The energy price cap is set to increase in October, affecting households across England, Scotland, and Wales. Under this new cap, a typical dual-fuel household paying by direct debit will face an annual bill of £1,717. Simultaneously, new changes to winter fuel payments will come into effect, leaving many pensioners without the financial aid they have relied on during the colder months.
What Are Winter Fuel Payments and Who Will Qualify?
Previously, all pensioners were eligible for winter fuel payments, a vital financial support ranging from £100 to £300, depending on age and living arrangements. In the winter of 2022-23, over 11.3 million pensioners received these payments. However, from winter 2024, the government plans to limit these payments to pensioners who qualify for pension credit or other means-tested benefits. This policy change, announced by Chancellor Rachel Reeves, will apply to England and Wales.
It is estimated that around 850,000 pensioners who qualify for pension credit do not claim it. To be eligible, individuals must be above the state pension age and have an income below £218.15 per week (or less than £332.95 for couples). Savings, as well as circumstances such as disability, caring responsibilities, and housing costs, are also considered in the eligibility criteria.
As of now, Scotland and Northern Ireland are yet to decide whether to adopt this new policy on winter fuel payments.
What Is the Energy Price Cap?
The energy price cap is a government-set limit on the cost of each unit of energy (gas and electricity) for households on a standard tariff. It is regulated by Ofgem and reviewed every three months. The cap affects 28 million homes in England, Wales, and Scotland.
From 1 October to 31 December, gas prices will be capped at 6.24p per kilowatt hour (kWh) and electricity at 24.50p per kWh. This results in a typical dual-fuel household paying £1,717 annually. For those who pay their bills quarterly by cash or cheque, the annual cost will be higher, at £1,829.
Despite this increase, forecasters such as Cornwall Insight suggest that energy prices could rise again in January due to climbing wholesale costs.
Prepayment Customers and Standing Charges
Households using prepayment meters, which are often installed when customers struggle with bills, will see a typical annual bill of £1,669 from October, slightly less than those on direct debit. There are approximately 4 million households using prepayment meters, many of which were installed in response to the recent energy crisis.
Standing charges, which cover the fixed costs of maintaining energy supply to homes, remain unchanged. These daily charges typically stand at 60p for electricity and 31p for gas, although the amounts can vary by region. Campaigners argue that these charges disproportionately affect low-energy users, and Ofgem is currently consulting on potential reforms to the standing charge system.
Additional Support for Energy Bills
The government has extended the £500m Household Support Fund until March 2025, providing assistance to vulnerable customers. The Warm Home Discount scheme continues to offer financial relief to eligible pensioners and low-income households. Meanwhile, energy suppliers are obligated to offer repayment plans and payment holidays to those struggling with their bills.
With these changes on the horizon, it is essential to review available support and stay informed about energy policies to manage costs effectively.
