With energy price cap increases due to come into place in April 2021, now is the best time to consider switching your energy supplier to get the best deal possible going ahead.

The recent increase in wholesale energy prices, a result from the demand recovery, has caused an increase for Ofgem’s energy price cap that will now be at pre-pandemic levels of £1,138 in April 2021. The price cap had previously fallen by £84 in October due to the large decline in wholesale prices but has since recovered.

The exact prices for the 6 months are as follows:

£96 increase for 11 million default tariff customers totalling £1,138
£87 increase for 4 million pre-payment meter customers totalling £1,156

This new price cap will help cover some of the additional costs suppliers paid out for COVID-19 related issues and lost revenue.

What does this mean for consumers?

Firstly, price caps are put in place by the regulator Ofgem to protect energy consumers who have not switched supplier and are on default rates or pre-payment meters. Default rates are the rates that your supplier provides you once you are out of a contract and these are typically higher than contracted rates. A pre-payment meter is a type of meter given to low credit score consumers who must pay before they are supplied. As these two rates are higher than contracted ones, the price cap is put into place so that the consumer is billed reasonability and fair.

This cap follows the wholesale market so that prices accurately reflect the supply of energy and Ofgem review this every 6 months to make the up or down adjustments. The cap currently saves a default tariff consumer around £75-£100 per year which totals around £1 billion.

The price cap increase means that consumers should switch now to get the best deals from suppliers. Consumers should take advantage of the current price cap before it is increased in April 2021 by switching providers to get a contracted rate. As the prices are due to increase in the future it is better to buy sooner than later. Ofgem recommends that, by switching, you could save as much as £150 on your tariff as a residential consumer.

Chief Executive of Ofgem, Jonathan Brearley said:

“The price cap offers a safety net against poor pricing practices, saving customers up to £100 a year, but if they want to avoid the increase in April they should shop around for a cheaper deal.”

If you are considering switching supplier, getting a better tariff and taking advantage of the current price cap please do not hesitate to contact our team to see if you could be saving on energy. The Utility Swop team can be contacted via our website page, email or phone at: Contact us

More information and support from Ofgem available at:

https://www.ofgem.gov.uk/publications-and-updates/energy-price-cap-increase-april-consumers-should-switch-save-money