ALL ABOARD!
Energy customers are set for a rollercoaster with bills this year – we explain how to ride it out
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MILLIONS of households are set for an energy bill rollercoaster this year.
We explain what's happening, whether you should consider fixing and how to ride it out.
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WHAT'S HAPPENING?
Over the past few years, energy bills have skyrocketed due to Covid lockdowns, cold winter and geopolitical issues such as Russia's invasion of Ukraine in early 2022.
The energy price cap limits the price you pay for energy, although your bill will vary depending on how much energy you use.
But households are set for some relief this summer when bills fall to their lowest level in two years, as the price cap, which is set by Ofgem, falls on July 1.
The typical cost for 29million households on their energy supplier's standard variable tariff will drop from £1,690 a year to £1,568 a year.
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However, this dip in costs will be short-lived, according to experts.
This is because Ofgem reviews the price cap every three months.
And the latest forecasts by energy consultants at Cornwall Insight suggest that typical bills will rise once again to £1,761 in October.
Ben Gallizzi, energy expert at Uswitch.com, said: "Energy bills will fall in July as the price cap drops 7%, providing some relief for households on a standard variable tariff.
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"Don't be lulled into a false sense of security, however, as energy analysts suggest that rates will rise 12% in October and stay that way through winter, taking the average annual household bill up £200 to £1,761."
So, what can households do to manage costs? We take a look at the options.
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SHOULD YOU FIX?
This is the question readers are asking us - but the answer isn't straightforward.
There are two types of energy deals on offer to customers - the standard tariff and fixed ones.
The standard tariff is limited by the price cap.
But several major suppliers, including British Gas, Octopus and Ovo Energy, are now offering cheap fixed deals below the current price cap.
Fixing is good if you want certainty - but it's a gamble because if prices end up falling, you could be locked into paying more.
Many have hefty exit fees worth up to £190 that you need to pay to exit them.
Customers also have to factor in the price cap predictions into their decision.
Ben Gallizzi, from uSwitch.com, added: "It's impossible to know what energy rates will be in six, nine or 12 months' time, but while prices continue to fluctuate, the best bet for households wanting to avoid payment uncertainty is to lock in a fixed deal that will give you at least a year of stability."
James Longley, managing director at Utility Bidder, said: "With Ofgem's energy price cap set to fall in July, UK customers will be questioning whether now is the right time to switch to a fixed energy deal.
"They give customers peace of mind and provide lots of choice in terms of start and end dates.
"It would be recommended that you look into and compare comparison sites to find the best deals for fixing your energy, and this should be only considered if you are locking in the cheapest rate."
Kara Gammell, personal finance expert at MoneySuperMarket added: "With speculation that the price cap could increase in October, switching to a fixed tariff now can provide some reassurance if you prefer to know how much your energy will cost for the next 12 months."
WHAT ARE THE BEST FIXED DEALS?
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There are a handful of fixed deals which beat October's price cap.
For example, Ecotricity is currently offering its Green 1 Year Fixed tariff, which costs a typical household £1,540 a year - £150 less than Ofgem's price cap.
That's 2% less than the July price cap (£1,568) but 12.5% cheaper than October's predicted cap.
This comes with a £75 exit fee per fuel - so £150 if you lock in with a duel fuel tariff.
While Outfox the Market's Fix'd Dual Jun24 v1.0 tariff will set a typical household back £1,576 a year - 0.5% more than the July price cap but 10.5% the predicted cap from October.
Octopus Energy's 12M Fixed tariff costs £1,611 a year, but there are no exit fees if you leave early.
For the average household, this will cost 2.5% more than the July price cap but 8.5% below the October cap.
Before switching, make sure to compare prices, as these vary based on where you live, and consider exit fees.
However, customers also need to know about other changes to the energy market which could affect prices.
TO FIX OR NOT TO FIX?
COMMENT by Tara Evans, Head of Consumer, at The Sun: FIX or not to fix? That is the question!
I really wish I had Mystic Meg's Crystal Ball to help with the answer to this question.
As we explain in this article - there are lots of issues to consider.
I've not fixed my energy bills yet, as I'm interested to see how the regulatory changes and election affect bills.
But whatever you decide, you must compare prices and fees before going ahead with a switch.
ENERGY MOVES YOU NEED TO NOTE
Just like any good rollercoaster, there are some unexpected twists and turns that you need to consider before switching.
Regulator Ofgem has revealed plans to end a ban on acquisition-only tariffs later this year.
This would mean that energy firms could offer cheap prices to new customers - but loyal ones would not have access.
The ban was an issue The Sun fought for, as it was ripping off loyal customers.
But now, experts think removing it could boost fixed-rate deals and inject competition back into the energy market.
However, one energy firm, Octopus Energy, has told The Sun that it won't be offering cheaper tariffs, even if the ban is axed.
The Sun will be keeping a close eye on how it affects prices and customers.
It would be good for competition, but it does mean the most vulnerable could lose out.
Ofgem is also considering changing how the price cap works in the future.
This may include a 'dynamic' price cap, which would mean energy firms could charge more at peak time and less during the night, for example.
But these changes have not been agreed, and there's no timeline for when they will happen yet.
HOW WILL THE ELECTION AFFECT BILLS?
The outcome of the election could also have an effect on bills.
Labour wants to create a publically owned energy firm dubbed Great British Energy, which it claims will cut household bills by £93billion.
The details remain patchy, and the party hasn't actually explained how it would lead to lower household bills.
The Conservative Party has yet to set out their ambitions to shake up the industry.
WHAT ABOUT FLEXIBLE TARIFFS
Customers who don't want to fix can rely on a standard tariff to follow the price cap.
Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: "These will almost always be at or below the price cap."
For example, E.ON Next's Pledge variable tariff offers a fixed discount of around three per cent on the price cap rates for 12 months.
It will save the average household around £50 a year but comes with a £50 exit fee if you switch before the year ends.
The deal is available to both new and existing customers.
For a bigger reward but at a higher risk, Octopus Energy offers two variable tariffs which track wholesale gas and electricity costs.
Customers on the Octopus Tracker see their prices change daily, but unit rates have remained consistently lower than the price cap in recent months.
For example, in the last 30 days, people living in Southern England on the Octopus Tracker paid a maximum of 20.3p per kWh for electricity and 4.81p per kWh of gas, which is 4.2p and 1.23p cheaper than the price cap per fuel.
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The Agile Octopus tariff works similarly to the Octopus Tracker, the main difference is the former’s prices change every half hour.
But anyone wishing to switch to any of these tracker tariffs must have a smart meter.
What energy bill help is available?
THERE'S a number of different ways to get help paying your energy bills if you're struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don't think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have grant schemes available to customers struggling to cover their bills.
But eligibility criteria varies depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £1,500.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don't need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill, and some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you're struggling.
Get in touch with your energy firm to see if you can apply.
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