An energy expert has said that switching to a fixed tariff before October is the "only way" for households to avoid the upcoming energy price cap rise and protect themselves from a possible further increase in January.
Ofgem announced today that the energy price cap will rise by 4% from October. The regulator attributed the increase to the ongoing situation in the Middle East, which has pushed up wholesale gas prices.
What the expert said
Richard Neudegg, director of regulation at Uswitch.com, said: "This is going to be another difficult winter. For price cap customers, gas costs will be almost 27% higher than the same period last year, with the increase hitting just as the heating is due to go on. The Middle East conflict continues to impact wholesale gas prices, and ongoing supply challenges are set to hammer household bills as winter demand looms."
He added: "Over half of households say they are already worried about paying for heating this winter. And now, those on standard tariffs may face a double blow on bills, with suppliers already pointing to another rise in January."
Government measures and the 'escape route'
Neudegg noted that the Government's electricity VAT cut, along with the earlier removal of certain levies on bills, has meant the cap level "isn't as high as it might have been", but that these have not been enough to hold off price cap hikes.
"While households may feel powerless, there is an escape route," he said. "The best current fixed deals will save you money straight away, let you avoid this increase, and protect you from future price shocks in January. With January's potential rise already looming, fixing before October is the only way to dodge a double blow to your energy bill."
Neil Kenward, Ofgem's director general for markets, said that high international gas prices are "continuing to drive energy costs in the UK". He added: "We welcome the Government's intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter. Savings are available by choosing a fixed tariff, which is available at £100 or more below the October price cap, and many suppliers offer tariffs with cheaper electricity to smart meter customers for electricity consumed out of peak times. It's also worth considering different payment methods, with prepayment customers paying the lowest price cap rates, and could save consumers an average of about £45 compared to direct debit."
Martin Lewis's advice
Money Saving Expert founder Martin Lewis said the cheapest fixes are currently 7% lower than the current cap, and roughly 10% lower than October's. He said: "With the Cap predicted to rise again in January, they look a decent bet. Your cheapest depends on usage and location, so use my whole-of-market by default comparison site CheapEnergyClub.com, which also has a 'Pick Me A Tariff Tool' if you're not good at deciding."
Following Ofgem's announcement, the Energy Secretary said the Government "will keep looking at what more we can do to protect families from unaffordable bills".
