Energy customers across the country are being urged to “take action” after it was confirmed bills will rise significantly in just a couple of months. Ofgem confirmed that the energy price cap will rise by 6.4% from April to June. This means customer bills will rise by £111 per year on average across the three-month period.
The price cap helps to determine the maximum rate per unit of energy and standing charge that providers can bill their customers While the price cap rise will be an unwelcome shock for many customers, there are still things they can do to help mitigate the increased financial pressure.
Richard Neudegg, director of regulation at Uswitch.com, said: “Millions of households still sitting on standard tariffs, which follow the price cap, are about to see their bills rise for the third time in a row. The hat-trick hike of 6.4% in April will add £111 to the average annual bill in yet another price cap blow for standard tariff customers.
“Consumers can take action to avoid this. If you are still riding the rising rates, now is the time to find a better deal. There are plenty of fixed deals available that are cheaper than today’s rates, let alone the higher April prices.
“A fixed deal could protect you from further price increases for 12 months or longer. The cheapest fix on the market, currently from Outfox the Market, could save the average household around £179 per year versus the April price cap.*
“The larger suppliers are also vying for customers. The cheapest large supplier fixed deal is from British Gas and could save the average household around £172 per year against the April rates.
“Households still sitting on a deal linked to the price cap can absolutely beat the upcoming hike. We urge anyone who hasn’t switched in a year or more to see what savings they can make.”
According to Ofgem, 11 million Brits are now on a fixed-rate deal which means they won’t be affected by the price cap rise. It stated that this is the largest movement of customers coming off the price cap and on to a fixed deal since the start of the energy crisis.
Jonathan Brearley, CEO of Ofgem, said: “If anyone is worried about paying their bills, I would urge them to reach out to their supplier to make sure they’re getting all the help they can. Where possible, switching or fixing tariffs now could also help to bring costs down and provide certainty over coming payments.”
Should I fix my energy bills or not?
When it comes to navigating your energy bills, there are numerous factors to take into account. The energy price cap does not set a definitive limit on the total cost of your energy bill.
Instead, it establishes a price for each unit of gas and electricity consumed. Consequently, if your usage exceeds that of an average consumer, your bill could be higher as result.
Moreover, the annual figure often associated with the price cap can be misleading when budgeting long-term. This is due to Ofgem’s quarterly adjustments to the price cap, which in turn affect variable tariffs.
Therefore, a tariff that aligns with the price cap could potentially be cheaper, although this isn’t guaranteed. Ultimately, you must decide whether to risk the unpredictable energy market, where potential savings may be made, or opt for the security of a fixed price, which could result in higher costs compared to other deals in the future.