Energy bills to rise from October – here’s the best fixed deals to save up to £300 on your annual cost

Households that haven’t fixed their energy bill will pay more in October when the price cap changes.

Ofgem announced the new price cap will increase from £1,720 to £1,755 from 1 October for the average dual-fuel household on a standard variable tariff.

Electricity will increase from 25.73p/kWh to 26.35p, while the price of gas will ease from 6.33p/kWH to 5.29p/kWH. Standing charges will jump again, from 51.37p to 53.68p for electricity, and from 29.82p to 34.03p for gas.

The 2 per cent hike in prices – around £2.93 extra a month – is ahead of the rise forecast by energy consultancy Cornwall Insight, which warned of volatility in the energy markets.

It also said that the expansion of the Warm Home Discount scheme for vulnerable households is expected to add £15 to the typical bill.

Ofgem today said that the price rise had been driven by an increase in the cost of ensuring there is a stable electricity supply.

> Read more: Our weekly round-up of the best energy deals

Price hike: Households on a variable tariff will pay £35 more for their energy from October

Its figures also show that the cost of buying energy for the October to December period had fallen by £15 annually, but the cost of building, fixing and repairing pipes and wires had increased by £24. 

Households will also have to pay for supplier business costs (up £6), government and social and environmental schemes (up £17).

Tim Jarvis, director general of markets at Ofgem said: ‘In the longer term, we will continue to see fluctuations in our energy prices until we are insulated from volatile international gas markets.

‘That’s why we continue to work with government and the sector to diversify our energy mix to reduce the reliance on markets we do not control.’

‘No brainer’ to move to a fixed deal

More than a third of households have moved onto a fixed tariff to save money on the price cap.

While bills are nowhere near the levels seen during the crisis, they are unlikely to return to the levels seen beforehand.

There is increased competition in the market, with plenty of suppliers offering cut-price fixed deals. 

Jarvis said households that are still on variable tariffs could save more than £200 against the new cap if they switch.

The best deal on the market is currently Outfox Energy’s 12-month deal, which offers savings of nearly £300 a year with an average bill of £1,463.

Its 24-month deal offers similar savings with an average bill of £1,465, while its 15-month deal has an average bill of £1,467.

Richard Neudegg, director of regulation at Uswitch says: ‘This is a wake-up call for households on price cap-linked tariffs to lock in cheaper fixed rates to cover the critical winter period. 

‘Savings equivalent to £292 a year are already available compared with this incoming price cap.

‘We all typically use a lot more energy over winter compared to summer. The cost of doing nothing now means an extra £76 more per month on average for energy bills from October to December, on top of rates already higher than the majority of fixed tariffs.

‘Fixing your energy tariff to cheaper rates should be a no-brainer for all households who are able to.’

Households should also consider switching from standard credit payments to direct debits to reduce costs of up to £135.60, according to Ofgem.