Archive: MoneySavingExpert's Money Tips Email

New. Price Cap hike confirmed
Energy bills to rise 10% for millions in Oct - but many could save by fixing. We've 8 need-to-knows, including...

- New calc. What will your increase be?
- Cheapest fixed deals undercut Oct cap
- Martin urges Govt to rethink Winter Fuel Payments

On Friday, the energy regulator Ofgem confirmed the Energy Price Cap will rise an average 10% from 1 October. So for the 85% of homes in England, Scotland & Wales on a price-capped standard tariff (that's everyone except those on fixed or special tariffs), for every £100 you spend now, you will typically spend £110 then.

That means this winter many will be paying nearly double what they were pre-crisis. And the next Price Cap in January is now predicted to rise a further 3%. This makes the current fixed deals out there (do a Cheap Energy Club comparison to find yours) look a decent bet, as you can likely save over the next 12 months, and get the added bonus of price certainty. 

You can watch Martin's instant video reaction above (he briefly interrupted his mini-sabbatical), and read on for our eight need-to-knows...

1. Prices will RISE an average 10% - use our calc for what YOU will pay. The Price Cap will increase to £1,717 a year on average for a typical dual-fuel Direct Debit household from 1 Oct to 31 Dec, up from £1,568/yr currently.

But remember, the Price Cap is misnamed as there is NO CAP ON THE MAX YOU PAY - it's on the underlying rates, so use more and you pay more. Plus, the cap varies by region and payment method.

Use our new 'What will I pay from October?' calculator to get an estimate of your energy costs from 1 October.

As the changes to standing charges are fairly small, with most of the increase on unit rates, higher users will see relatively higher increases than lower users - particularly those that use a lot of gas. We've full region-by-region rates in our guide. 

2. Prices are predicted to rise again over winter... Price Caps are set every three months. They're based mainly on wholesale costs - those the energy retailers pay - and we're already into the assessment period for the January 2025 cap.

Analysts at Cornwall Insight are currently predicting that after the 1 October rise, the Energy Price Cap will increase again by 3% in January to £1,762 a year for a typical household. Cornwall doesn't yet have predictions beyond March 2025 - though the further out you go, the more crystal-ball gazing there is.

Of course, this isn't set in stone - the predictions can change over time. But, at the moment, it looks like anyone who sticks on the Price Cap will pay about 11% more over the next year than they do now (as we've no prediction beyond March 2025, we've assumed it'll stay at next January's rate beyond that).

3. Today's cheapest standalone FIX is 3% MORE than the current Price Cap - but CHEAPER than October's cap. Contrast that to Price Cap predictions over the next year of an 11% rise, and it looks a strong time to fix, particularly if you value price certainty. Use our Cheap Energy Club comparison which will give you a bespoke prediction (based on your usage, area and payment method).  

Should you fix now or wait till October? Fixing now means most will pay more than the current Price Cap for a month, but, based on current predictions, should save over the year. You could wait to see if cheaper fixes launch, though there are no certainties, and these current fixes may not be around long, so it's worth considering fixing now.

PS: Cheap Energy Club now has bespoke help for those on dual-fuel and single-fuel standard variable and fixed tariffs. We initially relaunched our comparison at speed and only had bespoke help for those on dual-fuel monthly Direct Debit price-capped tariffs. We now have help for those on fixes, electricity-only and gas-only. 

You can see our guidance in the club on how predicted changes in the Price Cap will affect what you pay over the next year and whether a fix might be right for you.

On Eco 7, prepay, or pay by quarterly cash or cheque? We're still working on adding bespoke help to the tool for you, but currently you can find more help in Should I fix?

4. There are specialist tariffs worth considering too... There are a number of newer tariffs that are tough to display via the traditional comparison site model (we're trying to work through how to get it right for the future as this becomes more common) and even to fit into a table, so let us walk you through the main ones...

• Octopus Tracker & Agile (for existing customers) can be substantially cheaper. Existing Octopus customers can switch to its Tracker tariff, where rates change daily based on wholesale costs. It's been a big winner: 31% cheaper than the Price Cap on average over the last year, but of course you must be aware there's a risk it can go the other way... if wholesale rates continue to rise, it could be substantially more expensive. 
  
  Also, its elec-only 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.
   
  Not with Octopus? To get these, you could try first switching to the Octopus Price Cap tariff then, once in, switching to one of these.
  
  
• Got an EV? Consider a dedicated tariff. Several suppliers have launched specific two-rate tariffs that offer cheaper electricity overnight for charging your electric vehicle (EV). If your car charge costs make up a decent proportion of your electricity usage (or you can shift other usage to these hours), these can work well. See what's available in our EV tariffs guide.
  
  
• Want to fix for longer than a year? There are some. They're not that cheap. And frankly we can't help you decide. There are simply no assessments of what'll happen to prices at that time in such a volatile market as we have now. Yet if you really value certainty, it may win out with hindsight. See longer fixes.

5. Pensioners will need to find £100s more than last winter - Martin urges Gov to rethink Winter Fuel Payments.  Winter Fuel Payments - a tax-free payment of up to £300 which had been made to all pensioners to help with winter energy bills - are to be restricted to those on certain benefits and Pension Credit this winter. Martin has urged the Government to include a wider group, and to ensure the 800,000+ eligible who miss out on Pension Credit get it. "While energy will cost less than during last winter's crisis time, the reduction in rates compared with last year only equates to a drop of roughly £100 over the six winter months for a household with typical usage. Yet specific pensioner energy support has dropped by far more...  "Last year, pensioner homes got up to £300 extra per household cost-of-living support - that's gone, and its loss alone is far bigger than the saving made by slightly lower rates. Piling on top of that is the Government's new decision to means-test Winter Fuel Payments, which will leave all except usually those who claim Pension Credit missing out on a further £200 to £300.  "While there's a strong argument for ending the universality of Winter Fuel Payments, eligibility is being squeezed to too narrow a group. Those just above the thresholds will be hardest hit. I'm due to meet the Chancellor in a couple of weeks, and will then be urging her to look at methods to widen eligibility - such as to homes in council tax bands A to D - an imperfect but workable proxy for lower household incomes.  "The Government also has a huge moral imperative to ensure the 800,000+ people eligible for Pension Credit who don't get it are informed, educated and helped through the process. It is planning an awareness-raising campaign, but it needs to ensure that reaches every corner. Pension Credit is a crucial gateway benefit, giving access to a host of other entitlements, and now with the link to the Winter Fuel Payment, it makes it even more important to ensure fewer miss out."

6. Consultation to lower standing charges launched. We have long been campaigning to lower standing charges and on Friday Ofgem opened a consultation on options to reduce these. 

Reacting to the announcement, Martin said: "The standing charge is a daily poll tax that means everyone with gas and electricity will pay an average £338 a year from October, even if they don't use it. This moral hazard penalises lower users, often many who are vulnerable, and means they will face a proportionately larger rise.

"I've long called for change, so welcome this long-promised consultation on reducing standing charges - though I'm slightly disappointed even the maximum proposed reduction is only £100/yr - but I'll hold judgement until I've read the consultation in full."

7. Can you cut bills by cutting your use? Obviously, cutting use cuts bills - and hopefully there are cuts you can make to improve efficiency that don't affect your lifestyle too much. Start with energy saving tips, then add in our Energy mythbusting guide for less clear-cut issues.

8. What to do if you're struggling to pay. 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. There can be hardship & debt grants from energy suppliers. For far more guidance, see our full What to do if you're struggling to pay energy bills guide.

PS: Martin is still off on his mini-sabbatical until next month - he just returned on Friday to give his instant reaction to the Price Cap news.