Recently, the UK government has announced that consumers will face a big increase in energy bills, as the Energy Price Cap will reach a record-high increase on October 1st.
What is the Energy Price Cap?
The Energy Price Cap puts a limit on the maximum amount that energy suppliers can charge annually. It is designed to protect the consumers from being overcharged and to regulate the suppliers´ prices.
The Energy Price Cap can vary from city to city, depending on the region, the fuel type and even the payment method. This means that there are a few price caps, which ensures the fair competition between energy providers in the different regions and the fair price paid by the consumers. The implication of this is that if you have not selected your provider and tariff carefully, you might be paying more than you should.
It is important to note that the price set up by Energy Price Cap is not the best deal that customers can find. It was put in place for consumers who are on default or standard tariffs, which are the worst. Luckily, customers are able to find better energy plans and lower their monthly bill. This is why it is important to compare energy prices, before signing a contract with a provider.
What will change from October 1st?
As the UK has been recovering from its lockdown period, there has been a trend of steady increase in gas prices over the past months with more than 50%. This is very noticeable as compared to the previous year of Covid-19, when prices were kept lower.
Due to this, customers on default plans will face an increase of £139, going from £1,138 to £1,277. At the same time, customers on prepaid plans will experience an increase in the price cap of £153, going from £1,156 to £1,309.This graph shows the breakdown of the cap.
What can consumers do?
Many consumers are not aware of the benefits of switching their provider or believe that it will not make a significant difference to their monthly expenses. However, if you consider switching your provider and looking for a better deal, this can help you save up to £400 on your energy bill.Therefore, it will be our recommendation to switch your energy supplier to another one that meets your budget and lifestyle. With the Energy Price Cap increase approaching, make sure to do this before October 1st, to take advantage of the cheap rates while they last.