E.on Next has become the first major firm to launch a fixed deal that undercuts the current energy price cap that is available to new and existing customers. Its one-year fixed tariff is 2% cheaper than the current cap, but will be more expensive than the cap from 1 October. Here’s what you need to know…
Firms are slowly starting to fight for new customers again after pulling deals when the energy crisis hit. E.on’s fixed tariff is the cheapest deal on the market for new customers, with So Energy’s one-year fix for new and existing customers 1% under the current cap.
Several other firms are offering fixed deals to existing customers only. Octopus has a fixed tariff 6% under the current cap, while Sainsbury’s Energy (2% less) and British Gas (1% less) are also offering cheaper fixed deals to their existing customers only.
Energy supplier E.on Next has launched a 12-month fixed tariff that costs below the current price cap. It is available for both new and existing customers. While it’s currently the cheapest option available, starting from October 1st, it will become more expensive than the price cap.
Meanwhile, if you’re looking to do an energy comparison, see how to find the cheapest gas and electricity deals for you.
What is the new E.on tariff and how much is it?
Here’s the important info:
- The tariff is called ‘Next Fixed 12m v2’ and is available to new & existing customers.
- The rates are fixed for 12 months
- It is priced at £2,040 a year based on typical use – 2% under the current cap (what you’ll actually pay depends on your usage and region)
- There are exit fees of £75 per fuel
- It’s available as dual-fuel, electricity-only or economy 7
- You can sign up for it online at E.on
- You must pay by direct debit
How does it stack up against the energy price cap?
If you are on a standard tariff, like most are right now, the rates you pay are governed by the regulator’s energy price cap, which changes every three months. So when considering switching to a fixed deal, you need to look at what is expected to happen over the course of the next year.
While this E.on tariff is an average £34 a year cheaper on typical use than the current price cap, that changes at the end of September.
From 1 October, the fix will be more expensive as the price cap is dropping 7% to £1,923 based on typical use.
Here’s what is expected to happen with the price cap over the next year, according to analysts at Cornwall Insight (though do remember, these are predictions and things change quickly in the energy market.)
|E.on Next Fixed Tariff Rates||Current Energy Price Cap rates|
|Gas||Unit rate: 7.39p per kilowatt hour (kWh). Standing charge: 29.11p per day||Unit rate: 7.51p per kilowatt hour (kWh). Standing charge: 29.11p per day|
|Electricity||Unit rate: 29.42p per kilowatt hour (kWh). Standing charge: 52.96p per day||Unit rate: 30.11p per kilowatt hour (kWh). Standing charge: 52.97p per day|
Existing E.on customer? It has a tariff that tracks the price cap
If you are already an E.on Next customer, it has a tracker-style tariff called Next Pledge which might be worth considering. Here’s what you need to know:
- Next Pledge is a 12-month fixed-term product which will track the price cap and remain £50 below the cap at average annual consumption.
- The price will change each quarter in line with price cap level changes.
- It is currently on sale at prices from 1 October 2023 at £1,870 for typical dual-fuel use (the actual bill will depend on your consumption).
- You must pay by direct debit
- Exit fees of £75 per fuel apply.
So if you use an average amount of energy (12,000 kWh of gas and 2,900 kWh of electricity), it might cost around £1,870 for the year. But it fluctuates based on the amount of energy you consume.
Is the E.on fix worth switching to?
It all depends on how much you value price certainty. If you want to know the rates you’ll be paying for the next year, without having to worry about fluctuations in the energy market, this is an option worth considering.
However, no one knows for certain what will happen to energy prices over the next year and current predictions can always change. This means a tariff that looks like a decent deal now, may not work out as well if the price cap drops by more than expected and you are locked into a pricey fix with high exit fees.
On the flip side, if wholesale prices shoot up and so do energy prices, then you may have missed the opportunity for a cheaper deal. So it all comes down to your attitude to risk.
If you’re a low-income household and are struggling to pay bills, check if you’re eligible for E.on Next’s winter support scheme which is 50% off the new energy price cap. Keep in mind that this is for existing customers only.