What the New Energy Price Cap Means for Your Bills and Savings

London: The latest energy price cap kicked in on January 1, 2025, and it’s set at £1,738 a year. That’s a slight bump of 1.2% from the last three months. This cap is what energy providers can charge for their standard tariffs, and it’s based on a typical household’s gas and electricity usage when paying by direct debit. But remember, your actual bill might be different since it depends on how much energy you use.

During the energy crisis, many providers struggled to offer deals below the cap, and some even went out of business. The market for switching providers was pretty much frozen. But now, you can actually find better deals than the default one. There are fixed and variable tariffs available that could save you some cash, especially with the cap expected to rise again in April.

Elise Melville from Uswitch.com says there are “significant savings” to be had. In fact, the average household could save up to £148 a year by switching to a 12-month fixed deal. One of the best options right now is from Outfox the Market, called the Big January Sale – Fix’d Dual v1.0.

If you’re in debt, you might still be able to switch suppliers, but only if your unpaid bill is less than 28 days old. Otherwise, you’ll need to settle your debt first. Even if you owe money, it’s worth checking if you can save by switching to a new deal with your current supplier.

Using a price comparison site like Uswitch or GoCompare is the easiest way to find a better deal. They gather a lot of info from suppliers, so you won’t have to provide much to get a quote. Just enter your usage details, select the type of energy you want to compare, and you’ll see a list of tariffs. You’ll find out the price for your current usage, whether the deal is fixed or variable, and how long it lasts.

Fixed deals mean the cost per unit of gas or electricity stays the same, but your bills will still change based on how much you use. You’ll also see if there are any exit fees, which are what you’d pay if you want to switch again before your deal ends. Some exit fees are as low as £25, while others can be as high as £100.

Most comparison sites show deals from providers that pay them a commission, but you can usually filter to see all available offers. Right now, the cheapest options include a variable deal from Home Energy and fixed tariffs from Outfox the Market. Just keep in mind that these providers don’t go through switching sites, so you’ll need to contact them directly.

Emily Seymour from Which? suggests comparing what your monthly payments would be on a fixed deal versus what you’d pay on the price-capped variable tariff. It’s a good idea to look for deals cheaper than the cap, ideally not longer than 12 months, and without hefty exit fees.

If you’re on the default tariff, you shouldn’t face any exit fees to switch. If you’ve switched recently, double-check that you won’t incur a penalty, or if you do, make sure the savings are worth it.

Lastly, if you’re sticking with your current provider, make sure you’re not overpaying. Submit a meter reading this week to avoid paying January 2025 prices for energy used at the lower December 2024 rates. If you don’t have a smart meter, now’s the time to do a reading and send it in.