Energy Price Cap Predicted to Rise in October: Is it Time to Switch to a Fixed Tariff?

Energy bills are expected to rise in October when the price cap changes, with dual-fuel households facing an increase of £28 to £1,748. Suppliers Eon Next, EDF, and British Gas have published predictions, with further increases expected in January. Households on variable rates should consider taking out a fixed deal to save on energy bills.

Energy bills are expected to rise in October when the price cap changes, with dual-fuel households facing an increase of £28 to £1,748. This prediction is based on recent analysis by Cornwall Insight, a well-regarded independent energy research firm [1]. The new price cap will take effect from 1 October, and it is anticipated that the cost of energy will continue to fluctuate due to volatility in wholesale markets.

Suppliers such as Eon Next, EDF, and British Gas have also published their own predictions, with further increases expected in January. This underscores the uncertainty surrounding energy prices and highlights the importance of consumers taking proactive measures to manage their energy costs.

Given the expected price hikes, households on variable rates should consider taking out a fixed energy deal to secure their energy costs for the coming year. Fixed deals provide cost certainty and can help mitigate the impact of future price fluctuations. However, it is essential to weigh the risks and benefits of fixing, as prices could drop in the coming months, potentially making a fixed deal less competitive [2].

In response to the price cap prediction, Abigail Ward, policy manager at the Energy Saving Trust, emphasized the need for policy action to reduce energy bills. She highlighted the importance of the Warm Homes Plan, which aims to upgrade homes at scale, and called for a national advice service to empower households to take action [1].

The long-term outlook for energy prices remains uncertain, with Cornwall Insight predicting that prices will remain relatively flat over the next three years before beginning to drop away from 2028. However, wholesale prices are expected to remain well above averages seen from the last decade, even by 2031 [2].

In conclusion, households should be prepared for further energy price increases in the coming months and consider their options for managing their energy costs. Fixed deals can provide cost certainty, but consumers should carefully weigh the risks and benefits before making a decision.

References:

[1] https://energysavingtrust.org.uk/energy-price-cap-response/
[2] https://moneyweek.com/personal-finance/605440/will-energy-prices-go-down