Households in the UK are struggling to save money on their energy bills due to limited cheaper fixed-rate energy deals. Out of the 11 fixed-rate tariffs currently available on the market, only one is cheaper than the Ofgem price cap. The cheapest deal, offered by Utility Warehouse, requires consumers to bundle other utility bills with their energy plan. Despite consumer demand for more affordable fixed-rate deals, research from Future Energy Associates shows that these options are scarce. The study found that there are 337 existing fixed-rate energy deals that cost more than variable-rate tariffs, and some even have expensive exit fees for customers who want to switch providers.
The Utility Warehouse Fixed Saver 7 is currently the cheapest fixed-rate deal, priced at £1,775 until November 2024. This is £59 cheaper than the average home pays on a price-capped tariff. However, this deal comes with the condition of adding two other utility bills to the package. Fiona Waters, spokesperson for the Warm This Winter charity group, expressed frustration with the lack of affordable options in the energy market and criticized the government and energy industry for not addressing this issue.
Consumers may still have opportunities to find cheaper energy prices than those set under the Ofgem price cap. One way is by switching to a fixed-rate energy deal offered specifically to existing customers, which may not be publicly listed. Energy firms often contact customers directly with special fixed-rate offers. Another option is to consider two separate variable-rate deals for gas and electricity, depending on personal circumstances and location. Future Energy Associates found that the Fuse Saver deal from Fuse Energy is the cheapest variable tariff for electricity, while the Home SVT October 2023 v1 deal from Home Energy is the cheapest for gas.
In order to assess the value of a fixed-rate energy deal, consumers should compare the unit rate and standing charge with their current rates. The Ofgem price cap currently places limits on rates at 53p per day for electricity standing charges, 30p for gas standing charges, 27p per kWh for electricity unit rates, and 7p per kWh for gas unit rates. However, it is important to consider the future changes to the price cap, as it may decrease significantly and leave consumers overpaying for their energy.
While Ofgem does not make predictions about future price cap changes, Cornwall Insight analysts have provided their predictions. They estimate that from January 1, the typical household will pay £2,032, which will decrease to £1,964 in April, £1,917 in July, and rise again to £1,974 in the following October. Due to changes in the Ofgem price cap, energy suppliers are expected to make an additional £140 million in profit on energy bills over the next 12 months.
The End Fuel Poverty Coalition coordinator, Simon Francis, advises customers to exercise caution when considering switching and fixing energy plans, especially with fluctuating prices. He also calls on companies to waive exit fees, allowing people to easily switch to the cheapest available tariff.
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