Households are being advised to take advantage of affordable energy packages before an anticipated increase in prices.
Regulator Ofgem is preparing to reveal the new price cap effective from July 1 on May 27. The calculation period closes next Monday, considering factors such as suppliers’ wholesale costs, which have risen due to the recent conflict in the Middle East between the US, Israel, and Iran.
Industry analysts at Cornwall Insight forecast that the price cap, affecting approximately 33 million customers on standard variable tariffs, could rise from an average of £1,641 per year to around £1,843 per year starting July 1. An updated prediction is expected soon.
This price hike coincides with households already feeling the financial impact of the Middle East conflict through increased inflation, soaring fuel prices, and the looming threat of higher food expenses.
Despite these challenges, households are being encouraged to switch to fixed energy deals, as approximately 21 million customers are already benefiting from them. Fixed deals lock in a set unit rate for a specific period, providing stability and potential savings.
Recent findings by comparison site Moneysupermarket reveal fixed deals as low as £1,585, potentially saving households £258 annually compared to the projected price cap increase in July. Various suppliers offer competitive fixed deals, including Outfox Energy, Fuse Energy, E.on Next, Ecotricity, Sainsbury’s Energy, and SO Energy.
Laura Hinton from Moneysupermarket Energy noted the return of competitive fixed deals after a scarcity following the surge in global gas prices. With energy bills expected to rise in the coming months, consumers are advised to shop around, secure fixed deals, and avoid impending price cap hikes.
Ofgem’s price cap dictates the maximum charges for electricity and gas units on standard tariffs, along with the standing charge. However, the total bill cost depends on usage and payment method, not limited by the price cap.
Simon Francis of the End Fuel Poverty Coalition emphasized the need for government support for vulnerable households and energy debt relief, urging reforms to lower electricity prices. Encouraging the adoption of clean energy solutions like solar panels, heat pumps, insulation, and electric vehicles is vital to reducing costs and promoting sustainability.
