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ARCHIVED ARTICLE This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 16/09/2021

Hikes in energy prices have been talked about frequently in recent months. Prices are going up as the cost of fossil fuel soars. Energy suppliers will look to pass on this increased cost to their customers where possible, either through increasing their rates on standard and variable tariffs. The maximum rate energy suppliers can charge for energy is set by Ofgem and is called a price cap. This cap increases on 1 October, meaning those on standard tariffs will see increases of up to 13% on their energy costs. The price cap is reviewed every six months and experts believe that another increase is highly possible.

It is for this reason that those on all types of tariffs should review their energy costs and see if switching or moving to fixed deal would get them ahead of future rate increases.

Those on a standard tariff will gain protection from future rates increases by switching to a fixed energy deal. Even if the cost saving is small right now, because the cap is being reviewed again in April 2022 and experts predicting another increase, the saving over the next 12-months could be greater. If rates did unexpectedly fall then consumers could choose to pay an early exit fee to switch again.

Those with a cheap fixed or variable deal could move to a fix now for security or continue to make savings with their current lower rates. It is inevitable that the cost of energy for those on a low-cost deal is going to increase. Consumers need to decide when they want to face this price increase. Either fix earlier and lose the benefit sooner of the lower cost deal but protecting from another potential increase later; or fix when the cheaper tariff ends, maximising the time paying a lower rate but with a potential greater jump in cost for the future.

Energy firms in crisis

Four energy firms have gone bust this month including PfP Energy, MoneyPlus Energy, The People’s Energy and Utility Point. Consumers of these firms will continue to have their electricity and gas supplied and Ofgem will then find a new supplier to provide their energy. Any outstanding credit balances of domestic customers is also protected. Consumers are advised not to switch until their new energy provider has contacted them and to take a meter reading. Find out more from Ofgem.

How to switch your energy supplier

Find out more about how to switch your energy supplier.


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