Energy bills forecast to rise to £1,729 in October: Should you fix your tariff?

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Typical household energy bills will increase to £1,729 per year from October 1 according to a respected forecast. 

Cornwall Insight has predicted that Ofgem’s energy price cap will increase by 4 per cent for the average household, going up from the current level of £1,663.

The price cap governs energy bills for those on standard variable tariffs, which households are usually on if they have not fixed their energy bills for a year or more. 

It caps bills per unit of usage, and the £1,729 figure is based on a household using an average amount of units. If a household uses more or less energy than average, its bills will be different.

This is Cornwall Insight’s final forecast before the regulator, Ofgem, announces the new cap on August 26.

The rise is being driven by the ongoing conflict in the Middle East, with wholesale gas prices rising to their highest level in almost four years.

Cornwall Insight’s latest prediction comes as inflation accelerated to 2.9 per cent in July following the energy price cap increase. And although it’s still too early to predict January’s price cap confidently, Cornwall Insight currently expects a further increase, meaning elevated bills throughout the colder months. 

Richard Neudegg, director of regulation at price comparison website Uswitch, said those who don’t fix their energy tariff will be paying more than needed, with ‘standard gas prices likely to be a staggering 26 per cent higher than they were last year’.

Energy suppliers also issue their own predictions for the energy price cap. British Gas predicts that it will increase to £1,730 from October 1 and says it has ‘medium’ confidence in this forecast, while EDF Energy has it rising to £1,722.

Ofgem updated its typical energy consumption values in July to reflect that people are using less energy.

This means that the price cap will now look lower. The July energy price cap was previously announced at £1,862 but is £1,663 under the new normal consumption rates.

But energy hasn’t got cheaper, households are just changing their behaviour as a result of higher bills. 

If you haven’t fixed your energy bills in a year or more, it’s likely you’re on a price cap tariff. It’s worth checking whether fixing will save you money.

Should you fix your energy bills? 

Richard Neudegg from Uswitch says that a fixed energy tariff could be an ‘escape route’ from the predicted price cap. 

He says: ‘The best fixed deals on the market right now undercut this prediction by around 12 per cent, with the cheapest priced at £1,522 for a typical home.

‘Every week spent on a standard tariff is another week paying higher rates than you need to.’

A fixed energy deal gives you certainty over your bills and protects you against volatility in the energy market.

You can check how much a fixed tariff would cost from your existing supplier or compare new deals at a website such as Uswitch* or Moneysupermarket.

Smaller energy suppliers generally top the list of the best fixed energy deals. 

However, earlier this week Eon Next was offering the second-cheapest fix – a two-year tariff at £111 below the current price cap and £177 below Cornwall Insight’s prediction for October.