Energy customers are in for a rollercoaster of bills this year

MILLIONS of households are set for a rollercoaster with their utility bills this year.

We’ll explain what’s going on, whether you should consider a repair, and how to fix it.

WHAT’S HAPPENING?

Over the past few years, energy bills have skyrocketed due to Covid lockdowns, a cold winter and geopolitical issues such as Russia’s invasion of Ukraine in early 2022.

An energy price cap limits the price you pay for energy, although your bill will vary depending on how much energy you use.

But households will get some relief this summer when bills fall to their lowest level in two years as the price cap set by Ofgem falls on July 1.

The typical cost of 29 million households on their energy supplier’s standard variable tariff will drop from £1,690 a year to £1,568 a year.

However, according to experts, this drop in costs will be short-lived.

This is because Ofgem reviews the price cap every three months.

And the latest forecasts from energy advisers Cornwall Insight suggest typical bills will rise again to £1,761 in October.

Ben Gallizzi, energy expert at Uswitch.com, said: “Energy bills will fall in July as the price cap drops by 7%, giving households on a standard variable tariff some relief.

“But don’t be lulled into a false sense of security, as energy analysts predict rates will rise by 12% in October and remain so through the winter, increasing the average annual household bill by £200 to £1,761.”

So what can households do to manage costs? Let’s look at the options.

SHOULD YOU FIX IT?

That’s the question readers ask us – but the answer isn’t straightforward.

Customers are offered two types of energy offers – standard tariff and fixed.

The standard tariff is limited by a price ceiling.

But several major suppliers, including British Gas, Octopus and Ovo Energy, are now offering cheap fixed deals below the current price cap.

A fix is ​​good if you want security – but it’s a gamble because if prices end up falling, you could be forced to pay more.

Many have high exit fees of up to £190 that you have to pay to leave them.

Customers also need to factor in price cap forecasts when making their decisions.

Ben Gallizzi of uSwitch.com added: “It’s impossible to know what energy rates will be in six, nine or 12 months’ time, but while prices continue to fluctuate, the best option for households looking to avoid payment uncertainty is to lock in a fixed deal , which will give you at least a year of stability.”

James Longley, chief executive of Utility Bidder, said: “With Ofgem’s energy price cap set to come down in July, UK customers will be asking whether now is the right time to switch to a fixed energy deal.

“They give customers peace of mind and a lot of options when it comes to start and end dates.

“We recommend that you look at comparison sites and compare them to find the best deals to fix your energy, and this should only be considered if you’re locking in the cheapest rate.”

Kara Gammell, personal finance expert at MoneySuperMarket, added: “With speculation that the price cap could rise in October, switching to a fixed tariff now can provide some certainty if you want to know how much your energy will cost over the next 12 months .”

WHAT ARE THE BEST FIXED OFFERS?

There are several solid trades that break the October price ceiling.

For example, Ecotricity currently offers its Green 1 Year Fixed tariff, which costs a typical household £1,540 a year – £150 less than Ofgem’s price cap.

This is 2% less than the July price cap (£1,568) but 12.5% ​​cheaper than the predicted October cap.

This comes with a £75 fuel exit fee – so £150 if you lock in with a duel fuel tariff.

While the Outfox the Market Fix’d Dual Jun24 v1.0 tariff will set the typical household back at £1,576 a year – 0.5% more than July’s price cap, but 10.5% more than October’s predicted cap.

Octopus Energy’s 12M fixed plan costs £1,611 a year, but there are no exit charges if you leave early.

For the average household, it will cost 2.5% more than the July price cap, but 8.5% less than the October cap.

Be sure to compare prices before making the switch, as they vary depending on where you live, and consider exit fees.

However, customers also need to know about other changes in the energy market that could affect prices.

ENERGY MOVEMENTS YOU MUST NOTICE

As with any good rollercoaster, there are some unexpected twists and turns that you need to consider before making the transition.

Regulator Ofgem has revealed plans to end the ban on acquisition-only tariffs later this year.

This would mean that energy companies could offer cheap prices to new customers – but loyal ones would not be able to access them.

The ban was an issue The Sun fought for because it was ripping off loyal customers.

But now experts believe its removal could boost fixed-rate deals and return competition to the energy market.

However, one energy firm, Octopus Energy, told The Sun it would not offer cheaper tariffs even if the ban is lifted.

Sun will be closely monitoring how this affects pricing and customers.

It would be good for competition, but it means the most vulnerable could lose out.

Ofgem is also considering changing how the price cap works in the future.

This may include a “dynamic” price cap, which would mean, for example, that energy firms could charge more at peak times and less at night.

However, these changes have not been agreed upon and there is no timetable yet for when they will happen.

HOW WILL IT AFFECT BILLING CHOICES?

The result of the election could also affect the draft laws.

Labor wants to create a publicly owned energy firm called Great British Energy, which it says will cut household bills by £93bn.

The details remain patchy, and the party hasn’t really explained how it would lead to lower household bills.

The Conservative Party has yet to outline its ambitions to shake up the industry.

WHAT FLEXIBLE TARIFFS

Customers who do not want to fix can rely on a standard tariff that will respect the price ceiling.

Kara Gammell, personal finance expert at comparison website Money Supermarket Group, says: “These will almost always be at or below the price cap.”

For example, E.ON Next’s Pledge variable tariff offers a fixed discount of around three percent off the price cap rates for 12 months.

The average household will save around £50 a year, but if you switch before the end of the year, you’ll be hit with a £50 exit fee.

The promotion is available to new and existing customers.

For higher reward but higher risk, Octopus Energy offers two variable tariffs that track wholesale gas and electricity costs.

Customers on Octopus Tracker see their prices change daily, but unit rates have remained consistently below the price cap in recent months.

For example, in the last 30 days people living in southern England paid a maximum of 20.3 pence per kWh for electricity and 4.81 pence per kWh for gas on Octopus Tracker, which is 4.2 pence and 1.23 pence cheaper than the fuel price cap . .

The Agile Octopus tariff works similarly to the Octopus Tracker, the main difference being that the prices of the former change every half hour.

But anyone who wants to switch to one of these tracking plans must have a smart meter.