WATTS UP
What will happen to energy prices in 2025 and how to save on your bills
Plus, we've explained whether it's worth getting a fixed deal
ENERGY bills are set to rise by £149 a year for millions of households this Autumn.
The energy regulator Ofgem has confirmed the new price cap, which comes into effect on October 1.
It means the average household will see their annual bill increase to £1,717 (up from £1,568) but the exact amount you pay depends on your usage.
The price cap changes every three months, affecting households on default or variable tariffs.
Around 29million customers will see their bills change agin from the start of they year, and then again in April, July and October 2025.
The energy price cap works by setting a limit on the maximum amount suppliers can charge for each unit of gas and electricity.
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The figure is calculated based on what Ofgem thinks an average household will use.
This is calculated assuming that a typical household uses 2,700 kWh of electricity and 11,500 kWh of gas across a 12-month period.
Those who use less will pay less, and those who use more will pay more.
That means despite the energy price cap averaging £1,717 from October, you might pay more or less than this amount, depending on how much you use.
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Your exact unit rates and standing charges will also vary based on your supplier, where you live and how you pay for your gas and electricity costs.
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What's happening to energy bills this winter?
The price cap will rise from £1,568 to £1,717 a year from October 1.
It means the average household paying by direct debt for dual fuel will see their annual bill go up by £149, or around £12 a month - a 10% increase.
The energy regulator said the maximum price a supplier can charge for gas will rise from 5.48p per kWh to 6.24p from October 1.
The price of electricity will rise from 22.36p per kWh to 24.50p.
Standing charges, which cover operational costs, will rise to 31.66p from 31.41p a day for gas and from 60.12p to 60.99p for electricity.
In preparation for this change, households should submit an up-to-date meter reading with their supplier before October 1.
This will ensure you are only charged for what you've used, and your energy company won't using estimated figures when prices rise in the Autumn.
When does the price cap change?
OFGEM reviews the cap on unit rates for those on the default tariff every three months.
This means the energy price cap can move up or down at four different points in the year.
Price cap rates are updated on the following dates:
- January 1
- April 1
- July 1
- October 1
Will energy prices rise again in January?
Analysts at Cornwall Insight are predicting another slight increase in the energy price cap in January 2025 due to recent tensions in the Russia-Ukraine war.
The latest forecast suggests that bills will rise to £1,762 a year for a typical household in January.
Experts at BFY Group have predicted that the energy price cap will fall slightly to £1,780 in April and down to £1,750 a year from July.
But these are just forecasts based on what experts think might happen.
There's no guarantee of what might happen, as wholesale energy prices are affected by many things and could still go up or down depending on world events.
Can I save with a fixed deal now?
Customers who lock into a fixed energy deal are charged the same gas and electricity rates during the term of the contract.
This means that prices will stay the same throughout and customers won't face large bill hikes if Ofgem were to increase the price cap.
But if Ofgem were to lower the price cap you might not be able to switch back to this without paying a hefty exit fee.
Several major suppliers, including Outfox the Market, are currently offering fixed deals that are cheaper than October's energy price cap.
Richard Neudegg, director of regulation at Uswitch.com, said: "The news of a 10% rise in energy rates from October is a harsh reminder of how quickly the energy market can reverse course.
"The good news is, households don't have to put up with the uncertainty of rising bills, as right now, there are fixed deals available that are cheaper than the new price cap."
However, you'll need to be quick to take advantage of the savings these offers yield.
Suppliers often reprice or remove their fixed energy tariffs from the market if wholesale gas prices are forecast to rise.
So it's wise to compare the best offers now to ensure you get the best deal before prices rise in October.
Outfox the Market is currently offering the cheapest deal on the open market to new and existing customers.
Its Fix'd Dual Aug24 v4.0 tariff costs a typical household £1,592 a year.
This means it is £125 cheaper than Ofgem's October price cap.
It comes with a £25 exit fee per fuel or £50 if you lock in with a dual fuel tariff.
Next is Ovo Energy's tariff, which costs a typical household £1,625 a year.
It comes with a £50 exit fee per fuel or £100 if you lock in with a dual fuel tariff.
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Octopus Energy's 12M Fixed August 2024 v3 costs £1,626 a year - £91 less than Ofgem's October price cap.
Remember to always compare prices before switching, as energy tariffs vary widely, and costs differ depending on where you live.
What energy bill help is available?
THERE'S a number of different ways to get help paying your energy bills if you're struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don't think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have grant schemes available to customers struggling to cover their bills.
But eligibility criteria varies depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don't need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill, and some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you're struggling.
Get in touch with your energy firm to see if you can apply.