As the new year approaches, many households are bracing for an upcoming rise in energy bills set by Ofgem’s price cap. The increase, albeit a modest 0.2%, will see the average customer potentially spending £1,758 annually. Ofgem regularly reviews and adjusts this cap every three months, adding uncertainty to future costs.
Chancellor Rachel Reeves announced measures in the recent Budget that could potentially save consumers around £150 per year. Despite these savings, the majority of customers, approximately 34 million on standard variable tariffs, may still face higher costs due to the price cap adjustments.
To mitigate these increases, an increasing number of households are opting for fixed energy deals, with around 21 million customers currently on such plans according to Ofgem. While fixed deals do not guarantee bill stability, they lock in unit rates for a specific period, providing some cost predictability based on usage.
Switching to a fixed deal could yield significant savings, with an average customer on a standard variable tariff potentially saving approximately £230 yearly. Transitioning to a new supplier can be a quick process, and customers may not even need to switch providers to secure better deals. Existing smart meter users can easily switch suppliers without any hassles.
Research from price comparison websites like Uswitch.com reveals several fixed deals cheaper than Ofgem’s current price cap. Popular options include Ecotricity’s EcoFixed, Outfox Energy’s Fix’d Dual, E.ON Next’s Next Fixed, So Energy’s So Kings, and EDF Energy’s Simply Fixed, among others, each with varying contract durations and exit fees.
Energy Secretary Ed Miliband has urged suppliers to pass on the promised £150 savings to fixed-rate customers, potentially reducing bills further starting in April. Making the switch now can lead to immediate savings, especially during the winter months when energy usage typically peaks due to colder weather.
Suzanne Edwards, an energy expert at Uswitch.com, advises households to consider fixed deals due to falling wholesale prices, which make fixed deals more attractive. By comparing and switching to the cheapest fixed deal, households could save significantly compared to sticking to standard tariffs. Conducting an energy comparison can help identify cost-effective options for locking in lower rates.