This year, more than 11 million homes across the UK will see their energy bills rise if they don’t take action. This is because experts predict that industry regulator Ofgem will raise the price cap when it’s reviewed in February. On top of this, another half a million customers will be moved to standard variable tariffs when their fixed-term deals come to an end later this month.
It isn’t all bad news though. Before prices rise, you can switch supplier and fix your rate. There are a couple of ways that you can do this, but the fastest is to run an online energy comparison. Doing this will show you the best energy deals in your area and will allow you to switch provider in only a couple of minutes.
Fixed deals to end for half a million homes
At the end of January, energy bills will rise by an average of £171 for nearly half a million homes. This is because 68 fixed-term deals are set to end, according to The Sun. Many of the deals that are set to expire are from some of the UK’s largest energy suppliers, including British Gas and EDF.
When these deals end, customers will be moved to standard variable tariffs, which are generally among the most expensive deals on the market. Exactly how much your energy bill will rise by when your deal ends depends on which tariff you’re on and who your supplier is. This is because there is currently a £154 difference between the cheapest default tariffs on the market and the default energy price cap.
If you’re on a fixed-term deal and haven’t switched in the past 12 months, it’s worth checking when your fixed-term deal is due to end to make sure you’re not caught out. If you don’t act now, you’ll be automatically moved onto your supplier’s standard variable tariff when your deal ends. This could cost you an extra couple of hundred pounds a year if you’ve previously been getting a great fixed rate.
Price cap to rise by £87
Next month, industry regulator Ofgem is reviewing the price cap. This limits how much suppliers can charge customers who are on the standard variable tariffs mentioned above.
Overall, it’s estimated that around 11 million households are on standard variable tariffs. As a result, since the price cap was introduced in 2019, it has saved customers about £1 billion a year.
Due to higher wholesale costs and current plans to let energy companies receive compensation for the increase in unpaid bills during the pandemic, consultants Cornwall Insight believe the price cap will rise to £1,129 per year after the review. This represents an increase of £87.
When the change takes place in early February, it will set the level for April until September. If you’re on a standard variable tariff, you could save hundreds of pounds by switching to a fixed-term deal before the new price cap comes into effect.