In October, experts predict that millions of homes will see their energy bills rise by more than £100 as a new price cap comes into effect.
According to data from energy analysts Cornwall Insight, the new price cap is expected to be around £1,250. This means a household on a typical duel fuel energy tariff will see their energy bills rise by 9.8%. This will be the second time this year that these customers will be asked to pay more for their energy. Back on April 1, the average bill for around 11 million households jumped by £96 a year when the current price cap came into effect.
- Online energy comparison: find the best deals in your area now
Thankfully, if you’re likely to be affected by the change, you can avoid the impending price hike. By running an online energy comparison and switching to a new fixed-term deal, you can lock in a great tariff before the price rise comes into effect.
Why are prices rising again?
Regulator Ofgem revises a price cap for customers on standard or other default energy tariffs twice a year. The next price cap is due to come into effect in October, and experts believe that soaring wholesale prices will force the cap higher.
Commenting on the new price cap, Dr Craig Lowrey (a senior consultant at Cornwall Insight) said: “Wholesale prices have been hit by a combination of factors.
“Underlying commodity prices have risen, so, too, have carbon prices, reaching a high of €50 per tonne of carbon and more than doubling over the past year. On top of this, underlying gas prices have risen considerably due to a cold winter across Europe and low levels of gas in storage facilities.
“Moreover, the rising carbon, oil and LNG prices have further supported this rise in underlying gas prices. More generally, we are experiencing tighter power supply margins than last winter due to unforeseen and prolonged outages of several ageing fossil fuel and nuclear plants.”
He went on to warn that: “With a substantial increase in the wholesale price, it is extremely likely to expect this to be passed through fairly quickly in terms of prices to new customers.”
How to avoid the price hike today
If you think you’ll be affected by the new price cap, then take action today. It’s estimated that by running an online comparison and switching suppliers, you could save up to £200. In fact, Dr Lowrey believes that “competitive tariffs are priced around £250 below the level of the cap.”
To switch provider and lock in a great new deal, you’ll just need to provide a few basic details about your home and your energy use. You’ll then be shown all the best energy deals in your area from the country’s best energy suppliers. You’ll also be shown exactly how much you could save by switching.
You can even filter your results so you only see tariffs that are suitable for you, such as tariffs that only use green energy. The whole process is simple and takes just a couple of minutes.
