Households across the UK are being advised to take immediate action to shield themselves from anticipated increases in energy costs, as economic experts caution that prices could surge in the coming months. Customers of major suppliers such as Octopus Energy, British Gas, OVO Energy, E.ON Next, EDF Energy, and Scottish Power should consider proactive steps now, according to an economics professor, due to rising wholesale costs driven by global pressures.
Economic Warning on Energy Price Volatility
Stuart Mills, an assistant professor of economics at the University of Leeds, has highlighted that consumers should think about increasing their energy payments today to mitigate the impact of higher bills later. His warning comes amid disruptions to global supply chains linked to conflicts in the Middle East, which are putting significant pressure on energy prices. Mills explained that the current situation risks creating a mismatch between expectations and reality, with prices likely to remain volatile even after immediate market pressures subside.
In an article published on the academic website The Conversation, Mills stated: “The conflict in the Gulf is just the latest shock to the energy supply chain. And the tricky thing with supply chains is disruption takes time to be felt. Even if a peace deal sticks, consumers and businesses can still expect higher prices to ripple through the energy market for months.”
Understanding Present Bias in Consumer Behavior
Prof Mills elaborated on a common behavioral pattern known in economics as 'present bias', where consumers often focus on short-term costs rather than future risks. This tendency can lead households to underestimate how quickly higher energy costs may arrive, potentially resulting in unpleasant surprises when bills are issued.
He advised: “So, pay it forward. Don't fall into the trap of present bias. If you can, increase your energy bill payments today. Economists call this 'smoothing out' your consumption. When higher bills bite, you'll be psychologically better off for it.”
Consumer Finance Expert Echoes Urgent Calls
Adding to these warnings, consumer finance expert Martin Lewis has urged households to consider switching off standard variable tariffs and moving to fixed deals where possible. Speaking on Newsnight with journalist Victoria Derbyshire, Lewis emphasized that the timing of future price cap changes will be crucial in determining household expenses.
Lewis said: “This is all about timings. Of course, this is not just about the spike that we're seeing in oil and gas prices. It's about how long that spike lasts for. The longer it lasts for, the worse the situation gets.” He noted that while petrol and diesel prices have already increased, the most painful rises have been in heating oil and LPG oil.
Key Dates and Potential Price Cap Increases
A pivotal moment for consumers will occur at the end of May, when the next price cap level is announced for July. Lewis warned that this cap is almost certain to be more expensive than the current April cap, with the extent of the increase depending on how long wholesale price spikes persist. If prices remain high, it could create a 'ticking time bomb', leading to successive price cap rises into winter and potentially prompting government intervention in the energy market.
In a separate post on X, Lewis urged quick action: “Important: If you can get off the Energy Price Cap right now, you should and urgently! The wholesale gas rate is spiking due to the Iran conflict and it is a prime driver of UK electricity prices. If that's sustained, it will likely push the Price Cap rate up from July.”
Opportunities for Savings and Tariff Changes
Lewis pointed out that some cheaper fixed deals may still be available, offering savings of around 14% less than the current price cap, though these could disappear quickly as suppliers reassess pricing. He also mentioned that changes to how energy bills are structured, with some policy costs moving to general taxation, could reduce unit costs slightly for some customers from April, depending on tariff type.
He added: “Fixes are available for most payment methods except prepay. Those on smart prepay can look at the EDF Simply Tracker tariff, which is effectively a price cap tariff with lower standing charges.” To determine if you are on a price cap, note that it only applies to standard variable tariffs—the default if no other deal is chosen or if a previous deal has ended.
Broader Context and Additional Support
Amid ongoing uncertainty in global energy markets, analysts suggest that households reviewing their tariffs early may be better positioned to manage potential price rises later this year. This advice comes alongside other support measures, such as the £50 million available for families struggling with heating oil costs and the Government's Breathing Space scheme for debt help.
With rising energy costs posing a significant challenge, taking proactive steps now could provide both financial and psychological benefits as the market continues to evolve.
