Will switching energy supplier reduce your bills?
Under normal circumstances, it would be advisable to compare prices and switch energy supplier or tariff to seek out the best deal. But the cost of living crisis means switching is not a viable course of action for many people at the moment. Suppliers are not offering cheap deals, many aren’t even accepting new customers, and the majority of variable tariffs cost the practically the same.
The government’s energy price guarantee (EPG), which protects households from the most severe recent energy cost increases, has been in place since October last year – but bills are still higher than they were previously.
The EPG is expected to be higher than the price cap from July this year. If this does happen, default or variable energy tariffs will once again be regulated by the Office of Gas and Electricity Markets’ (Ofgem) price cap. If your fixed tariff has come to an end or you’ve been moved from a supplier that’s gone out of business to a new one, you’ll be put on a variable tariff.
The price cap is based on wholesale rates and there is a limit on what suppliers are allowed to charge for each unit of energy.
That’s not to say you bills won’t increase – they may well do – but wholesale gas prices have been falling, so it’s predicted that the price cap for a ‘normal’ household will be somewhere around £2,025 per year from July. Suppliers might also be able to offer cheaper tariffs.
Long story short, if you’re still on a fixed-term deal, switching away from it early might not be the best idea because it will be challenging to find anything as cheap just yet.
