The energy price cap rise is less than a month away: What can you do to beat it?

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Households will pay even more for energy when the price cap changes next month thanks to continuing volatility in the market.

Ofgem has announced that prices will rise to their highest level in a year in April, pushing energy bills higher at the same time other taxes are expected to soar.

Suppliers are offering generous fixed deals to beat the April price cap, but with prices widely predicted to fall again in July, it can be confusing to know which deal to choose.

Other suppliers have introduced tariffs that track and undercut the price cap, offering a better deal than their standard variable tariff - the 'default' energy deal which most customers are currently on.

We look at what's happening in the wholesale energy market, where prices are expected to go and whether it's worth fixing or tracking your energy bill.

Stick or twist? Households can save money on the April price cap with both tracker and fixed deals - but could end up overpaying if the price cap then goes down in July

Why are energy prices increasing again?

April's price cap increase surprised both experts and suppliers who had widely expected a smaller rise.

Energy forecaster Cornwall Insight had initially anticipated prices to rise from £1,738 to £1,785 in April, before increasing its prediction to £1,823.

Instead, prices will rise by 6.4 per cent, meaning a typical household will pay £1,849 for electricity and gas.

That is based on average usage. Electricity and gas are charged per unit, so if you use more, you will pay more.  

Unit rates will now be 27.03p/kWH for electricity and 6.99p/kWH for gas, and standing charges will come in at 53.8p and 32.67p per day, respectively.

A spike in wholesale prices, driven by geopolitical issues, is the cause of the rise. 

Ofgem said this accounted for around 78 per cent of the total increase, with the remaining amount attributed to policy costs and associated inflationary pressures.

Will the energy price cap rise again in July?

Cornwall Insight predicts households will pay slightly less in July, with the price cap expected to fall from £1,849 to £1,756.02 for a typical dual-fuel household.

This is split between £882.16 for electricity and £873.87 for gas, based on a typical dual-fuel household. Standing charges are expected to fall again with electricity falling to 55p a day and gas to 30p.

This is broadly in line with seasonal changes. Electricity and gas prices are cheaper in summer because there is far less demand.

However, as with any prediction, it is subject to change and given heightened geopolitical tensions energy prices have the potential to push higher than anticipated.

Suppliers also publish their predictions of where the price cap might fall. British Gas anticipates the price cap falling slightly less to £1,785, while EDF predicts the price cap will move to £1,782.

As it gets colder again, prices are expected to increase again in October, meaning bill payers need to weigh up whether it is worth riding the wave or fixing.

Can a tracker tariff save you money on bills?

The sustained volatility in the wholesale market that has pushed energy prices higher has prompted suppliers to launch a new type of tariff.

A handful of energy companies are offering 'tracker' tariffs, which track the wholesale price of energy or the price cap, claiming to save households money.

Instead of fixing for 12 or 18 months, which means customers can miss out when bills fall again, the tariffs try to undercut the price cap.

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EDF's tracker will undercut the price cap by up to £50 per fuel with the discount applied through lower standing charges, while Scottish Power is offering its customers prices below the price cap and ensuring its standing charges are £15 lower per year.

There are exit fees of £25 per fuel for the EDF tariff, but none for Scottish Power.

Elise Melville, energy expert at Uswitch told This Is Money: 'If you're not ready to fix now and you want to ride out the market with the highs and lows… if you're that type of customer it can be good. But if the market rises, then obviously your rates are going to rise as well.

'They're quite a good option for customers who might want to switch supplier but don't want to lock into a fixed deal right now.'

Another option is Octopus Energy's tracker tariff, which follows the daily wholesale price of energy. Unlike standard variable or fixed tariffs, it doesn't rely on futures pricing - the forecasted price a supplier expects - and instead passes any savings on to customers.

The energy company says its tracker customers saved an average of £320 over 2024 compared to its standard variable tariff customers. Electricity was cheaper for 300 days of the year, while gas cost less on 324 days of the year.

There is a risk if you opt for this option, though, as these savings won't be replicated, especially if wholesale prices trend higher again. 

You'll also need to keep up with energy prices on a daily basis and be prepared to pay more when they are higher because it's not protected by the price cap.

Will a fixed deal save you more money?

Regulator Ofgem has urged households to fix their energy bill before April's price rise, and some suppliers are offering some hefty discounts.

Outfox the Market's 12-month deal offers a £199 saving on the April price cap at £1,650, while those who fix for 18 months can bag a £178 saving, according to comparison website Uswitch.

Eon is also offering a generous saving of £175 with its 16 month fixed deal, followed by British Gas which is offering an average annual bill of £1,677 with £20 cashback if you sign up with Uswitch.

Fixed deals mean that you will pay the same unit rate for however long the deal lasts, whether 12, 16 or 18 months. This means you can lose out when prices drop.

But even if the price cap went down to £1,756 and tracker tariffs followed, if you fixed at the cheapest deal today you would still pay over £100 per year less.

Ben Gallizzi, energy expert at Uswitch says: 'With the price cap climbing to £1,849 on 1 April, an average household could currently save around £239 by picking the cheapest fixed deal on the market.

'While Cornwall Insight believes that the price cap may fall back to £1,756 in July, this fixed deal would still represent a significant saving. Energy prices continue to be volatile and it's unlikely we'll see energy bills go back to pre-crisis levels in the near future.

'Picking a fixed deal means your energy costs will stay the same for a whole year or longer.

'If you're not ready to fix, consider a deal such as a tracker which guarantees a saving on the price cap, whether it goes up or down.

'It only takes a few minutes to run a comparison, so it's worth seeing if you can beat the price rise.