Annie
22nd Aug 2024
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3
minutes
Consumer specialist Jasmine Birtles is advising us that there is still time to secure favorable energy tariffs before the anticipated October price cap increase. The energy price cap decreased by 7% in July 2024, but it is expected to rise by 9% in October. With these changes on the horizon and the new government policies, now is an opportune moment to seek fixed tariffs for your energy bills to lock in a competitive rate for the next 12 months.
How to Shop Around for Energy Deals
The July Energy Price Cap
During the summer, households are benefiting from a double whammy as the energy price cap is reduced by 7% from 1st July, resulting in lower energy bills due to reduced heating and energy usage in the house.
If you are on a Direct Debit payment plan, it’s a good time to check the amount of credit accumulated on your energy account. With lower summer bills, you may be eligible for a refund from your energy provider, especially if your Direct Debit payments were set at a high level in the past year. This reduction in heating costs combined with a warm winter may have left you with significant credit.
The reduced July price cap is effective until 30th September. This means that the October cap is expected to rise. Therefore, it is advisable to consider switching tariffs to lock in a favorable rate. You have a few months to make this switch, allowing time to transition if you are currently on a fixed tariff expiring between now and 30th September 2024.
Why Fix Your Energy Tariff?
In recent years, energy pricing has become more volatile due to various factors like international unrest impacting supply. While fixing a energy tariff has been risky in the past, the combination of the July reduction and the anticipated October increase makes it a good time to explore available deals.
Variable tariffs fluctuate with the market, leading to potential surprises in energy bills even with reduced usage. Fixed tariffs provide stability but may result in higher costs when prices drop compared to those on variable tariffs.
Jasmine’s Thoughts on the Energy Price Cap:
“Opt for a cost-effective 12-month fixed plan if possible. This way, you can lock in the summer rate for several months. I wouldn’t recommend a longer term as there’s a possibility of bills decreasing in January. However, geopolitical tensions and the outcome of the General Election could impact prices in the next year. For now, it’s safest to opt for a 12-month fix and reassess later.”
How to Shop Around for Energy Deals
Your current supplier may offer an ideal fixed term tariff, so start by checking with them. Existing customers might receive preferential rates, so it’s worth logging into your online account or contacting your provider to explore tariff options. While your supplier cannot recommend the best rate for your usage, they can provide information about available options.
Make note of different rates for day and night (if applicable) along with the standing charge. Ensure that the term is for 12 months and then compare with other providers before making a decision.
Research other energy providers through their websites or comparison tools. Some providers offer switching incentives, and if you are already on a fixed term contract, consider any financial penalties for switching. Certain providers may cover these fees if you switch to their service.
Review your past year’s bills to determine your average annual usage. This is crucial as relying on cheaper summer months alone may not provide an accurate estimate of your yearly bill. Consider the kW/h price and standing charge, and calculate your usage over the last year to assess if switching tariffs will result in overall savings.
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