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£400 energy grant: How you will receive October’s discount on your bills

energy rebate £400 grant energy bills government rebate help pay how claim savings 2022 payment fuel prices gas electricity bills save money uk 2022
energy rebate £400 grant energy bills government rebate help pay how claim savings 2022 payment fuel prices gas electricity bills save money uk 2022

Liz Truss has announced that the energy price cap will be frozen in October, meaning the average annual household energy bill will be capped at £2,500 a year.

In May, former Chancellor Rishi Sunak announced a £400 energy bill discount for all British households to take the sting out of the planned October price cap increase, which would have seen bills soar to £3,549 a year.

The frozen cap means the average household will pay £2,500 a year for their energy bills – which is higher than the current average of £1,971 as it takes into account this £400 rebate.

Households not connected to standard gas and electricity contracts, such as those who use heating oil or who live on heat networks, will receive additional support in the form of a £100 payment, a Government spokesman confirmed on September 21.

However, critics argue the support package does not go far enough to help with rising energy costs, which are still 54pc higher than they were last year. Experts said households may have to make other changes to cut their outgoings.

How will the £400 energy bill discount be paid?

The vast majority of homes in England, Scotland and Wales will qualify for automatic rebates. Customers paying by direct debit will have the sum deducted from their bills and "smart" pre-payment customers will receive credit on their device.

Standard credit and payment card customers will also have credit applied to their account automatically.

However, bill payers with older pre-payment devices must make a claim with their supplier. These customers will instead be given a voucher to exchange when they top up their device.

There will be separate arrangements made for households in Northern Ireland, which has its own energy market.

How to cut energy bills and save money

Traditionally, the solution to rising gas and electricity tariffs has been for customers to shop around for a better deal from a plethora of providers. But as the energy crisis causes small suppliers to collapse and those that remain to pull their best offers, households will need to turn to different tactics to reduce their bills.

Cutting down on the energy you consume, using it at the right time, or generating some of your own, will take on added importance. A few small changes to your home could be the key to weathering a winter of rising energy bills.

In the meantime, here are some of the steps you can take, how much you could save, and the pitfalls to avoid.

Consider installing a smart meter

Smart meters track how much energy you use in your home daily, giving much more accurate readings than traditional analogue meters, which work off a monthly estimate. Readings are sent automatically to suppliers, meaning customers are less likely to underpay or overpay for gas and electricity.

They can also save you money. Some energy suppliers offer tariffs exclusively for smart meter users, which vary the cost of electricity throughout the day. Customers can then tailor their energy use, making more use of appliances when electricity prices are lower.

However, the devices have proved controversial. Some people are uncomfortable having their energy use tracked and have questioned how much money the meters really save, given bills have increased to pay for the smart meter rollout.

The devices themselves have also been prone to issues. First-generation meters can lose their functionality when a customer switches supplier, effectively rendering the devices useless.

Energy firms are adamant that only they can see your data and that information cannot be passed on to a third party without your explicit permission. Although smart meters send readings to your energy supplier, they do not store your name, address or bank details.

Improve your insulation

Changes to your home to improve its heat retention could shave hundreds of pounds from your energy bill.

According to My Utility Genius, a comparison site, around 35pc of heat in an average semi-detached house is lost through its walls. Properly installed cavity wall insulation can save up to 15pc on heating costs.

Homes built before the 1920s are more likely to have solid walls. These are more difficult and expensive to insulate but doing so can generate higher savings. My Utility Genius said that installing this type of insulation could cut the average energy bill by up to £350 a year.

In an uninsulated home, almost a quarter of heat is lost through the roof. Loft or roof insulation could save up to £175 on the average bill, the comparison site said.

Insulating floors, by filling in gaps below skirting boards can reduce heat loss by up to 10pc, cutting £60 from the typical energy bill.

Should you switch to a heat pump?

The Government wants to replace gas boilers with green alternatives, such as air source heat pumps, in the coming years. These are expensive to install, costing between £7,000 and £14,000 versus £1,000 for a traditional gas boiler, but can cut down on energy costs in the long run.

Households switching from an old liquid petroleum gas – or LPG – boiler to a heat pump would see the biggest savings. According to the Energy Saving Trust, the energy bill for a four-bedroom detached home would drop by £1,250 a year after the switch.

However, savings vary depending on the age and style of households' existing boiler. While heat pumps are four times as efficient as traditional boilers, they are usually powered by electricity, which is much more expensive than gas or oil.

Households which make the switch to a heat pump can also take advantage of the Domestic Renewable Heat Incentive, known as the RHI, a Government grant designed to promote the use of renewable heating. The scheme provides quarterly payments for seven years based on the amount of renewable heat produced and is open for applications until March.

Some energy firms offer schemes that help meet the upfront costs of fitting a heat pump in exchange for the quarterly subsidies. However, the effectiveness of heat pumps has been questioned.

How much would solar panels save you?

Solar panels cost the average household £5,940, according to price comparison website The Eco Experts. It generally takes over a decade to make back the upfront costs, depending on how much a household paid for their energy beforehand, and how much they export back to the grid.

Customers with solar-panelled homes can shop around for the best price for the energy they generate, as the rates paid vary between energy providers.

Savings on annual energy bills for the average British home installing solar panels vary between £95 and £234 depending on energy use, according to the Energy Saving Trust, but there are regional variations.

Savings are lowest in Stirling, from £90 where a household uses energy only from 6pm, to £220 where energy is used all day. In London the range of savings rises to between £100 and £240 per year.

Be mindful of your appliances

On average, British homes have 10 unused items plugged in and switched on at any one time, according to energy firm Utilita.

Leaving the 10 most electricity-hungry products on standby all year round costs Britons £2.2bn more than if they were turned off at the plug. Televisions on standby cost Britons more than £430m in wasted electricity per year, energy supplier Utilita said.

A TV left on standby all year adds £16 a year to a household's electricity bill, while a printer or scanner adds £6.50. The amount per appliance is relatively small, but quickly adds up when multiple appliances are left on.