Soaring energy bills are the bane of everyone's household budget at the moment - with more looming over the horizon towards the end of the year.
The energy price cap rose by a massive 54% on April 1, increasing a typical bill by 54% to £1,971 a year. And there'd no end in sight, with energy regulator Ofgem warning the cap could surge to £2,880 at the next price cap review in August, which will take effect in October, piling even more pressure on family finances.
Up to now, advice has been to stick with the standard variable tariff. Although you'll pay the maximum amount permitted under the energy price cap, you're unlikely to find a cheaper deal by moving. But while the standard variable rate is still the cheapest way to buy your fuel at the moment, if you're looking for longer-term lower rates you might want to consider fixing your energy tariff now, before we get hit by the new cap in October.
Read more: What is the energy price cap and why is it in the news now?
However, there's a complication: To build in longer-term economy, you'll have to swallow paying more for your energy than you need to now. Money Saving Expert Martin Lewis has advised those looking for price certainty to check the rates you are being offered to fix. He said: "It now may be worth switching if you've been offered a fix that's no more than 35% above your current price-capped tariff, or 40% more if you very strongly value budgeting certainty."
So you will need to be comfortable paying up to 40% more than you need to for your fuel in June, July, August and September before you start paying less in October onwards - if Ofgem's' predictions are correct. It's also worth bearing in mind that you'll have to pay an exit fee to come out of the fix in the unlikely event that prices start to drop significantly after October, although latest information from analysts is that prices are forecast to remain high throughout 2023 and 2024.
The alternative is sticking to the price cap and seeing how the market pans out - although the better deals are likely to fade away as we get closer to the new price cap announcement in August.
Of course, finding a fixed deal is not the easy exercise it used to be. It's pointless looking on price comparison sites, as most of the fixed deals are only on offer to existing customers, and the energy firms tend to keep quiet about them. They don't need to publicise these deals and they don't offer them to all customers.
There is one fixed deal on the open market that just about scrapes into Martin Lewis's 35-40% above price cap rule. It's being offered by Ovo and is a one-year fixed deal at 38% more than the current price cap on typical use. This will give you an annul average bill of £2,732, so is below the predicted October price cap hike by around £150.
There are one or two new fixed-rate deals for existing customers which have come on to the market in the last couple of weeks, detailed below. It's worth noting that these deals can be short-lived, so get them when you can if you want to fix. For instance, British Gas's tariff on offer to customers moved to the company when their original supplier went bust is a poorer deal this month than last month. We reported on May 26 that the offer was 26% more than the energy price cap ( Exclusive May 23v1) but this has now changed to 32% more ( Exclusive Jun23v1).
Here's what's on offer:
EDF
Tariff name: Fix Total Service May24v3
Fix length: Two years
Price: 24% more. £2,444 a year
Exit charge: £300
Who can get it? Customers on its standard variable tariff or those on a 'deemed' tariff.
Tariff name: F ix Total Service May24v4
Fix length: Two years
Price: 24% more. £2,444 a year
Exit charge: £300
Who can get it? Customers on a fixed deal that's ending in the coming weeks.
British Gas
Tariff name: Exclusive Jun23v1
Fix length: One year
Price: 32% more. £2,606 a year
Exit charge: £150
Who can get it? Only available to customers who were moved to it after their old supplier went bust.
Tariff name: Loyalty Jun 23v1
Fix length: One year
Price: 32% more. £2,596 a year
Exit charge: £150
Who can get it? Only available to customers whose fixed tariffs are ending.
EON/EON Next
Tariff name: Fixed Online v14 / Next Online v14
Fix length: One year
Price: 30% more. £ 2,571 a year.
Exit charge: None
Who can get it? A ll existing customers.
SSE:
Tariff name: 1 Year Fixed V27
Fix length: One year
Price: 32% more. £ 2,595 a year.
Exit charge: £60
Who can get it? available to all existing customers
Ovo Energy:
Tariff name: Better Energy 31 May 2022
Fix length: One year
Price: 32% more. £ 2,595 a year.
Exit charge: £60
Who can get it? Available to all existing customers
Remember that if you a signing up for a fixed-rate deal, it's the TARIFF that's fixed, not the monthly amount you are quoted. So your direct debit amount may go up or down, depending on the amount of energy you use, even though the amount you are paying per unit is fixed. Use more units and you'll pay more.
Also remember that the predicted £2880 energy price cap is just a prediction and may change between now and August 1. Also the amount quoted is for an average bill, not the maximum you'll pay. Use more than an average family and and you'll pay more, although you'll pay less if you use less.
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