Since the start of September we’ve also seen:
- The cost of the cheapest one-year fix jump by £49/yr to £980/yr.
- The cheapest provider at the time, Outfox the Market, has raised its prices by £128 to £987/yr – including a £65 rise this week.
- The cheapest variable tariff is now only £300/yr cheaper than the average cost of the big six suppliers’ standard variable tariffs (£1,221) – compared to a £362 discount found in September.
Supplier costs and Ofgem’s price cap
Suppliers are being squeezed by a combination of rising wholesale costs – the price energy suppliers pay for gas and electricity – and watchdog Ofgem’s energy price cap, which will come into force on 1 January. The cap means a typical user on these tariffs paying by monthly direct debit will pay no more than £1,137/year on average.
But MoneySavingExpert founder Martin Lewis has stressed the £1,137/yr figure is NOT a cap on the price you pay, rather it’s a cap on the rates that will be charged.
The cap depends on usage, so that figure is indicative of someone with TYPICAL usage. Someone with higher usage would see a higher cap, use less and your cap will be lower.
Ofgem has previously warned that the price cap could lead to reduced energy switching, as the gap in price between standard tariffs and the cheapest on the market shrinks – leading to lower financial incentives to switch energy.