The latest energy price cap came into force on 1 January 2025. At £1,738 a year it is 1.2% higher than in the previous three months. The price cap applies to energy providers’ standard tariffs, and the figure is for a typical household buying gas and electricity and paying by direct debit. Most households will pay a different sum as bills are based on usage.
Do I have to pay the standard tariff?
No. For a while when the energy crisis began, it became impossible for providers to offer deals below the price cap – several went out of business because of their commitments – and the switching market all but closed.
Now, however, you can get a better deal than the default. There are fixed and variable tariffs with lower rates, and with the cap forecast to go up again in April, you could be locking in below spring’s prices too.
Elise Melville, energy expert at price comparison website Uswitch.com, says there are “significant savings” on offer, and that “the average household could save up to £148 per year against the January price cap by switching to a 12-month fixed deal”. That saving is on the Big January Sale – Fix’d Dual v1.0, from a company called Outfox the Market.
Melville says customers who are in debt may be able to switch suppliers if their unpaid bill is less than 28 days old – otherwise, they will need to pay off what they owe before they can move.
However, she says: “Even if you’re in debt, it’s worth checking if you can save by moving to a new deal with your current supplier, which could help you to lock in lower rates.”
How do I find a better deal?
The easiest way is to use a price comparison website such as Uswitch, GoCompare and The Energy Shop – these days they typically obtain a lot of information from suppliers so you need to provide very little to get a quote (you might be alarmed by how much data is on there).
Once your usage details are in there and you have selected which energy you want to compare – probably both gas and electricity – and how you pay, you will be presented with a list of tariffs. You will see the price for using the same amount of energy as you do now, what type of deal it is – fixed or variable – and how long it lasts. By fixed, it means that the cost of the unit of gas or electricity will stay the same, so your bills will still go up and down as your usage varies.
You will also be shown if there are exit fees. These are what you will have to pay if you want to move again before the end of the deal, and there is usually one for gas and one for electricity. Some are just £25 each, but some are £100 each.
As a default, comparison sites typically show only the deals from providers that pay them commission when you switch, but a list of all offers should be available – look out for filters that let you choose to see the whole of the market.
The cheapest tariffs available currently include a variable deal from Home Energy and fixed tariffs from Outfox the Market. Neither provider operates via switching sites so you will only see them if you opt for all deals. If you want to move to either of them, you need to go direct.
How do I choose?
Emily Seymour, the energy editor at the consumer group Which?, says: “You should compare what your monthly payments would be on a fixed deal with what you’d expect them to be if you remain with the price-capped variable tariff to see what the best option is for you.
“As a rule of thumb, we’d recommend looking for deals cheaper than the price cap, not longer than 12 months and without significant exit fees.”
Anything else I should know?
If you are on the default tariff, you should not face an exit fee to move. If you have switched recently, you should check that you will not face a penalty or, if you will, that the savings more than offset it.
Anyone staying put should at least make sure they are not paying over the odds for what they have used by submitting a meter reading this week. You do not want to pay January 2025 prices for energy used at the lower December 2024 rates so if you do not have a smart meter do a reading now and submit it.