How much will my energy bills cost in 2022? Use our calculator to find out

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  • How much will my energy bills cost is a question that worries millions of people in the wake of the energy crisis and soaring gas prices.

    Gas prices are now around four times higher than they were in 2020. The rise in prices was caused by a variety of global factors, including increased demand after the lockdown and export issues from Russia, which will undoubtedly get worse since the start of the war with Ukraine. As a result, the energy price cap has been raised and energy prices are expected to soar. It is estimated that 22 million homes will be affected.

    The cap – due to come into force in April 2022 – is set by energy regulator Ofgem. It aims to limit the amount that energy suppliers can charge their customers per kWh of gas and electricity. On 3 February 2022 the new cap of £1,971 was announced, an increase of nearly £700 for those on a standard default rate paying by direct debit. For prepaid customers, the cap will increase to £2,017. Ofgem reviews the cap twice a year, with changes taking effect in April and October. The cap takes into account underlying energy market costs and can therefore increase or decrease.

    Jonathan Brearley, chief executive of Ofgem, said: “We know this rise will be extremely worrying for many people, especially those struggling to make ends meet. Ofgem is working to stabilize the market and, in the longer term, to diversify our energy sources, which will help protect customers against similar price shocks in the future.

    The cap will not apply to you if you are on a flat rate, where you pay the same amount for your energy each month. But when your fixed rate ends (usually after 12-18 months), you’re likely to switch to a standard variable rate. This means that the price you pay may go up or down.

    The cap protects those on a standard variable rate by limiting the amount your provider can charge. However, you should keep in mind that if your energy consumption is high, you could end up paying more than the cap.

    If you are unsure of your rate, you can check your latest energy bill or speak to your supplier.

    How much will my energy bills cost in 2022?

    For more information on the potential increase in your energy bills as a result of the new price cap, use our handy calculator. You may have already heard from your supplier about the evolution of your bill from April 1st. If not, our calculator will give you an estimate of the impact of the price cap increase on your bills.

    You can also use our calculator to see how a second price hike in October could affect your bills. Cornwall Insight analysts predict the October increase could be in the order of 47%.

    Simply enter the amount you typically pay per month on your current rate. Our tool will estimate how your bills might be affected for the rest of the year.

    Normally, the best way to combat rising energy prices is to switch to a cheaper offer. But amid the energy crisis, many providers have raised the cost of their tariffs. That means there aren’t really any cheap deals to be found.

    Low-income households are also the most likely to be hardest hit by the increase.

    Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, says: “People on low incomes are being forced to spend a greater proportion of their income on essentials, so price rises have a huge impact. In the year to April 2020, the lowest 10% of households used 7% of their weekly energy expenditure. For the top 10%, it was just 2% of their spending. That means low-income people have a huge battle to cut costs at times like this.

    The government has also announced relief measures including a council tax refund and £200 help with the energy bill. This £200 will have to be repaid over a five-year period from 2023.

    How can I reduce the cost of my energy bills?

    There are simple and inexpensive ways to reduce your energy consumption. You might even consider some options that may involve short-term cost now with the promise of long-term savings in the future.

    Energy saving measures include:

    • Lower the thermostat one degree
    • Wash clothes at a cooler temperature
    • Turn off any devices left in sleep mode
    • Replace old incandescent bulbs with energy efficient alternatives
    • Proofing
    • Choose the most energy-efficient models possible when purchasing new appliances.

    You may also be eligible for a government grant for upgrades to make your home more energy efficient.

    What is the average energy bill in the UK?

    Your energy bill will depend on several factors. These include your location, the rate you are charged, the number of people in your household, and the energy efficiency of your home. But understanding the average gas and electricity bills in the UK can be a useful reference.

    Average electricity bill

    According to Ofgem, an average household of 2.4 uses 2,900kWh of electricity each year, at an average cost of 18.9p/kWh.

    This equates to an average electricity bill of £548.10 per year or £45.68 per month.

    But after the cap is raised, from April 1 it will be 20p/kWh, which works out to £580 a year or £48.33 a month.

    Average Gas Bill

    Looking at the average gas bill, the average UK household uses 12,000kWh of gas each year at a cost of 3.9p/kWh.

    This equates to an average of £468 per year or £39 per month.

    From 1 April this will increase to 7p/kWh, £840 per year or £70 per month.

    Why have energy prices increased?

    There are many reasons why energy prices have skyrocketed. At the heart is the UK’s increased reliance on imported energy and lack of energy storage facilities. There has been a cut in gas supplies from Russia, which has led to further pressure from across Europe on alternative options. This increased demand and limited supply is a key factor pushing energy prices higher. We are also not yet able to rely on renewable energy as an alternative option.

    Switching from fossil fuels to more renewable energy sources is a priority, however. The UK has reduced the exploitation of its North Sea reserves for on-demand gas, avoiding the need for expensive storage facilities. But, renewable energy is not currently being produced in the quantities needed to eliminate dependence on fossil fuels.

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    Eleanor C. William