The energy regulator Ofgem has announced that the energy price cap will increase from £1,641 to £1,862 per year for a typical household paying by direct debit, effective July 1. This marks a 13 percent increase from the current rate, which itself fell in April from £1,758 to £1,641.
In response to the impending rise, energy comparison website Uswitch reports that 27 fixed energy deals are currently available, with the cheapest offering potential savings. The most competitive deal is priced at £1,577 annually, which is £64 below the April cap and £285 below the projected July cap.
While the price cap does not limit a household's total bill, it sets the maximum charge energy suppliers can levy per unit of energy. Consumers whose energy usage differs from the average may see their annual bills vary from the cap. The price cap does not limit total bills, but rather sets a maximum charge per unit of energy.
Returning Fixed Deals
Fixed energy deals have been gradually returning to the market after many were withdrawn following geopolitical events such as the conflict in the Middle East. Until the energy crisis of late 2021, the advice was to switch providers regularly to secure the best deals, typically fixed-rate tariffs. However, rising wholesale energy prices led to a scarcity of affordable fixed-rate deals starting in autumn 2021, leaving many households on variable-rate deals.
Uswitch advises that fixing energy prices can offer stability and protection against unpredictable future pricing, especially for those seeking budget predictability. Energy unit costs and standing charges remain constant throughout a fixed contract, aiding household budgeting. However, market volatility influenced by international events means predictions should be approached with caution.
Understanding Fixed Tariffs
On a fixed tariff, energy providers cannot increase the unit cost of energy or standing charge during the contract term. However, a consumer's total bill can still fluctuate based on their energy consumption; higher usage will result in higher costs. The stability applies to the cost per unit and standing charge, not the overall bill.
When comparing tariffs, it is crucial to examine the unit rate—the cost per kilowatt hour (kWh)—against current deals. Under the April cap, the maximum unit costs were 24.67p/kWh for electricity and 5.74p/kWh for gas, with standing charges of 57.21p and 29.09p daily. From July, these are expected to rise to 26.11p/kWh for electricity and 7.33p/kWh for gas, with standing charges of 57.19p and 29.04p respectively.
Consumers are also encouraged to submit a meter reading by the end of the month if they are on standard tariffs without a smart meter, to ensure their energy usage is not charged at the new, higher rates from July. Comparison websites and direct provider contact can help identify the best deals, as not all providers are listed on every comparison platform.