The energy regulator Ofgem’s price cap will increase by 10% on October 1, reaching £1,717 for the average household, which may make switching to a fixed deal a smart choice for the first time since 2021.

This cap, reviewed quarterly and likely rising again in January, is the maximum suppliers can charge per unit of gas and electricity on standard variable tariffs.

Currently set at 5.48p per kWh for gas and 22.36p per kWh for electricity until September 30, the average dual-fuel household paying by direct debit will see costs around £1,568 a year. From October, electricity will cost 24.5p per kWh and gas will be 6.24p per kWh.

Wholesale energy prices are the reason for the increase, according to the consultancy Cornwall Insight.

Should You Get a Fixed Energy Deal?

Before the 2021 energy crisis, consumers frequently switched suppliers and opted for fixed deals. The crisis, exacerbated by a European gas shortage and Russia’s invasion of Ukraine, saw 28 energy suppliers go bust.

During the crisis, the government introduced a price guarantee, capping bills at £2,500 a year from October 2022 to July 2023. With falling bills, variable rates have generally been cheaper than fixed deals until now.

Ben Gallizzi from Uswitch suggests evaluating available deals as the cheapest fix is £149 less than the expected price cap from October, potentially saving more money through January 2025 amidst anticipated price rises.

Uswitch lists ten fixed energy deals cheaper than October’s £1,717 price cap. The most affordable, Outfox the Market’s Fix’d Dual Aug24 v3.0, costs £1,568 annually with a £25 per fuel exit fee.

Ovo Energy’s 1 Year Fixed 19 August 2024 is at £1,627 a year, available exclusively through Uswitch and Confused, with a £50 per fuel exit fee.

Consider that some fixed deals could result in higher payments until October 1, and the risk of the price cap falling in subsequent months.

What Is the Long-Term Forecast?

Consultancy BFY forecasts Ofgem’s price cap rising to £1,720 in January and April, then decreasing to £1,690 in July 2025, with an average annual bill of £1,702 if predictions hold true.

Seek deals without hefty exit fees to switch if predictions overestimate future price hikes. Octopus and Co-op Energy offer £1,628-a-year deals with no exit fees.

Gallizzi advises examining the price, duration, and exit fees of fixed tariffs to ensure the deal fits your needs.

Ofgem’s ban on better deals for new customers, in place until at least March 2025, aims to stabilize the market after unsustainable offerings caused supplier failures.

Are There Any Reasons Not to Fix?

Fixing at high rates and penalties for early contract exit could nullify savings. Moving house within the year also requires caution.

Switching is barred if you’ve been in energy debt for over 28 days, affecting many households, with outstanding energy debt at £3.3 billion as of March.

How Else Can I Cut My Energy Bill?

Economy 7-type tariffs offer cheaper rates at off-peak times, suitable for night shift workers and those with electric storage heaters or electric vehicle owners.

Octopus Energy’s Agile Octopus alerts users via smartphone when energy prices drop. Requires either an Economy 7 meter or a smart meter.

EV owners benefit from overnight charging at reduced rates, with Ovo Energy offering 7p/kWh, making a typical 60kWh car battery charge cost £4.20 compared to £14.70 under the October cap.

Can I Get Help With Rising Bills?

The chancellor, Rachel Reeves, has abolished winter fuel payments for pensioners except those on pension credit. Eligible families often miss out on this benefit, estimated at 880,000 by the government.

Pension credit recipients receive automatic cold weather payments of £25 per seven-day period of extreme cold between November 1 to March 2025.

Households can reduce bills through energy efficiency improvements. The Great British Insulation Scheme offers free insulation to those with energy performance ratings D or below and within certain council tax bands.

Insulating your home, especially the loft, can save significant amounts yearly. Apply through gov.uk, and your energy supplier will contact you for an assessment.