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Martin: Why energy prices ROSE 10% today even though wholesale rates have dropped. And how to use that to STOP TODAY'S RISE
Get off the Price Cap! Now's the time to compare energy - can you save £200+/yr?

Our energy market is perverse, especially right now. Today (1 Oct '24) the Energy Price Pants Cap, which dictates the rate eight in 10 homes in Eng, Scot & Wales pay, rose by 10% - meaning most of your bills will rise 10% too. Yet wholesale rates, those energy firms buy at, are far lower right now than a month ago - evidenced by the fact the deals you can switch to have got cheaper.

The disjoin is because the Price Cap is time-lagged. Each Cap lasts three months, yet the new 1 Oct to 31 Dec Cap is based on average wholesale rates from mid-May to mid-Aug - and they peaked in August.

It'll be January before the recent falls are factored in. But as that rate is an average over a 3mth period, the current predictions are a move of somewhere between +0.2% and -1.0% (a few weeks ago it was thought it'd rise a lot more). Yet switchable deals can, and right now are, taking advantage of shorter term dips. This leads to a simple rule...

... everyone should consider ditching price-capped tariffs right now and do a comparison.

That's because the Price Cap is a Pants Cap right now, too expensive compared with other deals available (see below). And this is the time to compare, as do it now and you'll see your actual savings compared with the next three months' rate (until now you were seeing it compared with the prior lower rate, even though that was just about to end).

Of course that's no help to the many vulnerable, elderly and struggling who find comparisons difficult. They'll stay on the higher rate (which is why we need a social tariff) and they're often the same people who should get the Winter Fuel Payment but won't because while they're eligible for Pension Credit they don't claim it. Anyway I digress... back to today's subject.

PS: If you find it easier to listen than read I've a 'beat the energy price rise' podcast special that'll talk you through it.

Quick Price Cap Need-To-Knows...

The cheapest fixes are slightly cheaper even than the prior Price Cap, so you can lock in for a year and you won't face the 10% rise.

This is the MAIN OPTION for most people right now, it should be seen as the default choice, the other options below are just alternatives.

Fixes are designed to give you peace of mind that you know exactly what you'll pay for a set time. Remember, though, it's the rate you pay for energy use that is locked in, not the total price. So, use more, you pay more - use less, you pay less. Exact prices depend on where you live and what you use, so go via our Cheap Energy Club comparison to find your bespoke cheapest (it'll also have the latest tariffs, in case things have changed by the time you read this).

- The fixed savings are only compared with the current Price Cap... what about once it ends? Currently, it's predicted that over the next year you'll pay roughly 1% less than the current Price Cap (see the graph above), so all the fixes above have a lot of wriggle room for things to change and them still to be cheaper than staying on the Cap. 

The further out you go, the more crystal ball gazing (and subject to change) predictions are. Yet we know the price till Dec and the Jan prediction that it'll likely stay roughly the same is pretty solid, as we're halfway through its assessment period. So over the heavy-use winter period savings are very likely to be strong.

After that... well, that's why checking the early exit penalties are important before signing up, as if, unexpectedly, things did get far cheaper you could always pay the early exit penalties and shift.

- Is it worth waiting a bit in case fixes get cheaper? It's impossible to say, the rate you can fix at moves roughly with wholesale rates, and like all markets they're volatile. Yet what we do know for certain is if you stick on the Cap you'll pay far more than you would on a cheap fix every day from today, so even if you did wait you'd need a very substantially cheaper fix to make up for it. The less stressful move is to fix today, though clearly with hindsight there's a chance waiting will win.

- Is it worth going for a longer fix? There are some longer fixes available, though they're not that cheap and unfortunately even the longest Price Cap predictions available only stretch till the end of next year. The market is still volatile, so it's impossible to know if it'll be worth it, though if you really value long-term certainty you may think so.

These tracker tariffs can be especially good for lower users as some have LOWER STANDING CHARGES... 

If you don't want to lock in to a set rate, these are a no-brainer. They promise to track the Price Cap (even though, as special tariffs, they're not subject to it), but at a lower rate, so you're always guaranteed to be lower than the Price Cap. And some have no exit fees, meaning you can switch penalty-free to another tariff if a better deal comes along.

Scottish Power also has a lower standing charges tariff, but it's only a £15/yr discount compared with E.on's £50. And Sainsbury's Energy has a tracker that is at the Price Cap, but just gives you 750 Nectar points (£3.75's worth) every three months, and extra points on Sainsbury's spending.

Highly volatile but with potentially the biggest savings, these are good for sophisticated energy users.

Octopus has two innovative tariffs where rates change rapidly. Many on them can save substantially, but as they move with wholesale rates, you need to understand they can work substantially against you too. 

These tariffs are only available to existing Octopus customers, but you could always switch to the Octopus standard tariff then once on it, opt for one of these (providing it hasn't changed things then).

- Tracker tariff: Price changes daily. Its Tracker tariff is available for gas & elec and has been 31% cheaper than the Price Cap on average over the last year. Though in recent weeks, it's been hovering around the Price Cap (ie, higher than cheap fixes), so you have to be able to cope with the volatility.

- Agile tariff: Elec-only price changes every 30mins. Its Agile tariff's rates change half-hourly, based on wholesale prices - good for those who can shift their usage nimbly to take advantage of super-cheap times. For example, if you've got storage heaters you can put on overnight, or other heavy use (electric vehicle charging) that you can shift to cheaper times. With this tariff, occasionally some half hours go so cheap you get paid to use it! Though, equally, in peak times it can be costly.

Several suppliers offer specific tariffs which offer cheaper electricity overnight for charging your electric vehicle (EV) and sometimes other household appliances. Full details of what's available in our EV tariffs guide but in brief there are two types:

• 'Add-on' tariffs where you can only charge your car on the cheaper rate. These are likely the cheapest for EVs at the moment if you've a compatible charger/vehicle. Ovo and Scottish Power offer these, so you can add EV charging to whichever of their tariffs you're currently on (including the Ovo fix above) and you'll get a cheap rate to charge your EV at any time. All other elec use in your home will be charged at your existing tariff rates.
  
  
• Two-rate tariffs giving you cheaper elec overnight. Most tariffs offer between five and seven off-peak hours a day (typically midnight to 5am) and charge around 7p to 9p per kilowatt hour of elec use (the Price Cap rate is 23p to 26p). The top EV tariffs right now are British Gas's Electric Driver and EDF's GoElectric Overnight. So the benefit here is if you've other appliances that you can use overnight, they'll cost less too.
  
  
• How do these differ from Octopus Agile? These tariffs have fixed overnight prices; Agile varies by the half hour and by the day, so it's more volatile - it can be much cheaper or costlier.
  
  

The key focus today is energy tariffs, but if you're struggling, it's always worth talking to your energy firm. Be polite and straight with it, and make sure you explain if you're vulnerable. We've lots of guides to help:

- Our What to do if you're struggling to pay energy bills guide, which can include hardship & debt grants.
- Energy saving tips.
- Heat the human, not the home.
- Energy mythbusting.

And finally, if you've not got a working smart meter and pay for your energy by monthly Direct Debit, do a meter reading as soon as possible, to reduce the risk that your supplier estimates that you've used more at the new higher rate than you have.