How To Keep Bills Down Despite The Rise in Energy Costs

Q: A couple of things have happened with our energy bills – what has just changed?

A: If you were over 66 (pension age) up until now, you got an annual payment called the Winter Fuel Payment. Rich or poor, it didn’t matter, as long as you were over 66, you got the money.

It was worth up to £300

In July, chancellor Rachel Reeves announced that the cold weather benefit will now only be eligible for older people who claim Pension Benefit.  That means only those who were much poorer would get the money.

It has happened at the same time of the withdrawal of the Cost-of-Living Support payment, which was worth around £300.

Thee cost of living support payments were single payments made at the following times:

·      £301 paid in the spring of 2023.

·      £300 paid in October 2023

·      £299 paid in February 2024

The final £299 payment will be paid from 16 February 2024.)

Added together, it means many could be £600 worse off.

Age UK says that several factors will mean pensioners who may need the Winter Fuel Payment won’t be eligible for it under new rules.

Q: How do you qualify for the Winter Fuel Payment?

A: You may be eligible for the Winter Fuel Payment in the winter of 2024-2025 if you meet all of the following criteria:

• you were born on or before 22 September 1958

• you receive either: Pension Credit, Universal Credit, Income Support, income-based Jobseeker's Allowance or income-related Employment and Support Allowance, or an award of Child Tax Credit or Working Tax Credit of at least £26 for the tax year 2024-25

• you were living in England or Wales for the qualifying week. The qualifying week is the week beginning from the third Monday in September. This is 16 to 22 September 2024. 

Q: How poor do you have to be to get the Pension Credit which then entitles you to the Winter Fuel Payment?

A: Even if you are not now claiming Pension Credit you might want to consider applying, if eligible, sine it is being used as a “passport benefit’ meaning qualifying for that, gives you entry to the other Winter Fuel Payments. If you qualify for Pension Benefit but don’t claim it, you are missing out on 2 benefits not just 1.

Roughly 850,000 households who are eligible to receive pension credit do not claim it, according to figures released by the Department for Work and Pensions last year.

• Pension credit is a form of means-tested benefit, which means it's based on income and savings

• To be eligible for Pension Credit you need to be above state pension age and have an income of less that £218.15 a week or less than £332.95 as a joint weekly income with your partner

• Your savings will also be taken into account and could mean you're still ineligible even if you're income is low

• You may still be eligible despite these factors if you're disabled, care for someone or have housing costs

• Just for context – the full state pension is £156/week

How can I claim Pension Credit?

To claim Pension Credit, you can either:

• claim online on GOV.UK (if you already claim State Pension and there aren't any children or young people included in your claim)

• call the Pension Credit claim line on 0800 99 1234 and they can fill in the application for you over the phone (lines are open Monday to Friday, 8am-6pm).

The Other Advantages of claiming Pension Credit

Claiming Pension Credit might also mean that you may get:

• You’ll get free NHS dental treatment, and you can get help with the cost of glasses and transport to hospital.

• If you care for someone, you might get an extra amount known as Carer Addition, which is worth up to £45.60 a week.

• If you have a disability, you may get an extra amount known as Severe Disability Addition, which is worth up to £81.50 a week.

• You probably won't have to pay Council Tax (unless other people live with you).

• If you rent your home, you might get your rent paid in full by Housing Benefit.

• If you own your home, you might be eligible for a help with mortgage interest, ground rent and service charges.

SOCTLAND & NORTHERN IRELAND

The Scottish government said it was “deeply disappointing” changes were made to the winter fuel payment by the chancellor “without any consultation or discussion” between ministers.

The responsibility for the payment is set to be transferred to the Scottish Government this winter and replaced with a Scottish equivalent - the pension age winter heating payment. Following the Chancellor's announcement, the Scottish Government has confirmed that the Pension Age Winter Heating Payments will also be means-tested when they launch in winter 2025. In Northern Ireland, the Winter Fuel Payment has so far been available to everyone above State Pension age. The Northern Irish Government hasn't yet confirmed whether this will remain the case or change going forward.

Q: While that has been happening, the industry regulator OFGEM has changed the price that everyone will pay. How much more expensive will it get?

A: This is about them changing the Energy Price Cap. That was meant to limit the maximum anyone could charge for a unit of energy. In practice, almost all companies charge the maximum. So the Price Cap, is actually the price we pay.

The Price Cap was introduced on 1 January 2019

From 1st October, the Price Cap will rise by 10%to £1,717 a year for a typical use household paying by Direct Debit. Though remember, it's the rates that are capped, so use more and you pay more

Q: That’s quite a jump given that inflation is only around 2% - a 10% jump in energy is very significant, isn’t it?

A: For every £100 you now pay, you are likely to be paying £110. So that is true, it’s a big jump compared to general inflation.  Overall prices rose by 2.2% in the year to July, slightly above the Bank of England’s target of 2% where the rate had been since May.

But to set it in context, it is still dramatically lo than it was

Average cost is now £1,717/year

That’s up from the last quarter, when it was £1,568/year

But in the winter of 2023, it was £4,059/year

Q: How long will the price rise last?

A: The Price Cap changes every three months, in January, April, July and October. It might rise again in January, who know.

Q: Is there anything we can do to limit the price rise?

If you can find a good fixed-price deal, you might be able to keep your costs down.

With prices due to rise 10% on average, it seems that a fixed price deal that is less than 10% more expensive than the current price cap, might be good value.

·       Before you commit to anything – check the exit fees that apply. They will probably charge you an effective fine for leaving the deal early, if you find that it wasn’t as competitive as the other deals on the market.

·       Also check how long you are tied to the deal for.

·       While a fixed price deal isn’t right for anyone, it’s certainly worth looking at some of the deals around.

Some Deals Worth Looking at:

E.on Next Pledge- Stays 3% less than every Cap. Not a fix but worth looking at.

Outfox the Market has a 12-month fix that is 2% more than the current cap

Octopus Energy has a 12-month fix that is 4% more than the current caop.

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