Millions of UK households have about four weeks to review their energy tariffs before a planned increase in the price cap pushes up bills at the start of October, according to analysts.
The warning from price comparison service Uswitch comes as Ofgem’s energy price cap is set to rise by 4 per cent on October 1, taking the typical annual household bill to £1,723.
The increase will affect customers on standard variable tariffs, which account for a large share of the market. Uswitch is urging households to consider fixed-rate alternatives before the higher cap takes effect, arguing that competitive deals currently available could protect consumers from further increases over the winter.
Forecasts suggest the October rise may be followed by another increase in January. Cornwall Insight expects the average annual bill to rise a further 8.6 per cent to £1,872, representing a cumulative increase of 12.6 per cent over six months.
Some energy suppliers are forecasting an even larger increase at the start of next year, with the average of their predictions putting the typical annual bill at £1,948.
The prospect of higher bills is already weighing on consumers. According to Uswitch, 58 per cent of households on standard variable tariffs are worried about whether they will be able to afford to heat their homes this winter.
Almost a quarter, or 23 per cent, said they felt powerless in the face of the expected price increases, despite the availability of fixed tariffs that could shield some households from the rise.
Uswitch said there are currently 20 fixed-rate tariffs on the market priced below the incoming October price cap, offering potential savings of as much as £185 a year, equivalent to an 11 per cent reduction compared with standard variable rates.
The cheapest deal identified by the comparison service is an 18-month fixed tariff from Fuse Energy costing £1,538 a year for a typical household.
That is £334 below the £1,872 January price-cap forecast from Cornwall Insight.
Standard variable tariffs are suppliers’ default rates and allow unit prices to change, typically in response to changes in the energy price cap.
Consumers are generally moved automatically on to these tariffs when a previous fixed-term or promotional deal expires, meaning households can find themselves paying more without actively selecting a new tariff.
Ben Gallizzi, energy expert at Uswitch.com, said households should act before the October increase takes effect.
“For the millions of households on standard variable tariffs, energy bills will rise on October 1 unless they take action now.
“This is the time to get on top of your bills, with predictions showing an additional seven per cent increase in January, when we use significantly more energy to heat our homes.”
Gallizzi pointed to the number of fixed deals currently available below the price cap.
“There are 20 fixed deals available that are cheaper than the price cap, with savings on offer of up to £185 compared to October rates.
“These deals might not be around for long, so take a few minutes to check online to see what is available to you.”
The warning comes as households enter the autumn period facing renewed uncertainty over energy costs after several years of unusually high and volatile wholesale prices.
For consumers able to switch, the current gap between some fixed-rate tariffs and the incoming price cap offers a potential opportunity to reduce exposure to further rises.
But households considering fixing their bills will also need to weigh the certainty offered by a fixed deal against the possibility that wholesale energy prices could fall, taking the price cap lower in future.
For those who remain on standard variable tariffs, however, the immediate consequence is clearer: unless they switch, their bills will rise automatically on October 1.
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