Energy prices will rise by about 5% from an average of £1,834 a year to £1,928 in January, following Ofgem’s announcement of the new energy price cap.
In recent months providers have finally started to launch fixed price energy deals, which vanished from the market amid the energy crisis. However, many of these tariffs are only available to existing customers and there aren’t any that offer significant discounts on the energy price cap.
Dr Craig Lowrey, principal consultant at energy analysts Cornwall Insight, said: “Amid the cost-of-living crisis, the last thing households need is a rise in energy bills – especially going into the winter months.
“However, as is often the case in the energy market, new challenges have arisen, and our reliance on foreign energy has once again left the UK vulnerable to price increases caused by events around the globe.”
Cornwall Insight said that energy prices are unlikely to fall to pre-pandemic levels for the foreseeable future. Meanwhile, energy bills will remain high this winter, and the government won’t be providing the £400 energy rebate to reduce bills that it gave households last winter. Read more in our article The energy bills crisis: what can you do about soaring costs?
Here we answer your questions about your options when it comes to energy tariffs. We’ll regularly update this as the news around energy costs changes and it becomes possible to switch to a cheaper tariff.
Which tariff are you on?
If you’re considering moving to a different energy tariff, your first step should be to establish which tariff you’re currently on. You’ll be on a variable tariff, the cost of which is determined by the price cap, if your fixed energy tariff has ended and you haven’t switched to another deal, or if you’ve never switched your energy tariff, or if you were with a supplier that’s gone bust and you’ve been moved to another provider. The majority of UK households are currently on the energy price cap guarantee.
The cap gives an estimate of the maximum amount per year that an average household using a ‘typical’ amount of energy will pay. However, it’s by no means a limit, as if you live in a large property, or use a lot of energy, you’ll pay more than this. Read more in our article What is the energy price cap?
What if you’re locked into a fix?
If you’ve locked into a fixed rate energy tariff at a higher rate than the energy price cap due to energy price rises, it’s worth seeing whether there are any exit fees to leave your current deal. If there aren’t, they are relatively low, or it’s due to finish soon anyway, you may find you’re better moving onto your provider’s default tariff, unless cheaper tariffs become available.
If you’re on a fix that costs less than the energy price cap, you’ll continue on this until your fixed term ends. When your fix ends, see if it’s possible to switch your tariff when prices start to come down.
What are the cheapest energy deals?
Default tariffs are still likely to be the cheapest overall option for households over the coming months, unless your supplier offers a fixed tariff to existing customers that’s significantly lower than the price cap. In the past, you’d always shop around for another competitive fixed rate tariff to move onto, as these lock in the unit rates and standing charges of your gas and electricity for a certain period of time.
Should I fix my energy prices?
As mentioned, there are some fixed deals from some energy suppliers. According to MoneySavingExpert, a fixed deal that offers a decent discount on the current price cap could be a deal worth considering, if only for price certainty. However, at present there aren’t any deals offering significant savings, so it isn’t a simple decision, and no-one can know for certain where prices will stand in the future.
It’s worth contacting your particular energy supplier and asking if there are any deals they are offering that might be worth considering. Here are a few deals that are currently available but bear in mind that these are frequently changing:
Octopus also offers existing customers tariffs that aren’t a fix but could be worth considering. For example, the Octopus Tracker is a variable tariff where rates you pay change every day. Recently, it’s proved to be cheaper than the energy price cap, but it’s not for those seeking fixed bills as energy rates can change rapidly.
E.on Next is offering Next Pledge, which also isn’t a fix, as it stands at 3% less than every price cap for a 12-month term (so it moves in line with the price cap, which is reviewed every three months) with £50 dual-fuel exit fees. The price changes each quarter in line with the price cap changes. The deal is available to existing customers paying by direct debit.
The energy price cap changes every three months and given the uncertain economic outlook, no-one can be certain where they will go next.
This article will be updated if any new fixed rate deals appear on the market that could save you money. Beware, though, that fixing when prices start to fall could potentially end up costing more in the long run. However, it’s worth checking what deals your existing supplier is offering, as those for existing customers can be worth taking up, and any good deals won’t be available for long.
Figures were correct at time of writing (29.11.2023)
What can you do if you’re struggling to pay your energy bills?
It’s an extremely tough time for households battling rising costs across the board, from energy to food and other general utilities. As a first step, it’s worth contacting your energy provider if you’re struggling and slipping into the red. They may be able to help with a payment plan, or make other suggestions. Read more in our article What can you do if you can’t pay your energy bills?
It’s important to check whether you might be eligible for some financial support from the government. People on low incomes and receiving benefits can receive £900 in three instalments this year as part of the government’s cost of living package. The £900 payment follows a £650 grant for people in receipt of means-tested benefits that was paid in two instalments last year. Read more in our article Cost of living payments: who will get the £900 and when will it be paid?
If you were born on or before 26 September 1955, check if you’re entitled to the Winter Fuel payment. This is a tax-free amount of between £100 and £300 to help pay your heating bills over winter, and the amount you receive depends on your age and anyone else in your household.
The government will also give an extra £300 to those receiving the Winter Fuel payment, with a further £150 payment to those receiving disability benefits.
Alternatively, you may be able to get money off under the Warm Home Discount Scheme, which is a one-off £140 discount on your electricity bill paid to your supplier between September and March. Find out more in our guide Are you eligible for help with heating costs?
If your home is poorly insulated, you may be able to make improvements through installing insulation. You can find tips on how to reduce your energy bills in our article Energy saving tips: how to reduce your bills.
It’s also well worth checking whether you might be able to reduce some of your other outgoings, so you can free up a bit of extra cash to help you cover rising energy costs. Our article Seven ways to save on your household bills explains how you may be able to make savings.