Assuming the price cap rises to £1,925/yr in April – most were better off doing nothing
The energy regulator’s price cap for typical energy use currently sits at £1,277 a year. But it’s estimated that this will jump by 50% on 1 April 2022 to £1,925 a year, presuming there’s no Government or Ofgem intervention – something Martin has called for. That’s because this cap is based on wholesale costs – what energy suppliers pay – from August 2021 to January 2022.
Martin explains that he had hoped the situation would improve and that people would be effectively locking in at the price cap for six months and then jumping back onto cheaper deals but, instead, the situation has gotten “worse, and worse, and worse”.
From October 2022, the price cap is predicted to increase even further based on wholesale prices from the start of February 2022 until the end of July 2022. While we don’t know exactly what they are just yet, if they stay at current rates then we can expect to see another 20% hike to the price cap in October – something Martin describes as “horrendous and unaffordable”.
But in hindsight, given the cheapest open-market fixes for typical users were around £1,580 a year at the start of the crisis in October 2021, and £1,630 a year in early November 2021, most households were indeed better off doing nothing and ignoring opportunities to fix (assuming they weren’t offered cheaper existing customer rates).
Martin adds that if the price cap does indeed rise by 20% in October 2022, then the majority still won’t have saved by switching last autumn – particularly given this was the high-use winter period. However, Martin says he’s “sorry” to the few “edge cases” who have lost out by around £10 to £15 a year on typical use by not switching.