French-owned EDF Energy has announced that it will be reducing the cost of its gas supply, but raising the cost of its electricity, as of next year.
The changes will apply to all customers on standard variable tariffs with EDF (around 700,000 people in total) and those using prepayment meters (around 200,000 people).
Starting from the 6th of January next year, gas prices for customers on standard tariffs will be cut by 5.2%, EDF said, which will make the average annual bill almost £30 cheaper.
However, as of March 2017, rises in electricity prices will offset the overall savings. EDF said that they will be freezing electricity prices on their standard tariff until March, but that they will then increase them by 8.4%, meaning that the supplier’s average dual fuel customer will see their total bill go up by 1.2%. They cited steadily rising wholesale costs as the reason behind the price hike, which is their first (for electricity) in three years.
Prepayment customers with EDF will still see savings into next year. When gas prices are dropped for those on standard tariffs in January, prepayment customers will see their gas bill fall by 12.9%, and so even with the subsequent hike in electricity prices, their overall bill will still be lower (by 5.1%) than it is today. These changes will come into effect soon before a price cap is introduced for all prepayment customers in the country.
EDF’s announcement that they will be increasing electricity prices is the first from any major supplier but, according to analysts, it is unlikely to be the last.
While a few major supplier (including British Gas, SSE and E.On) have announce that they will be freezing prices for their standard tariffs for the duration of this Winter, it is expected that costs will start to rise throughout the first half of next year.
The best way to avoid being hit by price hikes is to move away from expensive standard variable tariffs and onto cheaper, fixed rate deals. this doesn’t necessarily mean switching supplier altogether – large savings can be made simply by switching from a standard tariff to a fixed rate plan with the same supplier. A recent study published by Ofgem showed that consumers could save up to £261 by switching tariffs with their existing supplier.