As the new year approaches, many households are bracing for a slight uptick in energy bills due to Ofgem’s upcoming price cap adjustment on January 1. While the increase is modest at just 0.2%, it translates to an estimated annual cost of £1,758 for the average customer. Ofgem reviews the price cap every three months, adding an element of uncertainty for consumers.
Chancellor Rachel Reeves recently announced measures in the Budget that could potentially lead to savings of around £150 per year for impacted customers. Despite this, the majority of the 34 million customers on standard variable tariffs may still face the price hike. However, there are options available to mitigate the impact.
A rising number of households are opting for fixed energy deals, with approximately 21 million customers currently on such plans according to Ofgem. While fixed deals do not guarantee a static overall bill, they lock in the unit rate for a specified period, providing some stability in pricing based on usage.
Switching to a fixed deal could result in savings of around £230 annually for customers on standard variable tariffs. The process of switching suppliers is quick and easy, with numerous options available to explore competitive deals. Even customers with smart meters can seamlessly switch suppliers without any hindrances.
Various fixed deals are currently available that are cheaper than Ofgem’s price cap. For instance, Ecotricity’s EcoFixed – 1 Year Oct 25 v1 offers an average annual cost of £1,527 with an exit fee applicable if the contract is terminated early. Other competitive options include Outfox Energy’s Fix’d Dual Dec25 12M v1.0 and E.ON Next’s Next Fixed 12m v107, among others, each with its own features and exit fee structures.
Energy Secretary Ed Miliband has urged suppliers to pass on the promised savings to customers on fixed rates, potentially reducing costs further from April onwards. Taking advantage of lower prices now and securing a fixed deal can provide financial benefits, especially during peak energy usage periods in the colder months.
As wholesale prices decrease, fixed energy deals are becoming more attractive, offering better value for consumers looking to lock in favorable rates before the impending price cap adjustment. By comparing energy deals, households can potentially save significantly and avoid overpaying on standard tariffs.