from the current price cap of £1,971 to around £2,980.63 for the next period, which runs from October to December – previous estimates had set the next price cap at £2,800.
Millions of households across the country are seeing their budgets stretched to the max as they try to tackle the cost of living crisis. However, many may not know that they could reduce their next direct debit, especially if they have recently made energy savings in the house.
The information was revealed on Monday in a written response from Energy Minister MP Greg Hands to a question from Labor MP Dan Jarvis. And that could be a game-changer for many.
Mr Jarvis asked: ‘What steps is his department taking to support people whose pre-authorized energy bills have been significantly increased by their energy supplier without notice, forcing them into an unarranged overdraft ?”
Mr. Hands replied: “Providers must take all reasonable steps to ensure that direct debit payments from customers are based on the best information available.
“A supplier must explain the reasons for the changes made, with at least 10 days’ notice before the next payment.”
He added: “The customer can dispute a proposed increase and renegotiate the level of payment.”
This means that if you submit a meter reading at least 14 days before your next bill is due, when your provider contacts you to confirm your next direct debit – at least 10 days before the due date – you can contact them and ask ask them to review the amount they want to take, especially if it is higher than the previous month and you know your household has reduced overall usage.
While this won’t work for everyone, it’s a good way to start building the habit of regularly submitting meter readings to ensure your supplier has an accurate picture of your household’s consumption.
Ofgem announced this week that energy customers’ money must be protected by new financial measures to ensure suppliers can withstand future shocks in the market.
The energy regulator said suppliers will be able to “weather the ongoing storm” of challenges facing the industry, particularly in autumn and winter. The proposals include better protection for consumer credit balances if a business goes into administration, ensuring suppliers have enough money in difficult circumstances and allowing companies to have sufficient control over key assets.
Ofgem has also announced that there will be a tightening of the level of direct debits that suppliers can charge customers.
The energy regulator said the changes would reduce the risk of supplier bankruptcy and protect the credit balances of energy customers if they do.
A safety net ensures that customers are quickly transferred to a new supplier with their credit balances intact if a supplier goes bankrupt.
One of Cornwall Insight’s experts, predicting a £1,000 rise in energy bills this autumn, said the UK government had an opportunity to provide more support for bill payers.
Dr Craig Lowrey told BBC Breakfast on Tuesday: ‘We had the first household financial support in April, with the expectation of a £400 payment later in the year.
“Together these measures will dent the increases we expect, but obviously it won’t make up for it.
“There is therefore clearly the possibility of requesting further support from the UK government as long as these high prices continue, so we cannot rule out further measures.”
Dr Lowrey and his colleagues believe prices will remain above £2,600 until at least October next year.
Based on the latest data, they predict the cap will hit £3,003 in January 2023 before dropping to £2,758 in April and £2,686 in July.
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