Britain’s major energy suppliers, including British Gas, have quietly started offering fixed tariffs to their customers in response to a decrease in the Ofgem price cap. Many households were switched from fixed to variable tariffs during the energy crisis to cope with soaring wholesale prices. While variable tariffs are regulated by Ofgem’s price cap, which recently dropped from £2,074 to £1,834 per year, there is still a demand for the stability of fixed deals. Thankfully, some suppliers have begun to introduce fixed tariffs as the market stabilizes and wholesale prices decrease.
These fixed deals may not be as lucrative as they were prior to the crisis, but they are a step in the right direction. Let’s take a closer look at the details of the best fixed deals for electricity and gas, how they compare to each other, and whether it’s worth considering a fixed tariff.
Ofgem’s price cap determines the amount households will pay for gas and electricity based on average usage and direct debit payments. The current price cap is set at £1,834 per year. British Gas currently offers eight fixed tariffs, four of which are available to both new and existing customers. Their one-year fixed tariffs, ‘Fixed Oct24 v2’ and ‘The Fixed One v25’, come with an average cost of £1,953 per year and an exit fee of £75 per fuel.
EDF offers slightly better deals with their one-year and three-year fixed tariffs, priced at an average of £1,914 per year for both new and existing customers. EDF promotes their three-year fix as a way to protect against rising costs over that period. Shell Energy also provides fixed deals to new and existing customers, with a fix until January 2025 for £1,944.
Although these fixed deals offer only marginal savings compared to Ofgem’s price cap in the short term, industry experts anticipate slight price increases in January, which means locking in a fixed deal now may lead to greater savings in the future. Octopus Energy has a one-year fixed deal for £1,818, representing a £16 saving compared to the October 1 price cap.
The best current deal in the market is Utility Warehouse’s Fixed Saver 7 tariff, available to both new and existing customers. With an annual cost of £1,775, this deal saves households £59 per year or £4.91 per month. However, in order to access this deal, customers must also sign up for other utilities with the company.
Fixed tariffs usually come with exit fees if customers choose to terminate the contract. These fees can range up to £200 per fuel, depending on the supplier and contract duration. For example, EDF charges £75 per fuel for their one-year deal and £200 per fuel for their three-year fix.
Deciding whether a fixed deal is worth it depends on the volatility of the energy market and individual circumstances. While fixed deals provide peace of mind during price rises, they may also prevent customers from benefiting from potential savings if unit rates fall. The current fixed deals reflect the cautious approach of suppliers due to the continued volatility of wholesale prices.
Energy experts predict that energy prices are unlikely to see significant decreases in the coming months. Dr. Craig Lowrey, principal consultant at Cornwall Insight, suggests that prices will remain higher than pre-pandemic levels for the foreseeable future. It’s also important to note that energy prices typically rise in the first three months of the year.
Overall, considering the options available and the likelihood of future price changes, customers should carefully assess their situation and decide whether a fixed tariff is the most suitable choice for them.
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