Energy Bills Expected to Surge, Experts Advise Locking in Fixed Tariffs

Approximately 20 million households are bracing for increased energy bills as gas and electricity costs are projected to rise. Typical annual bills, previously around £1,663, saw an increase to approximately £1,723 on October 1, representing a 3.6% jump. Independent forecaster Cornwall Insight predicts a further potential surge of up to 16% in January, which could push average annual costs to around £1,999.

These price hikes are attributed to volatile global energy markets, with geopolitical events, particularly conflict in the Middle East, disrupting supply and driving up wholesale prices. The energy regulator Ofgem's price cap, which protects customers on variable rate tariffs, was raised on October 1. This cap would have been higher had the government not removed VAT from electricity bills.

Major energy suppliers, including British Gas, EDF Energy, and Eon Next, have released preliminary forecasts for April 2027, estimating annual bills to be around £1,995, £2,096, and £2,082, respectively. However, these figures are subject to change. Cornwall Insight cautions that even if supply disruptions cease, it could take months for prices to stabilize.

To mitigate these rising costs, households have the option to secure a fixed energy tariff. These plans allow consumers to lock in a specific rate for their energy, typically for 12 or 24 months, offering protection against further price increases and providing budget certainty, especially during colder months when energy consumption is highest.

Several fixed deals currently on the market are priced below both the current October price cap and the predicted January figures. Securing a fix that is lower than the current cap and projected January prices could lead to immediate savings and continued benefits. Even deals slightly above the current cap but significantly below the January predictions may offer financial advantages. However, consumers should be aware that if wholesale prices were to fall substantially, a long-term fixed deal could potentially result in paying more than if they had remained on a variable tariff.

It is important to note that the energy price cap is an estimate for an average household and fixed tariffs apply to the standing charges and per-unit cost of energy, not the total bill. Actual costs will vary based on individual energy consumption. Consumers are advised to consider the entire duration of a fixed deal and their comfort level with potential market fluctuations. Exit fees, which can range up to £125 per fuel type (gas and electricity), should also be carefully reviewed before committing to a fixed tariff.

According to the comparison website Uswitch, the cheapest available tariff is an 18-month plan from Fuse Energy, priced at £1,615 annually for an average household. This is £108 below the current cap and £384 below the predicted January price, with exit fees of £50 per fuel. Smaller suppliers have frequently offered the most competitive deals over the past year.

Among major suppliers, British Gas offers a 23-month fix at £1,669 annually for the average household, which is £54 below the current cap and £330 below the predicted January price. However, this deal carries exit fees of £125 per fuel. Eon Next and Outfox Energy also offer 24-month fixed deals priced at £1,670 and £1,671 respectively.

Consumers are encouraged to use price comparison websites such as Moneysupermarket or Uswitch, providing details like postcode and actual energy usage for more accurate price comparisons. The data indicates that prices are subject to change and vary by region.