Nearly 12 million UK households on standard energy tariffs are at risk of paying more than £200 extra on their bills from July, according to new research from Uswitch.com. The study reveals that almost two-thirds (63%) of these households are unaware that the rates they pay are expected to rise by 12% in July.
Price cap increase
The energy price cap, which sets the rates for homes on standard tariffs, is predicted to increase by £202 from 1 July. This would bring the annual bill for an average home from £1,641 to £1,843. A quarter (26%) of households affected by the changes do not know what is happening to the price cap on that date, and one in five (19%) mistakenly believe their energy costs will fall.
Long-term impact
Higher energy bills are likely to have an impact beyond July. Energy rates are expected to remain elevated through autumn and winter, which could come as a shock when households use more energy for heating. Two-thirds (66%) of households say even a 10% rise in energy prices would negatively affect their household budget. One in ten (10%) would need to use savings to pay bills, while 17% would cut back on essentials like food or transport. Younger consumers are hit harder, with 18% saying they would need extra income and 11% going into debt.
Confusion over deals
Despite current savings of £233 for fixed deals compared with predictions for July's price cap, more than half (51%) of standard tariff households believe they are on the best-value deal. This confusion means 47% do not plan to change their tariff, and only 13% plan to switch to a fixed deal. A quarter (25%) say they are happy with their current plan, 21% think no good deals exist, and 16% believe all energy deals are the same. However, there are five fixed tariffs cheaper than current rates, with 30 fixed deals available for 10 months to two years. One in six (15%) think switching is too complicated, though it takes as little as six minutes.
Expert warning
Ben Gallizzi, energy expert at Uswitch.com, said: 'Nearly 12 million households on standard tariffs are sleepwalking towards energy bill hikes, with their prices predicted to increase 12% in July. More worryingly, almost half of those on standard tariffs mistakenly believe they are on the best deal, despite the fact that the average home could save hundreds of pounds with a fixed deal. Two-thirds of households say even a 10% increase in their energy bills would hit their finances, so now is the time to act to protect yourself from higher costs. Take a moment to check online to see what deals are available. The cheapest fixed deals available are 13% less than the predicted July price cap, so we urge households to lock in lower rates while they are available.'
