Energy bills are set to climb for millions of households this July, with the Energy Price Cap increasing by 13%. However, consumer champion Martin Lewis has issued a stark warning: for most people, this rise is 'voluntary' and can, and should, be avoided.
If you're currently on a standard variable tariff, you're directly affected by the Energy Price Cap. This cap limits the maximum amount suppliers can charge you for each unit of gas and electricity, as well as the standing charge. The upcoming 13% increase means that if you do nothing, your energy bills will go up from July.
What Changed and By How Much?
The Energy Price Cap, which dictates the maximum rates for standard variable tariffs, is rising by 13% from July. This means that for every unit of energy you use, you'll be paying more. While specific unit rates and standing charges vary slightly by region, the overall impact is a significant jump in your monthly outgoings if you remain on a capped tariff.
Martin Lewis's advice hinges on the fact that, unlike previous periods, there are now fixed-rate energy deals available that are cheaper than the new July Price Cap. Staying on your current standard variable tariff means accepting the 13% hike, which is why he labels it 'voluntary'.
What to do right now
The key to avoiding this 'voluntary' rise is to act before July. Here's a step-by-step guide:
- Check Your Current Tariff: Understand if you're on a standard variable tariff or a fixed deal that's about to end. If you're fixed, check its end date.
- Compare Fixed Deals: Use comparison websites to see what fixed-rate tariffs are currently on offer. Crucially, compare these against what you would pay under the *new* July Price Cap. Money Saving Expert's tools are a good starting point for this comparison.
- Calculate Potential Savings: Look for fixed deals that are priced below the expected July cap. Even a small saving per unit can add up significantly over a year.
- Consider Switching: If you find a fixed deal that offers a clear saving compared to the July cap, it may be worth switching. Fixing your rate means your unit prices won't change for the duration of the deal, typically 12 or 24 months.
But there are risks
While fixing can protect you from the immediate July rise, it's important to consider the caveats. Fixed deals lock you into a price for a set period. If wholesale energy prices were to fall dramatically in the future, the Energy Price Cap could drop below your fixed rate, meaning you'd be paying more than those on variable tariffs. However, current expert advice, as highlighted by Martin Lewis, suggests that fixing below the July cap is a sensible move right now.
When Effective
The 13% increase to the Energy Price Cap will come into effect from July. This means you need to consider your options and potentially switch before your July bill arrives to avoid the higher rates.
Where to get help
For detailed comparisons and tools to help you find the best fixed deals, Money Saving Expert's website is a comprehensive resource. They provide up-to-date information on the Energy Price Cap and available tariffs.
What this means for you
If you're on a standard variable energy tariff, taking action now could save you hundreds of pounds on your annual energy bill by avoiding the 13% increase coming in July. By switching to a cheaper fixed deal, you lock in a lower rate and gain certainty over your energy costs for the next year or two.
Sources
- Money Saving Expert — Martin Lewis: For most people, July’s 13% Energy Price Cap rise is voluntary – it can (and should) be avoided
- Money Saving Expert — How will energy prices change?
- Money Saving Expert — Should I fix my energy or stay on the Price Cap?