Ofgem announced yesterday that the price cap which protects people on Standard Variable Tariffs (SVG) is set to rise by nearly 10% in April.
What does the price cap mean?
Ofgem have been clear that this price rise is due to an increase in the wholesale costs energy suppliers pay for energy.
We think this is a clear signal that not only will SVGs rise in cost, but also the few remaining cheaper fixed deals will also go up in price.
“We can assure these customers that they remain protected from being overcharged for their energy and that these increases are only due to actual rises in energy costs, rather than excess charges from supplier profiteering,” said Dermot Nolan, chief executive of Ofgem.
For an average household that uses 12,000 kWh gas and 3,100 kWh of electricity per year this is a £117 price increase. This will make a typical household pay £1,254 a year for their gas and electricity. The above figures are for a typical household, the exact price rise will depend on how much energy you use.
There are about 11 million households on this standard variable tariff.
There are still fixed deals available for around £1000 per year (for typical usage) so all these 11 million households could save about £250 per year if they switched to a cheaper deal.
We think that these fixed deals will be disappearing or increasing in price so if you are not on a cheap tariff switch now
You can read more on the price cap on the BBC site(opens in a new window) – their advice is the same as ours – switch to a cheaper tariff and save money.
What about prepayment meter customers?
Prepayment customers will also see price rises and have fewer options to switch to a cheaper deal.
What are the best available deals at the moment (February 2019)
The below are based around typical household usage of 12,000 kWh gas and 3100 kWh electricity consumption per year
Best Long term Fix:
EDF Simply Fixed Feb21 – a 2 year fixed deal – typical cost £1,046
NOTE: this is not the cheapest deal available but it is fixed for 2 years. You will need to scroll down the list on our switching site to find this.
Best 100% green
Tonik energy, SO energy and Octopus all have 1 year fixed plans with 100% renewable energy.
Best Cheap fixes:
(all under or very close to £1000 per year)
Lumo app only fixed (*Must manage your account via an app . *Smart meter installation mandatory, not eligible for existing smart meter customers)
First Utility April 2020
EDF, Zebra, Toto, GNE also have 1 year fixes that are £250 cheaper than the new Price cap, so will all save you money.
Are Small suppliers risky?
In the last year or so 8 small energy suppliers have gone bust. (one Select, Gen4U, Iresa, Future Energy, Usio Energy, Extra Energy and Spark)
However, if this happens you are switched to an existing provider, so in any event you are protected
We would advise against paying in advance for your energy even though your credit balances should be protected.
There is no doubt that small suppliers have been offering better tariffs than the big suppliers – as can be seen by the 5 million households that switched to small suppliers last year. If you look at the financial reports of the big suppliers (like SSE this morning saying they have lost 160,000 customers).
If you are really risk averse, choose a slightly more expensive tariff from a big supplier (like the 2 year fixed deal from EDF). If not then choose one of the cheaper tariffs from one of the small suppliers.