Households across the UK are facing a significant 13% increase in the energy price cap from July, but Money Saving Expert Martin Lewis has issued a crucial warning, stating that for many, this rise is 'voluntary' and can be avoided. The cap, which dictates the maximum amount suppliers can charge per unit of energy for customers on standard variable tariffs, is set to push average annual bills to approximately £1,220.
Lewis highlighted that while the cap is increasing, the energy market has shifted, and a range of fixed-rate deals are now available below the new July cap level. This presents a unique opportunity for consumers to lock in lower prices and circumvent the impending rise. His advice urges those currently on standard variable tariffs, who will automatically see their bills increase, to actively compare and switch to a more favourable fixed deal.
The energy price cap is reviewed quarterly by Ofgem, the energy regulator, and reflects wholesale energy costs and other industry charges. While it has provided a safety net during periods of extreme price volatility, its upward adjustment for July means that remaining on a standard variable tariff will likely result in higher costs for millions of households. Fixed-rate tariffs, in contrast, offer price certainty for a set period, typically 12 or 24 months, shielding consumers from future cap increases within that timeframe.
Consumers are encouraged to use price comparison websites or directly contact their energy suppliers to explore available fixed-rate options. It is crucial to compare these offers against the new July price cap rates, not the current ones, to accurately assess potential savings. Lewis's intervention underscores the importance of proactive engagement with energy tariffs rather than passively accepting the default price cap increases.
The implications of not acting could see many households paying more than necessary for their energy, especially as fixed deals have become more competitive. The advice is particularly pertinent for those who have not switched tariffs in a while or have rolled onto a standard variable tariff after a previous fixed deal expired. Taking action now could lead to tangible savings on household budgets in the coming months.