Ofgem announce a £3,549 energy price cap – what does it mean for homeowners?

Consumers are bracing for an 80% increase in their gas and electricity bills as Ofgem (the Office of Gas and Electricity Markets) announce their October price cap today. The average household will need to find £3,549 to pay their annual energy bills – a sharp leap from the previous cap of £1,971.

Most of us have probably looked into ways to save on our energy bills over the past year, but it’s now more important than ever to look at how energy efficient your home is.

What is the Ofgem price cap?

As the energy regulator whose responsibility lies in protecting consumers and supporting the decarbonisation of the UK’s energy industry, it’s Ofgem’s role to ensure we get a fair deal on our energy prices. They regularly review the underlying costs to supply energy in England, Wales and Scotland on a quarterly basis to set limits on what you pay per kilowatt hour (kWh) for gas and electricity.

This means that any changes within the energy industry are soon reflected in consumer bills – so in theory, everyone gets a fair price. Ofgem previously set their price cap every six months, but this has been increased to every three months going forward – to try to stabilise prices and ensure any reductions are passed on to consumers quicker.

From 1 October 2022, households on standard tariffs will see an increase in their electricity costs from 28p/kWh to 52p/kWh, and from 7p/kWh to 15p/kWh for the cost of gas.

Why is the cost of energy so high?

There are several factors impacting the cost of energy in the UK, and globally. One reason that prices are skyrocketing is because natural gas is in short supply. Demand for gas during the COVID-19 pandemic over the past two years has depleted reserves in many countries. Russia's war with Ukraine has also put pressure on the wholesale price of gas – as Russia is a major producer and many European countries are dependent on it. Change is happening in the UK to reduce our reliance on Russian oil and gas and to become more self-sufficient in our energy production, but these changes won’t provide immediate relief on energy bills.

Will the price come down again? It’s believed so, but in the longer term, and with an eye on a move to net zero carbon in UK homes by 2050, it’s time to think about what we can do to make sure we’re set for an energy efficient future.

How to reduce your energy bills

Implementing some simple steps around the home can add up to a saving on your energy bills – switching off lights and plug sockets, not heating rooms that aren’t in use and tuning down your thermostat by one or two degrees. These all play a significant part in saving energy in the home. But it’s also worth assessing whether your home is going to retain heat efficiently when you turn the heating on this winter.

Insulate your windows, doors and loft

Gaps and poorly insulated areas can leak heat, meaning your money is quite literally flying out the window. One easy way to wrap your house up against the cold is to make sure you have adequate insulation in the loft. If it’s old, damp or has been compressed by storing old boxes on top of it, it may be time to consider replacing it.

Check your windows and doors and make sure they are properly sealed with no gaps around them. Adding doorway strips is a quick and easy job to do yourself. If windows have seen better days it may be time to replace them – a good place to start your research is with our impartial review of some the UK’s best double glazing companies.

Get your home ready for energy-efficient future

If you’re planning any building work, whether that’s an extension, loft conversion or full house renovation, taking a ‘whole house, fabric-first’ approach is best. In other words, speak to your builder about ways to make your renovation more energy efficient before building work gets underway - this may require additional building work in other areas of your home (eg upgrading windows throughout the home).

Getting a retrofit assessment is the first step towards this. It can help you see what needs to be done in your home to bring it up to a good level of thermal efficiency. Retrofit surveys cost between £100 to £300 depending on where you live and the size of your home, and they will give you a detailed improvement plan for your property. The survey will identify the different measures you need to take to achieve maximum energy efficiency for your home, listing them in order of priority. You’ll be able to see which recommendation will give you the most thermal benefit - so you can work through the list of improvements right away, or when funds allow.

A good place to start your search for a retrofit assessor is with a company like Retrofit Works. The FMB work with companies including Retrofit Works to raise the profile of retrofit work - with the aim of getting the UK's housing stock ready to meet the Government's net zero carbon commitment by 2050.

Once you have a home that is set up to keep the heat in, it might be worth considering a longer term investment in solar panels or replacing your old boiler with a heat pump. You can check out our latest Home Picks 2022 buying guides to read up on the best ground source heat pumps and the best air source heat pumps, and to compare the best solar panels.

If you’re planning a home improvement project soon, you can find some useful tips in our ultimate guide to creating an energy efficient home.

If you need help with paying your energy bills

Financial help

If you think you will struggle to pay your bills, contact your energy supplier as soon as possible. They must work with you to negotiate a way of paying (such as a payment plan) that is more manageable for your circumstances. Citizen’s Advice offer practical advice on how to negotiate an easier payment plan with your supplier on their website, as well as information about how to apply for relief schemes.

The Government has also announced an Energy Bills Support Scheme and Cost of Living Payments to help people deal with rising bills.

Charis has a grants and benefits eligibility checker and can support you through applications.

Mental health and wellbeing

If the increase in energy costs is affecting your mental wellbeing, the charity Mind offers online help and support on mental health issues, or call their information line on 0300 123 3393. The Samaritans helpline is also free to call on 116 123 (Samaritans Welsh Language Helpline: 0808 164 0123, open Monday to Sunday 7pm to 11pm).