Gas and electricity deals are finally returning slowly as firms start to battle for new customers once again after pulling switchable tariffs when the energy crisis hit two years ago.
New data from Electralink shows there was a surge in switching in August, with 216,000 switches – double August 2022 and a one per cent increase compared to the previous month.
You can see the pick of the fixed deals currently out there below – including competitive fixes from Octopus and British Gas for existing customers – or you can do a quick energy comparison of the open-market deals available via our sister site, Go.Compare. But the switching market is a little different right now. Here we take you through the key things you need to know if you’re thinking about switching your energy.
1. Most households are currently on the price cap
The majority of households are currently on their provider’s standard variable tariff, with rates dictated by regulator Ofgem’s energy price cap. If you’ve not switched in the last year or so, that’s likely you. So that is what you’d need to benchmark against when thinking about switching.
The price cap sets a limit on what firms can charge for each unit of gas and electricity and the standing charges. See our full energy price cap explainer for more on how it works and the average unit rates below.
2. The price cap will drop by 7% in October
The price cap changes every three months and is currently set at an average £2,074/year for a typical household’s use. The price cap will drop by an average of 7% to a typical £1,923/year from 1 October. It’s important to note though that it’s the rates that are capped, not the amount you pay. So higher users will pay more than those typical use figures, lower users will pay less.
As a result, when comparing deals, it’s important to look at the unit rates. The price cap rates vary per region. But to help, here are the average unit rates and standing charges for direct debit under the current and new price caps.
| Current energy price cap rates from 1 July to 30 September 2023 | New energy price cap rates from 1 October to 31 December 2023 | |
|---|---|---|
| Gas | Unit rate: 7.51p per kilowatt hour (kWh). Standing charge: 29.11p per day | Unit rate: 6.89p per kWh. Standing charge: 29.62p per day |
| Electricity | Unit rate: 30.11p per kWh. Standing charge: 52.97p per day | Unit rate: 27.35p per kWh. Standing charge: 53.37p per day |
3. The price cap is expected to fluctuate over the next year
To work out if a fixed deal is worth switching to, you need to understand what is expected to happen to energy bills over the next year. Here are the latest predictions (as of 25 August) from analysts at Cornwall Insight on how the price cap is expected to move on average – this is what you’d pay if you don’t switch.
Remember, these are just predictions and things can change fast in the energy market. The further out the prediction, the more it is likely to vary. See more in our ‘Will energy prices go down? article.
| Time period | Price cap on current typical use figures | Price cap on new typical use figures |
|---|---|---|
| Current cap: 1 Jul 2023 to 30 September 2023 | £2,074 a year | £1,976 a year |
| Confirmed new cap: 1 October 2023 to 31 December 2023 | DOWN 7% £1,924 a year | DOWN 7% £1,834 a year |
| 1 January 2024 to 31 March 2024 | UP 6% £2,033 a year - PREDICTION | UP 5% £1,932 a year - PREDICTION |
| 1 April 2024 to 30 June 2024 | DOWN 3% £1,964 a year - PREDICTION | DOWN 3% £1,868 a year - PREDICTION |
| 1 July 2024 to 30 September 2024 | DOWN 2% £1,917 a year - PREDICTION | DOWN 2% £1,822 a year - PREDICTION |
| 1 October 2024 to 31 December 2024 | UP 3% £1,975 a year - PREDICTION | UP 3% £1,874 a year - PREDICTION |
Note, Ofgem’s current typical use figures are 2,900kWh for electricity and 12,000kWh of gas. From October this typical use figure will fall slightly to 2,700 kWh for electricity and 11,500kWh for gas, so annual prices may look cheaper than they are in reality when the new figures are used.
4. Is it worth ditching the price cap?
If you find a fixed deal for less than the current price cap, it might be worth considering, especially if you are someone that really values price certainty and want to lock your rates in for a year now, without having to worry about what happens in the energy market over that period.
The flip side, of course, is if wholesale prices – what firms pay for their energy – were to drop and suppliers were able to offer even cheaper deals, or the price cap falls by more than expected, you could be missing out and be stuck on a pricier tariff with hefty exit fees.
See Should I fix my energy? for full pros and cons of switching.
5. There are a handful of fixed deals on the market worth considering
If you want to find the cheapest gas and electricity deals, the easiest way usually is by doing a quick energy comparison via our sister site, Go.Compare. Though right now, as the switching market comes back slowly, there are only handful of open-market deals, so that’s not the only place to look.
