The new energy price cap for Great Britain, set at £1,738 annually, took effect on January 1, 2025. This marks a 1.2% increase from the previous quarter. The cap applies to standard tariffs for gas and electricity, with most households seeing different amounts depending on their energy usage. However, it is important to note that consumers do not have to stick with the standard tariff.
In the past, during the energy crisis, many energy providers could not offer deals below the price cap, leading to the collapse of several companies. This resulted in a near shutdown of the switching market. Now, however, better deals are available, with fixed and variable tariffs offering rates lower than the price cap. These deals may also offer savings for consumers who lock in prices before a potential price increase in April 2025.
According to energy experts, households can save significant amounts by switching to alternative tariffs. For instance, switching to a 12-month fixed deal could save an average household up to £148 annually compared to the price cap. Consumers can explore such deals through price comparison websites, which provide easy-to-use platforms to compare different tariffs and savings.
For those in debt, it may still be possible to switch suppliers if the unpaid bill is less than 28 days old. Otherwise, settling the debt may be necessary before making a switch. Even in cases of debt, it could be worthwhile to check with the current supplier for a potential move to a new deal that offers lower rates.
To find a better deal, consumers can use price comparison websites like Uswitch, GoCompare, and The Energy Shop. These websites gather information from suppliers, making it simple to compare tariffs. Users need to provide basic details, such as energy usage and payment preferences, and the site will display various tariffs, including both fixed and variable options. Fixed tariffs offer the advantage of stable unit prices, although bills will still fluctuate based on usage.
When considering a deal, consumers should be mindful of exit fees. These are the charges incurred if they wish to switch providers before the deal ends. Exit fees can vary, with some as low as £25 per fuel, while others may charge up to £100 per fuel. It is important to factor these fees into the overall savings calculation to determine whether switching is worthwhile.
While comparison sites typically display deals from providers that pay them a commission, users can filter results to view all available offers, including those from companies that do not participate in commission-based programs. For example, providers like Home Energy and Outfox the Market offer competitive deals that may not appear on commission-based lists, but they can be accessed directly.
When choosing a deal, it is crucial to compare the projected monthly payments under a fixed deal with the expected payments under the price-capped variable tariff. In general, consumers should aim for deals that are cheaper than the price cap, have a duration of no more than 12 months, and avoid significant exit fees.
For those remaining on the default tariff, there should be no exit fee to switch. However, if a consumer has recently switched, it is important to check for any penalties. If penalties apply, the potential savings from a new deal should outweigh the costs.
Finally, whether staying with the current provider or switching, consumers should ensure they are not overpaying by submitting an accurate meter reading. This is particularly important in January, as submitting a reading ensures that energy used in December 2024 is billed at the lower rates, preventing overpayment at the higher January 2025 prices.
