MILLIONS of households have just hours left to slash their energy bills ahead of a key deadline this evening.
From April 1, Ofgem‘s energy price cap is set to rise by approximately 6%, adding an extra £111 per year to the average household bill.
However, Uswitch is closing applications at midnight for a cheap E.ON Next fixed tariff that is £222 cheaper than Ofgem’s April price cap[/caption]
It’s a blow to 22million households on standard variable tariffs which are subject to the price cap, and will see their bills rise from £1,738 to £1,849 per year.
However, many households are likely to face costs exceeding this headline figure.
This is because the energy price cap does not limit the total amount a customer pays for their energy.
Instead, it sets a maximum charge per kilowatt-hour (kWh) of gas and electricity, alongside the daily standing charges.
Another factor affecting how much you pay is the area you live.
That said, households that act now by switching to a fixed energy deal can lower their bills ahead of the increase, offering a chance to save money in the long term.
However, Uswitch is closing applications at midnight for a cheap E.ON Next fixed tariff that is £222 cheaper than Ofgem’s April price cap.
The supplier’s Next Fixed 15m v4 tariff, priced at £1,627 per year for a typical household.
Fixed deals work to protect customers from bill hikes if Ofgem were to increase the price cap in the future.
Those who lock into a fixed energy deal are charged the same gas and electricity rates throughout the contract’s term.
There is a risk that if energy prices fall, you could end up paying more.
However, analysts at energy consultancy Cornwall Insight have advised that households should not anticipate a significant drop in prices this year.
How do fixed energy deals work?
FIXED deals work to protect customers from bill hikes if Ofgem were to increase the price cap in the future.
Customers on their supplier’s standard variable tariff see their energy prices change every three months, as these are tied to Ofgem’s price cap.
However, those who lock into a fixed energy deal are charged the same gas and electricity rates throughout the contract’s term.
Of course, doing so carries a slight risk of you paying more than those on the standard variable tariff if Ofgem’s energy price cap were to fall within your deal’s term.
However, this risk is minimal as analysts at Cornwall Insight predict that the energy price cap will only slightly to £1,756 a year from July.
From April, those on the standard variable tariff (SVT) will have their rates capped by Ofgem at the following levels:
- 6.99p per kilowatt hour (p/kWh) for gas
- 27.03p/kWh for electricity
- A standing charge of 32.67p per day for gas
- A standing charge of 53.80p per day for electricity
For a typical household that uses an average of 11,500kWh of gas and 2,700kWh of electricity every year, these rates will cap bills at roughly £1,849.
As this is only an estimate for a typical household, if you use more energy, you’ll pay more.
So, if you’re offered a fix that’s cheaper than April’s price cap, it’s always worth considering.
Even though E.ON Next’s deal will end this evening, millions of households could still switch, and some will save even more than £222.
For example, Outfox The Market is currently offering the cheapest deal on the open market to new and existing customers.
Its Fix’d Duel Mar25 v3.0 tariff costs a typical household £1,587 a year.
This means it is £262 cheaper than Ofgem’s April price cap.
This comes with a £25 exit fee per fuel or £50 if you lock in with a dual fuel tariff.
How can I find the cheapest fixed deals?
To find the best fixed energy deals, start by visiting price comparison websites, which aggregate various offers from different energy suppliers.
The best sites include Uswitch.com and MoneySavingExpert’s Cheap Energy Club.
Enter your postcode and current energy usage details to receive a list of available deals tailored to your needs – it’ll take you less than five minutes.
You’ll then be able to compare the rates, contract lengths, and any additional features or benefits offered by each deal.
Next, visit the websites of individual energy suppliers to check if they have exclusive deals that are not listed on comparison sites.
Sometimes, suppliers offer special promotions or discounts directly to customers.
Compare these offers with those on the comparison websites to ensure you get the best possible rate.
Finally, consider customer service reviews and the overall reputation of the suppliers.
Once you have identified the best deal, follow the instructions to switch your energy provider.
How can I check future price cap predictions?
EDF Energy has launches a brand new Ofgem price cap prediction tool on its website.
The energy company updates the tool with new information about changes to the cap on energy prices every Tuesday.
It also includes advice on how this affects your energy tariff choices.
You can find out more by visiting www.edfenergy.com/gas-and-electricity/price-cap-predictions.
What are the alternatives?
Customers unwilling to commit to long-term fixed energy deals may want to consider flexible tariffs.
Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: “These will almost always be at or below the price cap.”
For example, E.ON Next‘s Pledge variable tariff offers a fixed discount of around three per cent on the price cap rates for 12 months.
It will save the average household around £50 a year but comes with a £50 exit fee if you switch before the year ends.
The deal is available to both new and existing customers.
British Gas‘s Price Cap Guarantee and EDF Energy’s Ensure Tracker work in a similar way and also offer a £50 discount off the price cap’s charges for 12 months.
For a bigger reward but at a higher risk, Octopus Energy offers two variable tariffs which track wholesale gas and electricity costs.
Customers using the Octopus Tracker experience daily price fluctuations, but electricity rates have largely stayed below the price cap over the past 12 months.
For instance, over the last 30 days, households in southern England on the Octopus Tracker paid a maximum of 28.5p per kWh for electricity.
However, gas prices have generally been higher, with customers paying an average of 7.07p per kWh for gas.
The Agile Octopus tariff works similarly to the Octopus Tracker, but the main difference is that the former’s prices change every half hour.
Those wishing to switch to any of these tracker tariffs must have a smart meter.
What energy bill help is available?
There’s a number of different ways to get help paying your energy bills if you’re struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don’t think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have schemes available to customers struggling to cover their bills.
But eligibility criteria vary depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don’t need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill.
Some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you’re struggling.
Get in touch with your energy firm to see if you can apply.
