Households across the UK can reduce their energy bills by £207 from October 1 by switching to the cheapest fixed tariff currently on the market, according to Uswitch. This saving comes as energy bills are forecast to rise by 4% under the next Default Tariff Cap, and on top of Prime Minister Andy Burnham's VAT cut on energy bills, which is set to save households a further £45.
Cornwall Insight's final forecast for the Default Tariff Cap, which takes effect from October 1, predicts that the annual cap for a typical consumer will rise to £1,729 under Ofgem's new definition of typical usage, introduced in July 2026. This compares to the current cap of £1,663 under the same definition. Under the previous definition, the cap is expected to rise to £1,941 from £1,862. The exact amount a household pays depends on its energy usage, as these figures reflect the regulator's assumed annual demand.
Cheapest fixed deal undercuts price cap by 12%
Despite the predicted rise, customers can avoid the increase by switching to the cheapest fixed tariff on the market, which Uswitch says is priced at £1,522 for a typical home. This would represent a £207 saving compared to the forecast cap, and is around 12% lower than the predicted standard variable rate.
Richard Neudegg, director of regulation at Uswitch.com, said: “Households holding out for a last-minute reprieve on rising energy bills look set to have their hopes dashed, with predictions suggesting a 4% increase in the October price cap.” He added that with continued instability in the Middle East, higher energy costs are now looking very likely throughout winter, with a third consecutive price cap hike predicted for January.
January forecast points to further rises
Cornwall Insight's current forecast for January also points to a further rise, although the consultancy notes that its view is very likely to shift many times before the January cap is announced in November, given the extent of wholesale market volatility.
Neudegg warned that those who remain on standard price cap tariffs and do not take action before October should brace themselves to pay even more for their heating, with standard gas prices likely to be a staggering 26% higher than they were last year. He said: “But there is an escape route. The best fixed deals on the market right now undercut this prediction by around 12%, with the cheapest priced at £1,522 for a typical home.”
Fixed tariffs protect against further price rises
Neudegg concluded: “Don’t suffer higher winter bills when you don’t have to – a decent fixed tariff beats these rates and protects you from further price rises. Every week spent on a standard tariff is another week paying higher rates than you need to.”
The £207 saving is available to households with suppliers including British Gas, EDF, EON, Ovo and Octopus, who can all access the cheapest fixed deals currently on the market. This saving is in addition to the £45 VAT cut on energy bills announced by Prime Minister Andy Burnham, which is also set to take effect from October 1.
