Energy price cap rose 2% this month: should you fix your tariff before winter?

The energy price cap rose by 2% on 1 October, taking the annual bill for a typical household paying by direct debit to £1,762, and Ofgem has already signalled that the January cap is likely to be “broadly flat”. For most households the question is no longer whether prices will fall sharply, but whether to lock in a fixed tariff now or stay on the cap through the winter.

At the time of writing, a dozen suppliers are offering fixed deals priced below the cap. The cheapest, a 12-month fix from Northern Reach Energy, is about 6% below, which would save a typical household about £105 a year. Several others are 3% to 4% below. All of them are for 12 months, and most carry exit fees of £50 per fuel if you leave early.

“A fix below the cap is worth having if you value certainty, and this winter most people do,” said Joanna Metcalfe, energy analyst at the comparison service SwitchSense. “But do not fix because you think prices are about to rocket. The forward market is calm. Wholesale gas is where it was in the spring. You are fixing to stop worrying, not to beat the market, and that is a perfectly good reason as long as you know it.”

The cap is not a cap on your bill but on the unit rate and standing charge. Under the October rates, electricity costs 26.4p a kilowatt hour with a standing charge of 53p a day, and gas 6.3p a kWh with a standing charge of 33p a day. Standing charges have attracted most of the complaints to Ofgem this year, and the regulator has introduced a requirement that every supplier offer at least one tariff with a lower standing charge and a higher unit rate. These suit low users, such as people in small flats or second homes, and almost nobody else.

Before fixing, check three things. First, whether the tariff is genuinely cheaper on your own usage, not the “typical” household’s; a household that uses a lot of gas and little electricity can find a deal that looks cheap overall is more expensive for them. Second, the exit fee, and whether it is per fuel or per account. Third, whether the deal requires a smart meter, which a growing number do.

Households on prepayment meters are now charged the same as direct debit customers under the cap, after Ofgem removed the premium in 2024. Those who pay on receipt of a bill pay about £120 a year more, and switching to direct debit is the easiest saving available to them.

If you are struggling, support exists. The warm home discount gives £150 off electricity bills to about 3 million households on means-tested benefits, and is applied automatically. Most large suppliers have hardship funds that can write off arrears, and Ofgem rules require suppliers to offer an affordable repayment plan before installing a prepayment meter. Citizens Advice can help with applications.

Whatever you decide, submit a meter reading on the day you switch or the day a new cap begins, so that energy used at the old price is charged at the old price. And if you fix, put a reminder in your diary for 11 months’ time: the rate you fall on to when the deal ends is almost always worse than the one you signed up for.