Energy prices are falling this April

Ofgem has recently announced that it will be decreasing the next energy Price Cap from £1,928 to £1,690. This means that from 1 April, electricity and gas customers' So Flex and So Flex Green variable tariff rates will change to reflect this. For an average household paying by direct debit for dual fuel, this equates to a decrease of £238 over a year - approximately £20 a month. Here’s a quick refresher on everything you need to know.

What is the Energy Price Cap and how does it work?

The Energy Price Cap serves as a safeguard for households with variable tariffs, setting how much they pay for units of energy. It was implemented by Ofgem to ensure people on variable tariffs were not being overcharged. It’s a dynamic figure that changes every 3 months based on market conditions. If you’re on a variable tariff your prices will reflect this. If you’re on a fixed tariff, your prices won’t be affected.

It’s worth mentioning again that the Price Cap is a cap on how much you are charged for your rates, not your overall usage. If you use more, you’ll be charged accordingly for that usage.

Why are prices decreasing?

Gas supplies

Firstly, the price of gas dropped by about 15% during February. This is partly due to European gas storage sites being at high levels, meaning there were no fears of low supplies. Not only this but the UK was able to utilise Liquefied Natural Gas (LNG) being shipped in to meet demand. LNG is gas that has been converted into a liquid state, which is easier and cheaper to produce than other fossil fuels.

A warm winter

In a catch-22 situation, we’ve had another warm winter here in the UK compared to historic seasonal levels. Currently, temperatures are predicted to remain above expected levels for the remainder of the winter. This means stockpiles can be relied upon instead of needing to purchase more gas.

Political Conflicts

With the ongoing conflict in the Middle East, many have expressed concerns about how this may impact global energy prices. The armed conflict in the Red Sea has meant many ships have avoided using the Suez Canal, which is a vital route for commerce. The UK has so far been fairly unaffected by these tensions. This however could change in the next coming months.

Should I switch my tariff?

You have the choice to remain on our variable price tariff or sign up for a fixed tariff. In an earlier blog, we discussed the continuous rise of the Price Cap and the potential benefits of switching to our fixed rate tariff. Choosing a fixed rate tariff means you’ll avoid the instances of the Price Cap increasing, which it is predicted to do later this year. For more information on the pros and cons of fixed rate tariffs and variable tariffs, check out our previous blog.

We're here to support you and help you through any challenges you may face. If you have any questions or concerns about the upcoming energy price change, please don't hesitate to contact.