Millions of households are being urged to secure cheap energy deals ahead of an expected price hike. Regulator Ofgem is set to announce its new price cap for July 1 on May 27, with the observation window closing next Monday. This period has seen a significant increase in wholesale costs due to the US-Israel war with Iran, which began in late February.
Industry experts at Cornwall Insight forecast that the price cap, affecting around 33 million customers on standard variable tariffs, will rise from an average of £1,641 per year to approximately £1,843 from July 1. An updated prediction is due on Friday. This increase comes as households already grapple with higher inflation, rising fuel prices, and the threat of increased food costs stemming from the Middle East conflict.
However, consumers are encouraged to join the estimated 21 million customers already on fixed energy deals, which lock in unit rates for a set period. According to Moneysupermarket, the lowest fixed deal available is from Outfox Energy at £1,585 per year, offering potential savings of £258 compared to the forecast cap. Other competitive deals include 12- or 13-month fixes from Fuse Energy, E.on Next, Ecotricity, Sainsbury’s Energy, and SO Energy.
Expert Advice
Laura Hinton from Moneysupermarket Energy commented: “When global uncertainty sent wholesale gas prices spiralling in March, fixed deals virtually disappeared. However, in recent weeks providers have begun bringing back more competitive tariffs that beat the price cap. Analysts expect energy bills to rise in July, and October’s cap looks set to increase further. For those seeking to beat upcoming increases or gain certainty, now is the time to shop around and fix a deal before July.”
Ofgem’s price cap limits the unit rates and standing charges for standard tariff customers but does not cap total bills, which depend on usage and payment method.
Calls for Government Action
Simon Francis, coordinator of the End Fuel Poverty Coalition, urged the government to develop support packages for vulnerable households and those in energy debt, while urgently reforming electricity prices to lower costs. “Ministers must put aside power struggles and focus on their day job. The government must ensure more households, especially those on lower incomes, can switch to clean electricity and see savings. This means breaking the link between electricity and gas prices and rapidly expanding support for solar panels, heat pumps, insulation, and electric vehicles.”
