The Household Energy Issue and Crisis.

There is a great deal of concern about the cost of household energy in the near future.  The government has altered its decisions several times in the last few months, and I am hoping that my words are still correct as you read them, incidentally, I am writing this on the 10th of August.

First, there is some confusion about standing charges and energy charges.  A standing charge covers the costs your energy supplier incurs to get gas and electricity to you.  These costs include using and maintaining the energy networks, wires and pipes that carry gas and electricity across the country to your home.  A standing charge is like the line charge on your telephone, it is a fixed cost that you will pay regardless of how much you use your phone.

As far as Energy Charges are concerned, these are regulated by the Energy Price Cap.  This is a legal requirement that energy suppliers must comply with in an attempt by Ofgem, the energy regulator, to protect households against unfair rises in gas and electricity costs and being overcharged for their home gas and electricity.  The ‘cap,’ in theory, puts a limit in place on what suppliers can charge customers who are on either standard variable or default energy tariffs, and it is these tariffs that around 22 million of the UK remain on.  

Analysts now say that energy bills will hit £3,582 a year for the average household from October, this is up 81% from the current April price cap, which sits at £1,971.  However the energy Price Cap is expected to reach £4,200 in the coming January, so a typical household is predicted to pay the equivalent of £4,266 a year for the first three months to March 2023.  To put it simply, and I am writing this before the new PM is in place, every £100 you pay by direct debit now, will go up, perhaps by the time that you read this, to £181, and rise again in January to £215.  The fact is that on current trends we face, as inflation hits a 40-year high and in the words of Ofgem, “a very challenging winter.”

There is some help available.  Pensioners who receive Winter Fuel Payments will get an extra £300 as part of the cost-of-living package this is expected to be handed out in November and December.  Winter Fuel Payments are worth between £100 and £300 normally, depending on your circumstances, your age, who you live with and the benefits you get.  This £300 is on top of your Winter Fuel Payment.  Age UK says those who were born on or before September 25, 1956, should qualify for a Winter Fuel Payment this year.

Those who claim certain disability benefits will get an extra £150 from this September.  The benefits that will qualify you for this payment are Attendance Allowance, Constant Attendance Allowance, Disability Living Allowance for adults, Disability Living Allowance for children, Personal Independence Payment, Armed Forces Independence Payment, War Pension Mobility Supplement.  You must have received a payment, or later found to be eligible for one of these qualifying benefits on May 25, 2022, to get the £150 payment.

Around 29 million homes will receive a £400 discount on their energy bill from this October, spread out over six months.  You should get a discount worth £66 in October and November, rising to £67 each month from December through to March 2023.  This will be applied automatically to your electricity account and does not need to be paid back.  The credit should appear as if you'd made a payment to your energy bill.  Smart prepayment meter customers will also receive the discount automatically each month but will need to manually apply the discount to get the money off.  Prepayment customers will be given vouchers or messages in the first week of each month, issued via text, email or post.  Customers will then need to redeem these at their usual top-up point.  The £400 payment will apply directly to households, and all households are eligible for the full £400, regardless of income or size of the house.

A £650 cost of living payment is being awarded to around eight million households who claim means-tested benefits. These are payments where both income and savings are taken into account.  The £650 is being split into two parts, the first half, worth £326, should already be in the bank accounts of some eligible households.  This includes those who claim Universal Credit, income-related Employment Support Allowance, income-based Jobseeker’s Allowance, Income Support and Pension Credit.

My concern is that people's livelihoods and choices (quite literally heating or eating) and mental health depend on this issue being sorted, meanwhile, all we can do is reduce our energy consumption without endangering our health.

Rev Peter