Price Guarantee Confusion: 40% of households wrongly believe their energy bill can't exceed £2,500

Almost two in five households (38%) wrongly believe that the Government’s energy price guarantee means their bills cannot go above £2,500[1], according to new research from Uswitch.com, the comparison and switching service. 

The measures announced by Prime Minister Liz Truss on September 8 will support people with their energy bills, and avoid the nightmare scenario of Ofgem’s price cap soaring to a planned £3,549. 

Following the announcement, one in five (20%) say they feel confident about paying energy bills, and don’t think they will need to adjust their budgeting[2]. 

However, the announcement has caused confusion, with two in five households (38%) not understanding that the £2,500 figure is an illustration of an average household’s yearly bill, and not a fixed upper limit[1]. 

Taking into account the previously announced £400 energy bill support, households could still pay on average £237 more for energy over the three coldest months than they did last year[4]. 

A third (37%) of households still feel anxious that they will not be able to pay their energy bills this winter[2], whileover a third (36%) say they will need to make adjustments to keep up.[2]. 

Two in five households (39%) say they will only cope with rising bills by cutting back on non-essential purchases[3].

A third (34%) of households will reduce the amount they spend on socialising, and nearly a quarter (23%) will reduce the amount they pay into savings or their pension[3].

Ben Gallizzi, energy expert at Uswitch.com, said: “The Government’s measures will support a lot of households through the winter, but there is still a lot of confusion about what has been announced. 

“It is important to remember that the price guarantee of £2,500 is only an average bill — so you will pay more if you use more energy. 

“It’s possible the announcement has created a false sense of security for some, especially for larger households who may pay significantly more this winter. 

“It’s really important that households track their energy and cut their usage where possible - as well as keep an eye on all household spending. 

“At the moment you might not be able to save when it comes to your energy, but it’s still possible to cut costs across your other household bills. 

“Reviewing your broadband, TV and mobile contracts, especially if you are out of contract, could be a quick and simple way to reduce your monthly outgoings. For example, broadband users whose deal has expired can save £162 a year by switching to a new package.” 

Find out how to save on your household bills here.

FOR MORE INFORMATION

Prisca Simango

Phone: 07971 093 512

Email: prisca.simango@rvu.co.uk

Twitter: @UswitchPR

Notes

Research conducted online by Opinium, 13th to 15th September 2022, among 2,000 UK adults, weighted to be politically and nationally representative.

1. Respondents were asked ‘Last week the UK prime minister Liz Truss announced an energy price guarantee of £2,500 for those on standard variable tariffs. What is your understanding of the energy price guarantee?’ 45% said the bill for an average household will be £2,500 a year, 38% said my bill cannot exceed £2,500 a year, 12% said I don’t understand how the energy price guarantee works, 3% said I will pay exactly £2,500 for the whole year, 2% said I have never heard of the energy price guarantee. 

2. Respondents were asked ‘Which of the following statements best describes your ability to pay your energy bills this winter?’ Overall 56% said they were confident, split up by 20% saying I’m confident I can handle my energy bills without having to make any adjustments to my budgeting, 36% saying I’m confident I can handle my energy bills once I make any adjustments to my budgeting. In total, 37% said they were anxious or worried, with 33% saying I’m feeling anxious as I will struggle to afford to pay all my bills this winter, despite Government help, 3% saying I’m extremely anxious and I’ve already missed payments / expect to miss payments and 1% saying I’m worried that I will be put onto a prepayment meter. 

3. Respondents were asked ‘Have or will you be doing any of the following as a result of the rising cost of living?’ Please see table for responses. 

4. Extrapolating current gas and electricity unit rates and standings with those provided for original October price cap, a £2,500 price cap freeze yields: a 9.8p/kWh gas unit rate; 28p/day gas standing charge; 36p/kWh electricity unit rate; 46p/day electricity standing charge. Applying these to Ofgem’s usage profile expected over December, January and February suggests a medium-use household will pay £820.49 for their energy this year, compared with £382.78 last year. Dividing the £400 energy bill support over six months equates to £66.67 per month. Reducing £820.49 by 3 x £66.67 = £620.48. £620.48 - £382.78 = £237.70 increase compared to last year.  

About Uswitch 

Uswitch is one of the UK’s top comparison websites for home services switching, including energy, broadband and mobiles. 

More people go to Uswitch to switch their energy, broadband and mobile than any other site, and we have saved consumers over £2.7 billion off their bills since we launched in September 2000.

Free mobile app Utrack also helps households manage their home energy usage and make potential savings. 

Uswitch is part of RVU, a group of online brands with a mission to empower consumers to make more confident home services, insurance and financial decisions.