Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Start Looking for a Fix on Your Energy Prices NOW
Reading Time: 3 minutesThe energy price cap goes down 7% in July 2024 – but it’s set to rise again in October. With that in mind, and the impending General Election and concerning world events, now is an ideal time to start looking for a fixed tariff on your energy bills to lock in a good rate over the next 12 months.
How to Shop Around for Energy Deals
The July Energy Price Cap
In a two-for-one bonus for households this summer, not only is the energy price cap reducing by 7% from 1st July, reduced need for heating and energy in the house will slash energy bills for a few months.
If you’re on a Direct Debit payment, this is a good time to check how much credit you’ve built up on your energy account too. Your summer bills will be lower, so you could get some money back from your energy supplier if you need some more cash in your pocket. Direct Debits have been set at an historically high level in the past year, combined with a warm winter reducing heating costs, so you could have hundreds of pounds sitting there!
The July price cap only applies to 30th September. This means that the October cap could – and is predicted to – rise. That’s why it’s a good time to start preparing to switch tariffs to lock in a good rate. You have a few months to do so, which gives you time to switch if your on a fixed tariff due to end between now and 30th September 2024.
Why Fix Your Energy Tariff?
As we’ve seen in recent years, energy pricing has become increasingly volatile. There are several reasons for this, such as international unrest disrupting supply.
A fixed energy tariff has previously been risky in recent years, as you might have ended up fixing at a higher price overall and locking yourself into a contract when others are paying less for their energy. However, the combination of the July reduction AND the anticipated October increase, means now is a good time to make the most of deals.
Variable tariffs go up and down with the market – which means you can easily be surprised with a large energy bill even with a reduction in usage. Fixed tariffs don’t do this, but that does mean when prices drop you could pay more than those on a variable.
Jasmine’s Thoughts on the Energy Price Cap:
Go for a nice cheap 12-month fix if you can. That way, you lock in the summer rate for a good few months. I wouldn’t go for more than that, as it’s likely that bills will come down a little in January. Of course, we don’t know what will happen geopolitically in the next year – if tensions between the West and Russia continue to worsen, we could find our bills going up again. We also don’t know the outcome of the General Election and how that could impact prices. For the moment, I’d say it’s safest to fix for 12 months and then see what happens.
How to Shop Around for Energy Deals
Your current supplier might already offer an ideal fixed term tariff, so that’s the best place to start. Existing customers may get preferential rates too, so log into your online account or call your provider to find out about your tariff options. Your supplier cannot tell you which the best rate is for your usage (as they could get in trouble if they advise incorrectly), but they can tell you about the options you have.
Make a note of the different rates for day and night (if they are there) as well as the standing charge. Check the term is for 12 months, too. Then shop around before you commit.
Research other providers by looking at their websites or using a comparison tool. There are sometimes switching incentives too. Remember that if you are on a fixed term contract already, there may be financial penalties to switch supplier. Some providers offer to cover these fees for you if you switch to them.
Next, look at your last year of bills to get an idea of your average usage across the year. This is important, because the cheaper summer months can be misleading if you use those to work out your annual bill. Look for the kW/h price as well as the standing charge. Work out how many kW/h you used in the last year by subtracting a meter reading from 12 months ago from one taken today. This will help you decide if a tariff switch is a better price across the year.
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