Due to the latest Energy Price Cap, we have seen average annual energy bills fall by almost 17% as of July 1st. Energy suppliers such as Octopus, British Gas, OVO, So Energy, Utility Warehouse, EDF and Eon next, have now launched fixed energy tariffs. These are currently mainly for existing companies. However, some are offering some new customer deals so switching could take place.
Is fixing energy bills the right thing to do in the current climate?
Below is some information that should be considered before committing to a fixed energy tariff.
Prices are currently controlled by the Energy Price Cap for the majority of households with a standard tariff. This means the price per unit of gas and electricity is limited by the Price Cap along with a cap on standing charges for both fuels.
After the announcement that from July 1st, the Energy Price Cap would fall to £2,074 per year, 17% lower than the previous cap, the Energy price Guarantee is now superseded as we only pay the lower of the two.
This doesn’t, however, make up for the £66 per household that was given during the winter months which ended in April. In fact, lower users fare worse, as the £66 made up more of their bills proportionately, resulting in a bigger reduction in bills.
The Energy Price Cap is actually predicted to fall again in October, but to rise again in January. As the course of the next year is still uncertain, you have to consider what could potentially happen if you were to switch to a fixed tariff.
Another consideration is that OFGEM are due to redefine their annual “typical use” definition for their future prices. This will affect the headline figures that are quoted, this could make it sound like prices are dropping more than they are, it’s not a like for like comparison if this happens.
Predictions for the Energy Market –
Money Saving Expert have put together a table showing current prices along with their future predictions. See below:
Martin Lewis also advised, “Based on current predictions, if any firm offers a fix for under the July Price Cap, that looks a decent deal. If it’s the same or a little more, it may still be worth considering for the sake of price certainty. Of course, current predictions are just predictions, so I can’t promise to be right with hindsight.”
James Mabey, Analyst at Cornwall Insight, also said: “Based on our current forecasts, customers are unlikely to lose out by taking a one-year fixed deal, however, it is doubtful these deals will result in significant savings, if any at all.”
Should you fix?
We’ve seen, in recent weeks, that some Energy Suppliers have started to offer their fixed tariff deals again. However, this is mainly for existing customers already using their service, nevertheless, some have launched limited deals for new customers.
This may be the first time you’re hearing about these tariffs, as most companies are not publishing that they are on offer, meaning that we have to go out looking for them. If you access your supplier account, you should see the tariffs available from that supplier.
Alternatively, Money Saving Expert have put together a “Should I fix calculator” to help us decide what is best to do in the current climate.
Some of the current tariffs offers are below £2,000 per year, lower than the current Energy Price Cap. Utility Warehouse’s fixed saver, priced at £1,974 is the cheapest current tariff available in the UK.