Igloo Energy to hike prices by 12% from August – but it's still among the cheaper players on the market
About 180,000 Igloo Energy customers will see their gas and electricity bills rise by an average of 12% from August, after the firm announced it's hiking the price of its variable tariff. We've been warning for weeks that Igloo was likely to raise prices due to soaring wholesale costs though, so the move doesn't come as a surprise – and even after the rise Igloo will still be one of the cheaper players in the market.
Igloo's announced that the price of its 'Pioneer' tariff will rise by £111/yr to an average £1,078/yr, based on typical use, from 2 August. We've full analysis below plus what to do if you're affected – if you want to do a comparison to check if you can switch and save, you can use Cheap Energy Club.
'This price rise is not a surprise - wholesale prices have exploded'
Martin Lewis, founder of MoneySavingExpert.com said: "Igloo’s price rise is not a surprise. In fact, as it has been one of our top pick tariffs in the last few months, we always strongly warned that it is a variable deal – and were pretty certain it’d increase prices. I had expected the rise to be around 10%, so 12% is a little disappointing – but still within roughly the same ball park.
"The key here is to put this in context of what’s happening in the marketplace. Wholesale prices – the prices energy firms pay for gas and electricity – have exploded. The cost of electricity is up 50% in last six months. Almost all the big brands that can put prices up have done so, and Igloo is one of the last.
"The reason you haven’t seen headlines about that is that the really big names – British Gas, EDF, and others – can’t increase the price of their standard variable tariffs because they are already at the price cap. That moves next in October when we expect to see it go up by about 10% and all those big firms will almost certainly whack their rates up then.
"When you look at Igloo in that context, frustrating as it may feel, even after this big rise it is still one of the cheaper players on the market.
"Savings are possible though. If you do a comparison you will see a few substantially cheaper deals, but they are variable too, and likely just a few weeks behind Igloo in the price rise cycle. So if you move to them, there’s a decent chance they’ll put prices up soon after your switch too. If you’re happy with a variable, then Igloo at least has a strong customer service rating, and a relatively consistent price track record.
"The alternative is to go for a fix, where you lock in the price – it’s possible right now to do that and save around £50/yr. So if the price rise has spooked you that’s worth looking at – you won’t save much in the short term but at least you get certainty."
Surging wholesale costs have driven price rises across the board this year
Wholesale energy prices – ie, what suppliers pay for gas and electricity - have risen massively this year. Wholesale electricity prices are now at their highest since 2008, and have risen by a huge 50% since the start of the year. Meanwhile the wholesale cost of gas is at its highest in at least three years and has actually more than doubled since the start of this year.
Unsurprisingly, all this means that energy prices, including the price of the cheapest deals on the market, have risen throughout the year. In April, regulator Ofgem raised the energy price cap by an average £96/year, and experts have predicted a further £112/year rise when the price cap is adjusted again on 1 October. And at the start of the year, the cheapest one-year fix was a typical £888/yr, while the cheapest right now is £956/yr – a jump of £68/year.
How will Igloo's price compare after the hike?
Igloo only has one tariff – a variable deal called ‘Pioneer’ for dual-fuel and electricity-only households paying by direct debit. On typical use, its price will rise by £111/yr, from £967/yr to £1,078/yr, though of course what you actually pay will vary depending on where you live and how much energy you use.
Igloo’s new price from August will now be only an average £60/yr under Ofgem's current price cap of £1,138/yr, based on typical dual-fuel use. However, we know the cap is set to change in October – and compared to the new price cap predicted by energy analysts Cornwall Insight, Igloo's new price will be £172/yr cheaper.
The table below shows how Igloo's new price compares. As Martin's explained above, there are substantially cheaper variable deals out there currently, but there's a good chance prices with these tariffs could rise. Alternatively you can save around £50/year switching to the cheapest fixed tariff with good service. To find out what you can save, do a full comparison on our Cheap Energy Club - or if you find choosing confusing, our Pick Me A Tariff tools make it easier.
|Predicted price cap from 1 Oct||£1,250|
|Current price cap / standard big six energy tariff||£1,138|
|Current cheapest big name deal||£1,080|
|Igloo Pioneer deal from 2 August||£1,078|
|Current cheapest fix with good service||£1,030|
|Current cheapest variable with good service||£947|
|Current market cheapest – but it's variable & from a tiddler with no service feedback||£845|
|Based on Ofgem figures for medium dual-fuel use. Pay via monthly direct debit. Including £25 Cheap Energy Club cashback (where paid).|
What does Igloo say?
An Igloo Energy spokesperson said: "We recognise it’s been a tough year for everyone, so we’ve done all we can to absorb this impact for as long as possible. But costs have continued to rise, and we reluctantly need to increase our energy prices by 12%.
"Our history of price changes demonstrates that we will reduce our prices again as soon as wholesale costs allow us to. We are continuing to closely monitor the market to make sure our customers are always on the best deal that we can offer."
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