A fixed rate deal as low as £1,974 a year for your energy may sound good – but there’s lots to consider before you decide
Households now have access to fixed deals as low as £1,974 after a fall in the cost of energy.
Since December, the cost of wholesale energy has fallen by around 60%.
Now Ovo Energy, Eon, So Energy and Utility Warehouse are offering fixed deals to existing customers that work out about the same as Ofgem’s price cap over the next year: either slightly above or slightly below it.
Since the start of winter, the Energy Price Guarantee has been lower than almost all energy tariffs – effectively limiting the savings that households can make by switching suppliers.
Customers have had to get used to the idea that there was no point in shopping around for a better deal because there were no better deals.
Now households may be able to benefit from a choice of fixed deals and a more competitive energy provider market.
But it does not mean households will necessarily save money – some may find they save a small amount of money by switching but then find themselves locked into a deal costing them hundreds of pounds more.
What fixed energy deals are available?
The cheapest energy fix (as of 20 June) is Fixed Saver 1 from Utility Warehouse. It gives an average bill of £1,974 a year and is open to new and existing customers – but you do need to have at least two other services with Utility Warehouse (broadband, mobile or boiler and home cover) to get this energy fix. It has a £150 exit charge if you change your mind.
So Juniper tariff from So Energy – it gives an average bill of £2,047 a year. You’ll have to decide swiftly however as it is available to a “limited number of existing customers”. It has a £150 exit charge if you change your mind.
Eon Next’s one-year fixes gives an average bill of £2,050 a year. It has a £150 exit charge if you change your mind.
Ovo Energy’s one-year fix gives an average bill of £2,220 and you don’t have to be an existing customer to get it – you simply switch to its standard variable tariff and then fix. It has a £150 exit charge if you change your mind.
Octopus Energy Loyal Octopus tariff gives an average bill of £2,100 a year – and it is open to existing Octopus Energy customers only. If you change your mind, it has a £150 exit fee.
EDF Energy Essentials Exclusive tariff gives an average bill of £2,100 a year – and it is open to existing EDF customers only, plus you’ll need to get smart meters installed if you don’t already have them. If you change your mind, it has a £150 exit fee.
Think carefully before you commit to a fixed rate deal
What do you have to think about before opting for a cheaper fixed rate deal for your energy costs?
A fixed energy deal needs to be at an average bill of £2,035 a year in order for a household to be better off than staying on a variable tariff that tracks Ofgem’s energy price cap.
The only energy fix currently (as of 20 June) is the Fixed Saver 1 from Utility Warehouse and the So Juniper tariff from So Energy.
It also depends on what happens to the energy price cap going forward.
If you fix and the energy price cap drops significantly you risk paying more in the medium term.
If you fix and the energy price cap rises significantly – after all predictions are just predictions – you save money.
“Some may want to lock in the certainty of a lower price sooner, ahead of next winter, and others may wait to see what happens to the market,” said Richard Neudegg, director of regulation at Uswitch.com.