Britons are being urged to check energy tariffs thoroughly before making a switch ahead of the next energy price cap drop as certain regulations could see people forking out hundreds more without realising.
This is because some come with sizeable early exit fees, which could lead to consumers being “tied down” for a while.
More competitive fixed energy deals are entering the market as wholesale prices continue to fall. Cornwall Insight has announced its next Ofgem energy price cap prediction, which could result in bills being about seven percent lower.
The market researcher said: “For a typical dual fuel household, we predict the July price cap to be £1,574.37 per annum.
“This is a fall of approximately seven percent from the current price cap which was set at £1,690 per year for a typical consumer.
“If predictions are correct this would represent a 25 percent drop over the past year, with prices around £500 a year lower than July 2023.”
It added: “Looking further ahead, we forecast the cap will rise slightly in October before falling again in January 2025.”
However, Alastair Douglas, CEO at TotallyMoney pointed out that despite this price drop, bills are still “hundreds of pounds more” than they were a few years ago.
Mr Douglas said: “During the same time, the overall cost of living has shot up, making things even harder for millions of people across the country.
“Not long ago, there were almost 50 energy firms fighting for customers, offering price-cap-busting deals for those willing to switch.
“But now, six suppliers dominate 70 percent of the market, meaning competition has bottomed out, and the price cap has essentially become a price fix. One option mooted by the regulator is that it might remove acquisition tariffs — and if it does, it needs to protect existing customers from being punished for their loyalty.”
Mr Douglas noted: “There are some offers which under-cut the price cap coming onto the market, so it’s worth checking to see if you can save money on your bills.”
However, he added: “Always read the small print, as some might come with hefty early-exit fees of up to £300, meaning you might be tied down for a while.”
A number of energy providers, from Octopus Energy and British Gas to Ecotricty are all offering deals up to nine percent cheaper than Ofgem’s current energy price cap, according to new research from Uswitch.com.
However, it’s important to take note of how the price cap may fall over the year before deciding on a fix, as it may mean households pay more than what they could be on a variable rate.
EDF has launched a new price cap forecasting service to help empower consumers to make the “best-informed” choice for their energy tariffs.
Every Tuesday, EDF will update its website with their latest projections and what Ofgem’s price cap is expected to cost for the coming year for an average household.
This will help consumers to compare up-to-date costs against fixed deals in the market. The service is available to all consumers, not just EDF customers.
