The energy regulator is responsible for the energy price cap which limits the amount that suppliers can charge customers on their energy bills.
Ofgem said an announcement would be made at 11am on Thursday morning, with the decision affecting 22 million homes across the UK.
The current price cap is £1,277 and is reviewed twice a year, with the latest increase being around 50%.
This has led many bill payers to wonder if they should drop their price cap and get a fixed price on the new offers available.
What is the energy price cap?
🙋A question we often hear is “what is the ceiling price?”
Even if we do not increase or decrease the price of energy, we calculate the level of #EnergyPriceCap which applies to default energy tariffs.
It may affect you. See how it works📺 https://t.co/7SyVaj2ogq pic.twitter.com/4wqpvMDGpl
— Ofgem (@ofgem) January 25, 2022
What is a fixed energy tariff?
A “fixed rate” means that your unit price for gas and electricity does not change for the duration of the plan you have with your energy supplier.
Opting for a fixed rate offer gives you more security and will often be one of the cheapest offers available.
Entering into a fixed term agreement often means a longer plan and you will often have to pay a fee to leave the agreement early.
What is a variable energy tariff?
A “variable rate” is a more flexible approach to paying your energy supplier.
There’s often no charge for getting out of a variable rate plan, but your gas and electric costs per unit can vary from month to month depending on your energy provider’s guidelines.
Martin Lewis on whether you should set your energy price now
Britons have turned to money-saving guru Martin Lewis for advice in the wake of the new energy price cap.
In a recent Money Saving Expert weekly newsletter, he discussed whether consumers should ditch the cap and settle their bill with offers.
He said: “After doing the math, for the most part it’s still a ‘no’, but for the first time in many months the fix may be worth it for a few.”
“If you’re offered a solution that’s no more than 40% more expensive than your current capped rate, it’s worth considering, especially if you value budget certainty”
He added: “If you’re offered one, do the numbers to see what the percentage increase is.”