By Craig welsh | Content Writer
If you haven’t switched or your fixed-rate contract has expired, your energy tariff is almost certainly price-capped.
The energy price cap acts as a safety net, ensuring that prices remain reasonable if you do not shop around. It is advisable to switch in order to obtain the most favourable energy rates.
If you have recently moved into a property and have not agreed a fixed-term contract or your previous contract has expired, the energy price cap will affect you.
The cap price is reviewed by OFGEM twice a year; in February and in August with any changes becoming effective 1st April & 1st October.
The most recent cap rate of £1,138 was announced in February 2021. This meant a £96 annual increase which came into effect in April 2021.
Because of a cap set by a regulatory body, it may seem as if you are on a competitive tariff. Unfortunately, this is rarely the case for the following reasons:
– Comparing and switching still yields savings and a fairer overview of the market. At the time of the February 2021 price cap review, the price cap was still over £180 more expensive than the cheapest fixed term deal on the market. Furthermore, if you have an idea of what is happening price-wise in the market, you’ll be better informed to make smart, money-saving decisions.
– Prices still fluctuate. That’s the ‘Variable’ bit. This is why it is important to Switch and fix your costs. The cap doesn’t protect you from wholesale market price variances and is subject to change in line wholesale, distribution and taxation costs. These costs can be very volatile and can cause you as the consumer to be at the mercy of said costs. That is why it is important to protect yourself financially by comparing and switching to a more cost-effective, fixed-term tariff.
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