Millions of households are being advised to consider changing their energy provider due to an increase in winter energy prices. The regulatory authority Ofgem has raised the price cap by 2% starting today, leading to the average annual gas and electricity bill reaching £1,755. This hike coincides with the colder weather, resulting in higher energy usage at the elevated rates.
Experts suggest that approximately 34 million customers who are still on a standard variable tariff, impacted by the price cap, could benefit significantly by switching to a fixed-rate deal. MoneySuperMarket, a price comparison website, indicates that by making this switch, the average customer could save up to £271. The current cheapest deals in the market range from around £1,429 to £1,643.
Laura Hinton from MoneySuperMarket Energy pointed out that about 66% of households are on a standard variable rate, leading to increased bills during the winter months as energy consumption rises. Emily Seymour, the energy editor at consumer group Which?, emphasized the importance of exploring alternative deals below the price cap to potentially save money and avoid long-term commitments with hefty exit fees.
Debt charity StepChange noted a 32% increase in energy-related arrears among its clients over the past two years. Simon Trevethick, the head of communications at StepChange, highlighted the financial challenges faced by households as they brace for higher energy costs during the colder months.
Ofgem’s price cap increase will result in an average additional cost of just over £35 per year for a typical dual fuel customer on monthly direct debit. Among the 34 million customers affected by the price cap, around 20 million pay via direct debit, eight million pay upon receiving the bill, and six million use pre-payment meters. The shift towards fixed tariffs has been significant, with approximately 20 million accounts now on fixed-rate deals.
Industry experts at Cornwall Insight forecast a decrease in the price cap to £1,725 per year for a typical dual fuel household starting in January, followed by a projected increase of £100 in April next year. Minister for Energy Consumers Martin McCluskey announced initiatives to support vulnerable families during winter, including expanding the Warm Home Discount to over six million families and introducing a significant home upgrade program.
Amidst the rising energy costs, consumers are encouraged to explore various fixed-rate deals available in the market, such as those offered by MoneySuperMarket and Uswitch. Additionally, implementing energy-saving tips provided by the Energy Saving Trust can help households reduce energy bills by up to £300 annually without switching providers. These tips include simple actions like installing draught proofing strips, bleeding radiators, and using heating controls efficiently.
By making small changes to improve energy efficiency, households can mitigate the impact of escalating energy prices and ensure a more cost-effective and comfortable living environment.