Energy prices on the rise – Time to switch?

Fifteen of the cheapest energy tariffs have been withdrawn from the market since the start of June and replaced with those costing up to £105 per year more, new figures reveal.

The rises have been blamed on increasing wholesale prices, which have been creeping up since February, combined with the effect of market instability and a lower pound following the Brexit vote.

The old deals have been replaced with new ones that are £38 more expensive on average, according to price comparison site uSwitch.

The largest price hike is from Extra Energy, which upped its cheapest tariff by £105, followed by Sainsbury’s Energy with an increase of £94, OVO rising by £63 and First Utility adding on £48.

Of these price hikes, 12 have taken place since the Brexit vote suggesting that the market instability following the decision has influenced energy prices, according to uSwitch.

The wholesale energy price began to rise in mid-February after remaining at a record low value for gas since the third quarter of 2013, and the fourth quarter of 2014 for electricity.
The main reasons for the increase are energy supply concerns combined with market uncertainty after the Brexit vote and the falling value of the pound, according to the energy price reporting agency ICIS.

Prices were pushed towards a nine-month high after the Brexit vote. This was because the value of the pound fell, which made British energy cheaper for traders dealing in euros and therefore increasing demand.

The rise in demand then in turn pushed up the price of UK energy.

Jamie Stewart, electricity editor for ICIS, explains: ‘The UK’s electricity and natural gas systems are linked via undersea pipelines and cables to those in France, the Netherlands, Belgium and Ireland.

While prices have increased, the cheapest fixed-rate deals available are still on average around £99 cheaper than they were a year ago and £315 less than the average big six standard variable tariff.
The cheapest tariff available today costs £763 from the energy firm Octopus Energy, owned by Octopus Investments, which owns solar and wind farms.

It’s followed by another fixed-rate tariff priced at £770 from Extra Energy, then a tariff by Flow Energy priced at £752.

Tom Lyon, energy expert at uSwitch, says: ‘For nearly three years, wholesale gas and electricity prices have been falling, leading to cheaper and cheaper fixed term deals for consumers.

‘But with concerns about future UK energy supply, the impact of Brexit and a weaker pound, we are starting to see some suppliers increase the price of their cheapest deals.

‘There are still some very competitive deals on the market, offering significant savings against the average big six standard variable plan.

‘Consumers concerned about rising energy costs should shop around and consider switching to a fixed term tariff, offering protection against any potential future price hikes.’

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Written by: Houseladder