Energy price cap to rise by £221 – here’s how you can avoid the hike (Image: EXPRESS)
After weeks of anticipation, we finally know. Ofgem today confirmed its energy price cap will rise by 13% on July 1, with the repercussions of the ongoing Iran-US war finally starting to filter into our wallets. This is higher than most analysts predicted and stems from soaring wholesale gas prices driven by Iran’s stubborn closure of the Strait of Hormuz.
The cap hike will bring the average annual energy bill for a typical dual-fuel household to £1,862, marking a staggering £221 difference from today’s slightly more palatable – but still high – £1,641 average bill. The jump amounts to an average increase of £18 per month.
These figures will be concerning to a lot of people at first glance. And it’s gutting that just as it felt like we were coming out of the other side of spiralling living costs, we’re being brought back to square one. Particularly as current forecasts suggest the cap will rise even higher in October to £1,899 per year. But try not to worry, there are some important factors to be aware of and simple steps you can take to dodge these hits.
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60% of households on SVTs will see their bills rise in July (Image: Getty)
Firstly, the energy price cap, which is reviewed every three months by regulator Ofgem, caps unit rates for electricity and gas – not total bills.
For anyone worried about that £1,862 figure, it’s important to note that this is an estimate based on a dual-fuel household of two to three members, using Ofgem’s “typical” energy usage figures. If you use less, you’ll pay less. Equally, if you use more, you’ll pay more.
Secondly, July’s price cap hike will only affect energy customers on standard variable tariffs (SVTs). If you’re locked into a fixed rate – and an estimated 22 million people (or 40% of Brits) are – your unit rates will not change, and you won’t feel a new pinch in the summer.
For the remaining 60% of households on SVTs, which are tariffs that track the volatile price cap, it’s widely recommended to swap to a cheaper fixed rate tariff. These tariffs lock in unit rates for a set period, offering lower prices (if you choose the right one) and peace of mind.
You can use comparison sites like MoneySuperMarket or Uswitch to find the best deals. Compare the gas and electricity unit rates against the upcoming cap to find the cheapest one. Consumer champions Which? suggest opting for a tariff that’s fixed for around 12 months, and try to avoid deals with hefty exit fees.
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At the time of writing, there are 20 fixed energy deals that undercut July’s cap. The cheapest option on the market is priced £248 lower, and that’s with Fuse Energy, according to Uswitch’s analysis.
For more ways to cut costs, find out if your provider offers any savings schemes, such as British Gas’s Peak Save scheme or EDF’s Sunday Saver Challenge. These schemes are available to customers with eligible smart meters and offer free electricity between certain hours of the day.
If you’re struggling with bills or find yourself falling into energy debt, some firms offer support grants – some worth up to £1,700. Check in with your supplier and find out if they have anything available, or simply let them know your situation and ask them for help.
Suppliers have an obligation to do all they can to help you pay your bill. They’ll come up with methods to help you get back in control, offering things like tailored repayment plans or routes to extra financial help and advice.
There are a few other incredibly helpful, free tools available, too. The Lightning Reach Portal helps connect people to personalised support, such as grants, benefits, and general bill help. I’ve heard numerous success stories using this tool, such as Angharad Thomas, 45, from Swansea, who found she was eligible for a £150 grant from OVO and a free heated blanket.
The key takeaway is not to stick your head in the sand. Like with most things money-related, proactiveness nearly always pays off, and in this instance, you could land yourself hundreds of pounds in savings with a few simple changes.