Some suppliers are offering special fixed tariffs to existing customers only. These are not yet on comparisons and can be competitive, so it’s worth checking below and getting in touch with your firm.
| Supplier & tariff | Average cost compared with July Price Cap | Who can get it? |
|---|---|---|
| Loyal Octopus 12M Fixed Sept 2023 12-month fix | 8% less | All existing customers. |
| British Gas Smart Oct 24 v2 / Smart Fixed v6 12-month fix | 4% less | All existing customers. |
| E.on Next Next Fixed 12m v2 12-month fix | 2% less | New and existing customers via its site |
| Sainsbury's Energy Renew Fixed 12 month v1 12-month fix | 2% less | All existing customers. |
| Shell Energy Energy November 2024 14-month fix | 2% less | All new and existing customers. |
| So Energy So Juniper 12-month fix | 1% less | New and existing customers. Get it via Go.compare. |
| British Gas Fixed Oct24 v2/ The Fixed One v25 | 1% less | All existing customers |
Existing E.on customer? 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 £25 per fuel apply.
6. Switching is easy - you won't lose your supply
If you decide switching is right for you, it is really simple. You won’t lose supply, all that changes is what you pay and the customer service of the new firm.
Once you’ve done an energy comparison and chosen the tariff and supplier you’d like to switch to, you then confirm your contract and payment method. Paying by direct debit is usually cheapest, while paying by cash, cheque or quarterly direct debit is more expensive.
Your new supplier will contact you with a switching date. Ofgem says it can take up to five working days to complete a switch, although you can specify a later switch date if you want to.
If you change your mind, you have 14 days to cancel from when you agree to a contract – though if you’ve already been switched, you’ll need to pay the new supplier for any energy used.
7. In the last 49 days of a fix? You can switch fee-free
Under Ofgem rules, if you are in the last 49 days of a fixed deal, you are free to switch away without paying exit fees. So make sure you make a note of when your fixed tariff is due to end.
8. In debt? You may still be able to switch
If you’ve been in debt to your supplier for less than 28 days, you can still switch. Your old firm will add anything you owe to your final bill.
If you are on a standard credit meter (eg, you pay by direct debit), you’ll need to repay a debt first if you’ve owed money for over 28 days.
If you’re on prepay, it’s slightly different. If you’ve outstanding debt of under £500, the supplier you switch to will take on the debt and you will repay them instead. Ofgem says this happens under a ‘Debt Assignment Protocol’. You will agree the terms of your repayment plan with them and under the regulator’s rules, it must be realistic and affordable.
See how to get help with gas and electricity bills if you are struggling.
It’s worth noting that if it is your supplier’s fault you are in debt, they can’t stop you from switching.
9. Renters should be free to switch
If it is your responsibility to pay energy bills, then you are free to choose your supplier. Check your rental agreement if you’re not sure. Even if your landlord is responsible – eg, they include the cost of energy in your rent, or pay the supplier directly and claim it back – Ofgem says they should not unreasonably stop you from switching.
10. You'll likely need to have smart meters or be happy to get 'em installed for the cheapest deals
Many of the cheapest deals on the market require you to either have smart meters, or be willing to get them installed for free. This is because the Government has given energy suppliers the target of having smart meters in 80% of homes in the UK by 2025.
Smart meters can also open up eligibility to money-saving schemes. Last winter, National Grid ran a scheme where households with smart meters were paid to move their energy use away from peak periods, and the scheme is due to be repeated next winter. Here’s everything you need to know about smart meters.
11. Most suppliers will run a credit check
Energy companies will usually run a credit check when you sign up to a new deal as they want to check you are going to be able to pay your bill. This may leave a minor mark on your credit file.
If you fail a credit check, firms may suggest you get a prepayment meter instead. However, if you are about to make a big credit application, eg, for a mortgage, it may be best holding off switching until it is approved
12. On prepay? You can switch
If you are on a prepay meter and want to switch to a new supplier, you are free to do so, providing you are in debt for under £500.
There are fewer deals for prepay customers, but most suppliers let you switch to a regular credit meter for free (where you’re billed for your use after you use it). This could allow you to take advantage of cheaper fixed deals You’ll just need to clear any debt first and will be credit-checked.
If you are renting and want to switch off a prepay meter to a standard credit meter, you’ll need to get permission from your landlord first.
13. You are free to switch if you only have electricity
If you want to switch your electricity only as you don’t have a gas supply, you are free to do that. You can do an electricity-only comparison through our sister site Go.Compare.
14. Make sure you give regular meter readings
Unless you have smart meters, which give readings automatically, it’s important you give regular meter readings to your supplier. This will ensure you are billed correctly and your direct debit is set at the right level. See how to take meter readings.
