Energy price cap hike could raise bills by over £550 for least efficient homes

Some of Britain’s least energy efficient homes could see their annual energy bill rise by more than £550 from the start of October, according to Rightmove.

Energy bills are set to rise by 10 per cent in October. The average home currently pays bills of £1,568 a year, with prices limited by the Ofgem energy price cap, but this will rise to £1,717 from 1 October. 

While this will add £149 more a year to the average annual bill, homes with the poorest insulation and energy performance will see costs skyrocket.

The energy performance of a home is rated via an Energy performance Certificate (EPC). 

The EPC is a rating scheme which bands properties between A and G, with an A rating being the most energy efficient and G the least efficient. 

At least 18million homes have an Energy Performance Rating of D or below, according to Rightmove, which equates to 55 per cent of the total housing stock. 

Someone living in a home with an EPC rating of A could see their average annual bill increase by £56 once the price cap changes. 

But someone living in a G-rated home, which will typically be poorly insulated and have appliances such as a boiler which are not energy efficient, could pay almost ten times that at £558.

Someone living in a D rated property can expect their annual bill to rise by £225 to £2,471, while someone living in a E rated home will see their annual bill rise by £319 on average. 

The obvious way for homeowners living in energy inefficient homes to cut their bills is to make improvements.

Green improvements, if suitable for the home, could include window upgrades, roof or floor insulation, installing solar panels or moving from a gas boiler to a heat pump. 

However, all these upgrades cost money, and homeowners may have to wait years to see any return on their investment. 

There are of course much cheaper improvements that can be made, such as draught-proofing and installing energy efficient LED lights.

Many of these cheaper solutions repay themselves within a short timeframe, given the energy savings they can make.

Cost-efficient: upgrading windows to have double glazing could slash the annual bills for those in the least energy efficient homes – but they may have to wait years for a return on investment

There is also talk of Ofgem introducing a more dynamic price cap, where the price of energy varies at different times of the day.

Earlier in the year, the energy regulator set out this potential change to the price cap in the future. 

This could mean that energy is cheaper at less popular times of the day, or when renewable energy generation increases. 

Nearly three-quarters of people would be willing to change how and when they use energy, if it meant they could access cheaper energy rates at different times of the day, according to a survey by Rightmove.

Tim Bannister, a property expert at Rightmove, said: ‘The rising price of energy in recent years means that renters and homeowners are likely having to closely consider their total monthly outgoings when choosing their next home. 

‘We know that lower bills is one of the biggest motivators for people to go greener, so we expect over time people will increasingly seek out more energy efficient properties in order to keep bills down over the long-term. 

‘Our research suggests that if something like a dynamic price cap, where energy is cheaper at less popular times of day, was to be introduced, the majority would welcome it if it meant lower bills.’