I've never switched energy before - how does it work?
It's a simple process to switch energy supplier. Here's what you need to hand:
Your postcode
Your plan name.
That's it! We'll do the rest, including comparing top deals in your area, and providing savings figures, customer ratings, and the ability to filter by preferences including green plans and more.
For step-by-step instructions on how to switch energy suppliers after a price rise, read our dedicated guide about how to switch supplier for gas and electricity here.
Why are energy prices so volatile?
Several factors can cause suppliers' gas and electricity prices to go up or down.
Market forces can cause the wholesale price of gas to rise or fall which then has a knock-on effect on energy bills. This is why prices increased so dramatically throughout 2021 and 2022. However, wholesale gas prices aren't always the cause of energy price changes.
The energy price cap
In recent years, the most significant gas and electricity price rises and cuts have been in reaction to changes in Ofgem’s energy price cap, which is reviewed and updated four times a year. But how can a cap change the prices suppliers are allowed to charge?
The cap was first introduced in January 2019 and limits the amount that suppliers can charge for their default gas and electricity tariffs. However, because the cap was dictated by wholesale energy prices, customers have felt the brunt of suppliers' rising costs with their tariff prices increasing as a result.
Limited energy supply
Gas is pumped out of the ground and electricity is mostly generated using a mix of fossil fuels like oil, gas and coal. These are all natural supplies, which are costly to get hold of, and more importantly, in limited supply.
Despite there being a limited supply of fossil fuels, the technology to find and extract them has advanced significantly and has meant that there is no shortage of gas and electricity.
The limited supply of fossil fuels could impact gas and electricity prices if energy companies were looking very far ahead into the future, but in the short-to-medium term, supply should not be a factor.
Global conflicts
Wars in oil-rich countries and conflicts between countries over gas pipelines can impact wholesale prices. For example, wholesale gas prices in the UK have spiked when supplies in Ukraine, Iraq and Syria have been threatened in recent years.
For the most part, these spikes have been temporary, and the supply of gas and electricity has remained constant in the UK throughout these conflicts, so it isn’t the ultimate factor.
UK energy providers
There are some arguments that energy providers could afford to keep prices low but instead choose to maximise profits by raising prices. However, the industry regulator Ofgem aims to provide transparency in the way the sector prices its gas and electricity. Ofgem also aims to keep the market competitive to ensure that consumers get the fairest price possible. You can go to the Ofgem website to see how much profit suppliers make each year.
To some degree, all of the above arguments could have some impact on your energy prices, but consumers can take back control by switching. By comparing energy prices you can switch to a cheaper provider and ensure that energy gas and electricity suppliers have to stay competitive to retain their customers.
What makes energy cheaper?
Because energy suppliers have to keep the cost of their standard variable tariffs within the price cap, their prices can drop when the cap rate is reduced. This has happened several times since the introduction of the cap - where the price cap rate has fallen, suppliers have been forced to drop their energy prices too. It's important to remember though that the price cap only applies to suppliers' standard variable tariffs, with most fixed deals being much cheaper to start with.
Another element is competition. Energy suppliers need your custom to be profitable. If their customers leave because there's a cheaper energy provider or one with better service, then they lose out.
What is the gas and electricity prices forecast for 2024?
It's difficult to predict with any certainty but at the moment, gas and electricity prices are expected to increase throughout the winter of 2024 going into 2025. The market is still unpredictable so things could change, but the overall energy prices trend is upwards.
For more information, head to our energy market Q&A guide.