How to beat the Energy Price Cap: Fix now or forever hold your peace

On August 29th, Ofgem, the energy regulator, announced that the Energy Price Cap will rise an average of 10% from 1 October 2024. 

This is a huge increase and will affect anyone on a price-capped standard tariff – meaning that most UK households will end up paying almost twice as much as they were just a few years ago, before the energy crisis hit.

According to National Energy Action, this energy bill rise will plunge 400,000 UK households into fuel poverty. 

If you hadn’t previously considered a fixed price deal on your energy supply now is the time. In this article, we explain what the Energy Price Cap is, and how a fixed price deal can save you money by protecting you from fluctuating prices and further hikes on your bills. 

What is the Energy Price Cap?

The Energy Price Cap is a bit of a mis-leading term. There is no maximum on how much you pay for your energy bills – rather it’s the underlying rates that energy companies use to calculate your bill which are capped. If you are on a price-capped standard tariff the more fuel you use, the higher your bill will be. 

The Price Cap changes depending on the fluctuating costs that energy retailers pay when buying gas wholesale. It is set every three months – and there are industry experts who make predictions about how much costs will rise in the future. 

Over the last couple of years, a confluence of different factors has sent gas prices sky-rocketing: from conflict in the Middle East and Ukraine, to the detrimental effect of bad weather on sources of renewable energy. 

Rising wholesale gas prices mean that the Price Cap has been re-set higher numerous times. We are now in the assessment period for the January 2025 cap: analysts have predicted that even after the rise Ofgem has confirmed for October, the Price Cap will increase again in January – perhaps by another 3%! 

While the prediction is just that – a prediction – it seems likely that in 2025, most households will be paying even more on top of the 10% rise due in October. 

How to calculate how much your bills will increase

As well as being changed every three months, the Price Cap also varies depending on the region you live in and the payment method you use – whether it’s direct debit, a pre-pay metre or pay on receipt of bill rates.

Working out how much your energy bills are set to rise can help you decide whether to stick with your current supplier – or make a switch. 

Money Saving Expert has a free tool that can help you calculate how much your increase will be based on your usage, area and payment method. Try their calculator 

How to save on your energy bills?

The Ofgem announcement means that the Price Cap for a typical dual-fuel Direct Debit household will increase from £1,568 to £1,717 a year on average. However, there are ways of avoiding, or at least minimising, these hikes. 

Switch to a fixed tariff 

Unlike the capped standard tariff, fixed tariffs can ensure that the price you pay for energy will stay the same for a year – or even longer. 

Fixed deals may be slightly more expensive than the current capped rates, but they will give you peace of mind when it comes to price certainty. You’ll know exactly how much you’ll be paying with no nasty surprises. In times when energy costs are only getting higher, a fixed tariff is almost guaranteed to save you money over the next year. 

Finding the cheapest fixed deal now will help you beat the October cap: if you fix now you’ll pay more than the current Price Cap for September but should end up on a lower rate for the rest of the year. 

There are even some tariffs that are longer than a year! However, you should think carefully about whether you’ll end up regretting it if the price of wholesale gas begins to fall after a year.  

Along with fixed deals, some other kinds of specialist tariffs may be worth looking into.

On Octopus’ Tracker Tariff the rates you pay change daily depending on the fluctuation of wholesale prices. However, while it can end up significantly cheaper than the Price Cap, it could potentially end up costing more if there are sudden price increases. 

There are also firms offering specific two-rate tariffs for people who have electric vehicles: the price of electricity used at night to charge up a vehicle will be cheaper. 

Cut your use  

If you are not sure about agreeing to a fixed rate, you will want to consider how to cut your energy use to bring your bill down. 

There are so many ways you can reduce your energy consumption. Draught proofing and other kinds of home repairs can significantly reduce home heat loss. Ensuring that you don’t leave devices running or choosing to wash your clothes at a lower temperature are some small ways of being more mindful of how much energy you use. You could also invest in energy-efficient products like light bulbs and appliances. 

We have some simple but effective tips for improving the energy efficiency and consumption in your home. 

Check your energy bills are accurate

It may be a drag but doing due diligence to make sure your bill is being calculated correctly could end up saving you hundred of pounds.

We have a guide on how to tell if your energy bill is wrong so you can make sure that you aren’t overpaying. 

Ask your energy company for extra help 

The government has worked with energy suppliers to create hardship and debt grants for people struggling with the rising costs of heating their homes. 

If you’re struggling to pay your bills it’s always worth talking to your energy firm. Especially if you are vulnerable, such as a pensioner, disabled or living with a chronic illness, it’s really important that your supplier is aware so they can make sure that you receive any support that you are entitled to.

If you have any thoughts on this topic, or any other consumer issues you would like us to cover, feel free to get in touch with us at support@resolver.co.uk.