I saved £395 with 5 minute change after energy bills price cap rise | Personal Finance | Finance
The Ofgem energy bills price cap is on the rise once again, with another 2% being slapped onto the cost of gas and electricity from this October. It’s yet another cost of living blow to UK households still reeling from years of inflation, council tax hikes and a flurry of tax rises, with yet more on the horizon this autumn.
But you don’t have to just roll over and accept paying more, at least not for your energy bills. And in fact, if you can spare five minutes to make a switch, you can save hundreds of pounds off your energy bills. Money expert Martin Lewis is constantly pushing his followers to ditch the ‘pants’ price cap and instead move to a fixed deal to save money.
The price cap is supposed to be nothing more than a backstop, a safety net to prevent customers without the capacity to switch (think elderly or vulnerable people) from paying high prices because they don’t check.
My fixed deal with E.On Next is coming to an end next month, so I was in prime position to put this to the test in the real world. And in five minutes, I saved a whopping £395.
In fact, my new energy deal is set to be even cheaper than I paid over the last year!
Price cap illustrations are always very confusing – some may even argue, deliberately so – to make it hard to work out what you’re due to pay. But the newest price cap, taking effect from October 1 would cost me £2,105 per year for gas and electricity combined, including the standing charges.
I worked this out by taking my assumed annual usage, which is based on my usage history with E.On (so it should stay roughly the same unless I install a pool in my cellar or something), and then I multiplied it by the new Ofgem unit rates. For example, I will use 10,425kWh of gas, which on the new price cap will equal £1,130.41. Then add another £195.93 for the standing charge.
Taking all of this together, I get £2,105. That’s higher than the price cap illustration, which says a typical use household will see bills rise to £1,755 this October. That’s because my usage, for a family home, is higher than average.
Currently, my tariff is with E.On, and I pay £157.17 per month, or £1,886.04 over a year, for both gas and electricity.
E.On’s new tariff offer to me significantly beats the price cap. It will charge me £1,856.03 per year, which is £248.97 cheaper than the price cap.
But wait! Why stop there? If I’m willing to switch suppliers (I am), I can get this down even further.
Currently, Outfox The Market is the cheapest in my area, offering a tariff for the same amount of assumed usage for £1,709.35 a year, or £142.45 per month.
Over a year, that’s a saving of a whopping £395.65 against the price cap, or £146.68 cheaper than E.On.
Whether E.On is worth the £146 premium against the lesser known brand is a matter of opinion, but what’s clear is that the price cap is a bit of a con – and you should shop around and switch as soon as possible.
It’s easy – just punch in your details into a price comparison website, find your current usage figures from your current supplier’s account and the whole thing literally takes five minutes, and your new provider sorts the switch on your new tariff start date.
Easiest £395 I’ll ever make.
