Money Matters: Should I fix before the price cap changes next month?

In this week’s Money Matters column, Wrekin’s debt and energy manager Dan Bebbington looks into how the energy price cap is changing, and whether it’s worth fixing a deal.

We now know what the energy price cap is going to look like in the new year, and it’s going up again.

In January, the price cap will increase by 1.2%, taking the annual energy costs for an average household from the current price cap level of £1,717 to £1,738. This will mean an increase of around £1.75 a month.

However this figure is just an indication of what a typical household with average energy usage will pay, assuming they pay via direct debit on a dual fuel tariff (meaning gas and electricity are paid for together).

The actual amount you pay is determined by your energy use, which will probably be higher if you have a larger home and/or have more people living with you. Those who use other payment methods, including pre-pay meters, also pay differing amounts.

Currently, most households will be on price-capped tariffs, as deals and offers dried up with the onset of the energy crisis.

But since prices have stabilised somewhat, we are now seeing deals emerge again – albeit nowhere near the prices we were used to pre-2021.

With another price cap rise on the horizon, now is a good time to consider fixing a new deal to protect yourself from the upcoming increase.

Although we don’t know exactly what will happen to the price cap each quarter, it’s currently expected that there will be another slight rise in April 2025.

Therefore it may still be worth fixing now even if it will mean your bills go up slightly from what you are currently paying.

Money saving expert Martin Lewis says if you can get a deal for 1% more than the current price cap, you will probably save money over the course of the next year.

A number of suppliers including Eon, British Gas, Octopus, Outfox the Market and Ovo are currently offering deals within this range. Fixing will also give you certainty over what you’ll be paying, rather than waiting to see what the price cap does each quarter.

There are also deals available from E.On and EDF which give a commitment to staying below the price cap. These are not technically fixed deals as what you pay will change whenever the price cap does, but are still worth considering.

Meanwhile Octopus has a number of ‘tracker’ tariffs that fluctuate with wholesale energy prices. These can be a great source of savings, but you need to keep an eye in case the tariffs creep above the price cap.

Before signing up to a new contract, make sure you read all the terms and conditions to ensure it’s the best deal for you and you know what you’re agreeing to.

For example, many deals require you to have smart meters installed if you haven’t already got them, while others come with caveats that you have to take up boiler cover or other products from the provider in order to access the deal.

You can go to moneysavingexpert.com for more information on current deals. Wrekin Housing Group customers who need help with their energy costs can contact our Money Matters team.

4th December 2024