Households facing energy price hikes could slash bills by more than £250 a year

Households are being urged to bag cheap energy deals ahead of an expected price hike. Regulator Ofgem is set to announce what its price cap will be from July 1 on May 27. The observation window, during which Ofgem calculates factors such as the wholesale costs suppliers face, closes on Monday next week. It incudes a long spell during which those costs have jumped as a result of the US-Israel war with Iran , which erupted at the end of February. Industry experts Cornwall Insight is currently forecasting that the price cap, which applies to around 33 million customers on standard variable tariffs, will jump from an average of £1,641 a year to around £1,843 a year from July 1. It is due to update its prediction on Friday. The jump comes just as many households are feeling the economic fall-out from the Middle East war through higher inflation, a leap in fuel prices, and the threat of even higher food costs. However, households are being encouraged to join the estimated 21 million customers who are on a fixed energy deals, which lock in the unit rate households are charged for set period of time. Latest research by comparison website Moneysupermarket shows there are fixed deals as low as £1,585 - saving households a potential £258 a year on the forecast price cap from July. That is based on a year long fixed deal from supplier Outfox Energy. Its top 10 cheapest deals also include 12 or 13-month long fixed deals from Fuse Energy, E.on Next, Ecotricity, Sainsbury’s Energy, and SO Energy. Laura Hinton, from Moneysupermarket Energy, said: “When global uncertainty sent wholesale gas prices spiralling in March, fixed deals virtually disappeared from the market. However, in recent weeks we’ve seen providers begin to bring back more competitive deals, with fixed tariffs that beat the price cap currently available on the market. “Analysts still expect energy bills will rise in July, and October’s cap looks set to rise further still. That means, for those looking to beat the upcoming cap increases or who just want certainty in an unpredictable time, it’s worth shopping around and considering fixing now, beating the cap and locking in ahead of July’s expected increase.” Ofgem’s price cap limits how much suppliers can charge those on a standard tariff for each unit of electricity and gas, and the standing charge, which customers pay every day even if you do not use any energy. It does not limit the overall cost of the bill, which depends on usage and how customers pay. Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “The government should be focused on working out a package of support for vulnerable households and those in energy debt now, while urgently reforming electricity prices to bring down costs for everyone. Ministers must put aside the power struggle and get on with the day job. “The Government must make sure that more households, especially those on lower incomes, can make the switch to clean electricity and feel the savings in their bills. That means breaking the link between electricity and gas prices for good, and rapidly expanding support for solar panels, heat pumps, insulation and electric vehicles.”