Millions have just days left to avoid higher energy bills as experts warn the biggest price cap increase since the energy crisis is set to take effect next week.
More than 18 million households on standard variable tariffs will be hit when Ofgem’s energy price cap rises by 13% on July 1, according to analysis by comparison site Uswitch. The increase represents a potential £4 billion extra burden for households across Britain, prompting calls for consumers to check whether they could save money by moving to a fixed-rate deal before the deadline.
In theory, the 13% hike equates to an annual rise of £221. However, the immediate impact on household finances is likely to be less severe than the headline figure suggests because the increase arrives during the summer months, when most homes are using little or no gas central heating.
The £221 figure is based on annual energy consumption. In practice, many households may see their bills rise by only a few tens of pounds between July and September, with the bigger concern being that higher prices could still be in place when energy use typically surges during autumn and winter.
The apparent resolution of the Middle East war means that a feared further rise in energy prices in October may be averted.
There are currently 27 fixed energy tariffs available that undercut the incoming July price cap, with the cheapest offering potential savings of up to £284 a year compared with remaining on a standard tariff.
Ben Gallizzi, energy expert at Uswitch, said: “We’ve taken our message to UK towns, cities and the countryside to warn households of the urgency to take power into their own hands – you don’t have to accept rising energy prices.
“The price cap may be rocketing 13% in just seven days, but your bills don’t have to.
“The jump in energy rates might seem easier to bear in July while heating is off – but a graver concern is this setting the baseline for a further increase in October.
“If you haven’t switched in a while, you’re almost certainly on a standard tariff, and you will be impacted. Getting off a standard tariff and switching to a fixed deal should be an urgent priority for households.
“There are currently 27 fixed deals available that are cheaper than July’s price cap, with average savings of up to £284, so act now to ditch the price hike and save.”
Research commissioned by Uswitch found that 66% of bill-payers believe a 10% increase in energy costs would affect their finances. Some 17% said they would need to cut back on essentials such as food and transport, while one in 10 said they would have to dip into savings to cover the extra expense.
Energy switching hotspots
Uswitch’s data suggests Manchester residents are among the most active in hunting down cheaper deals, followed by households in Walsall, Weston-super-Mare, Torquay and Llandudno.
At the other end of the rankings, Milton Keynes was identified as one of the least active locations for switching, alongside Cwmbran, Carlisle, Handsworth in Birmingham and Altrincham.
How much could households save?
According to Uswitch, the cheapest fixed tariff currently available would leave a typical household paying around £1,578 a year compared with £1,862 under the July price cap.
Consumers should, however, check exit fees and other terms before switching, as some of the lowest-priced tariffs charge penalties for leaving early.
With less than a week until the price cap rises, households that have not reviewed their energy arrangements recently may want to check whether they are on a standard variable tariff and compare available fixed deals before July 1.