Energy bill price cap drop: When to switch tariffs and submit meter readings
ITV News Consumer Editor Chris Choi explains why bills are likely to go back up in October, and what can be done to prepare for it
A new energy price cap comes into effect today, with households in England, Wales and Scotland to benefit from a 7% drop in bills.
Regulator Ofgem has lowered its price limit in response to wholesale prices falling, meaning around 28 million customers will now spend more than a hundred pounds less annually - if prices were to stay at this level for a year.
But the cap only applies until October, when bills are expected to go up again.
Here's how you can make the most of it.
In numbers
A typical annual gas and electricity bill today drops from £1,690 to £1,568 - the lowest for two years
That represents a typical saving of £122 per household
Energy analysts predict typical annual bills will rise again in October, to £1,723
A £155 rise or 10% - and price levels are expected to remain around that level until early next year
Should people be looking to switch to a fixed deal now?
With the price at a low, price comparison sites are advising people to look into fixed deals to beat the predicted October price hikes.
Ben Gallizzi, energy spokesman at Uswitch, said: “There are a number of fixed tariffs worth considering right now.
"By opting for a fixed deal, you’re locking in those rates for the duration - usually 12 months - which means households could have price certainty and avoid the ups and downs of the price cap.”
ITV News Consumer Editor Chris Choi says there are two basic principles if you're thinking about choosing a fixed contract.
Firstly, look for a deal that's around about this price cap level to a little bit higher because the cap is likely to rise up in October.
The second is not to fix for longer than a year.
Experts say it gets harder to predict prices the further out we are, and look for exit fees, because if they're high and expensive, it will limit your flexibility in the future.
When should I do my meter reading?
With the news of lower prices people are advised to check their smart meter, electricity and gas readings with their supplier as close as possible to July 1 to ensure they are billed accurately at the lower prices.
This means there's less chance of any dispute with energy suppliers about how many units were used before or after the cap change.
Those who do not submit readings risk having some of their usage after this date charged at the previous, more expensive rates.
Households on a standard variable tariff - as opposed to a fixed deal - and who do not have a smart meter should submit their readings.
Suppliers who have not received meter readings base their bills on estimated usage, meaning households could be overpaying, while others may not be paying enough.
Expert analysis by ITV News Consumer Editor Chris Choi
This price cap doesn’t really cap the total of your individual bill, that will depend on how many units of energy you use.
This simply limits the amount charged per unit. And this price cap doesn’t operate in Northen Ireland, where there’s a separate system.
Charities and campaigners are warning against any sense of complacency about energy prices - pointing to official figures suggesting more than two million bill-payers are in debt to energy firms - with a total owed towering at around £3 billion.
Whether you owe money or not - that problem adds £28 a year to your bill because officials are allowing energy firms to add that to our bills to pay for the unrecoverable debt of struggling customers
So a move in the right direction in terms of energy prices today, but still millions are struggling to afford gas and electricity, and prices today are still higher than they were in 2022
Political parties are promising initiatives to bring prices down longer-term, but independent analysts don’t expect material reductions in our bills before 2030 at the earliest.
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