Energy Price Rises and The Price Cap
Over the last year we have seen a huge increase in wholesale gas prices which affect the prices that energy suppliers pay for gas. Electricity prices have also increased because in the UK most of our electricity is generated by gas!
The latest Price cap comes into effect today 1 April and the cap is going to rise by 54% with an average bill increase of £700.! A typcial household bill, paying by direct debit, will be about £1971!!
So who is on the price cap? You will be on the price cap if:
- You've never switched tariff,
- You were on a cheap fix and that cheap fix ended and you didn't switch again,
- You were with a supplier that's gone bust and you've been moved – as millions of people have – to a 'supplier of last resort
Just to be clear the price cap is not a cap on the total amount that you pay for your energy but actually a cap on the unit rates and standing charges that you pay for your gas and electricity.
The biggest rise is with gas with the unit rate increasing from 4.1 to 7.4p a unit and th standing charge increasing from 26.1p to 27.2p per day!
For electricty the unit rate is increasing from 21 to 28p a unit and the standing charge increasing from 25 to 45p day!
According to Ofgem one of the main reasons for the big increases in standing charges is to cover the cost of people moving if their supplier went bust!
Unfortunately it looks like we are going to be facing another rise in energy bills in October and the predicition is that the Price Cap will increase by approximately 30%. This will mean the typical household bill, paying by direct debit, will increase to about £2600!!
So based on all this the big question is should you look at a switching to a Fixed Tariff?
This is a difficult one but the general advice and according to Martin Lewis from MoneySavingExpert it is generally not worth switching yet. It is still best to stay on your April Price Cap tariff unless the fixed tariff is no more than 25% higher than your current price rates!
Unfortunately there are currently no fixed deals like this on comparison sites but there are some existing customer deals being offered by some energy suppliers so it means keeping and eye out for deals on offer from your energy supplier.
Here is a useful video from Martin Lewis: https://youtu.be/JvVld-qY3Gc
For further help and advice contact usSource: moneysavingexpert.com