One of the largest energy retailers in the UK has launched a new fixed tariff as Ofgem’s energy price cap is predicted to rise.
EDF’s price cap forecasting service, which it began updating weekly in May of this year, is predicting that Ofgem’s Default Tariff Cap will rise by £19 on 1 January 2025 to hit £1,736.
As such, EDF is launching a 12-month fixed-rate energy tariff, which it claims is the cheapest available among the UK’s major energy suppliers. However, EDF notes the deal could be removed at any time due to volatility in global wholesale prices.
Rich Hughes, director of retail at EDF, said: “At this time of year, people are using more energy and are more concerned about the cost of their energy bill. We want to help in any way we can and have taken advantage of wholesale prices dropping”.
“The American election and the uncertainty it brings for global gas prices as well as conflicts in the Middle East, and between Russia and Ukraine, continue to cause volatility in global wholesale energy markets. This will lead to a higher upcoming energy price cap” added David Edmonds, the head of pricing and valuations in wholesale market services at EDF.
Price cap rises cause concern for many
The energy price cap’s fluctuation in recent years has caused significant trouble for many households since the energy crisis began in 2022.
Energy and climate think tank the Energy and Climate Intelligence Unit (ECIU) has predicted that this winter, energy bills will be around 55% higher than before the start of the energy crisis. The energy price cap rose by 10% on 1 October, and the ECIU predicts that a typical home with an energy performance certificate (EPC) rating of C can expect to pay around £900 for energy across this winter, compared to £580 before the crisis, with less efficient homes paying even more.
A recent report from the UK’s energy regulator Ofgem revealed that, year on year, energy debt and arrears have risen by 43% to hit £3.7 billion, which includes a 12% rise between Q1 and Q2 2024.
Policy interventions have thus far failed to improve fuel poverty rates in the UK. The Committee on Fuel Poverty noted that rates have been “flatlining” over the past five years as the number of households in fuel poverty has remained virtually unchanged from previous years.
