Today, 15 million homes will see their gas and electricity bills rise by almost £100 a year. This is because the price cap for households on standard default tariffs is rising to £1,138.
As a result, 11 million homes across the country will see their dual fuel bills rise by £96. On top of this, a further four million homes on pre-payment meters will see their annual dual fuel bills rise to £1,156 for the year, which is an increase of £87.
Thankfully, if you’re on a standard variable tariff, then there’s no need to panic. By running an online energy comparison and switching provider today, you can avoid the price hike and lock in a great deal on your gas and electricity bills for the coming year.
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Why are prices rising?
The energy price cap is the maximum amount suppliers can charge customers on default or standard variable tariffs. It was introduced by Ofgem in 2019 and the regulator says it “protects consumers who do not switch from overpaying for energy, while encouraging competition in the retail market”. The cap is reviewed every six months and last October it fell by £84.
Ofgem announced that the cap would rise from April 1 back in February and Big Six providers such as British Gas, E.ON and Npower immediately announced they would raise their prices to the maximum allowed, while SSE and EDF hiked their prices to £1 below the cap.
Although some critics argue that these energy companies are using the price cap as a target and an excuse to raise prices for vulnerable customers, the suppliers say that prices are rising due to changing wholesale costs (this is the amount it costs a supplier to get the energy in the first place).
At the end of last year, the cap fell because wholesale demand collapsed due to the coronavirus pandemic. However, energy demand is expected to reach pre-Covid levels once again this summer and wholesale prices will rise alongside this increase in demand.
Although prices are rising, Ofgem points out that the price cap will continue to save 15 million households up to £100 a year on their energy bills by providing a safety net against poor pricing practices.
How can I avoid the price hike?
If you’re on a standard variable tariff, you can avoid paying more for your gas and electricity over the next year. In fact, by taking five minutes out of your day and switching to a fixed deal, you could save hundreds of pounds and lock in a great rate.
If you like the supplier you’re currently with, call them and ask to be switched to a cheaper deal. Alternatively, if you’d like to try a different provider, then use an energy comparison service to find all the best energy deals in your area.
A comparison service will provide you with quotes from all of the country’s best energy suppliers and you can also filter your results so you only see providers that match your needs, such as those that provide green energy or suppliers who will give you a smart meter. By providing some basic details about your home and your energy use, it’s estimated that you could save over £200 against the new price cap.
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TechRadar has partnered with MoneySupermarket to help you find the best energy deals in your area. Our energy comparison tool takes less than five minutes to use, and could save you hundreds on your energy bills. Save money now (opens in new tab)