Cheapest energy tariff that’s lower than the price cap launched by major supplier – but should you switch?
A MAJOR energy supplier has released a new fixed price tariff and its the cheapest of the large suppliers.
EDF’s ‘Essentials one year Aug25’ tariff is available to all new and existing customers.
The fixed tariff charges customers the same rate for gas or electricity until the contract ends, meaning you are locked into the price even if the price cap goes up or down.
It differs from the standard varial tariff (SVT) which has its prices capped by Ofgem.
EDF’s tariff, which is in place for one year, will be fixed at 1,567, which is a quid cheaper than the rate of the current energy supply cap.
The price cap is currently £1,568, the lowest figure in two years.
It changes every three months and is forecast to rise to £1,714 from October 1st and potentially increasing further to £1,733 in January 2025.
This could potentially save customers £146 a year from October and £165 from January when the new price caps come into place.
However, this can not be certain and there is a chance the price cap maybe higher or lower.
If you want to leave before your contract ends then you’ll be charged £25 per fuel, so £50 in total for gas and electricity.
“Current falling wholesale market prices mean we can lower our prices for a limited period of time and offer customers a deal which matches the current cap, which has dropped to its lowest level since winter 2021,” Rich Hughes, director of retail at EDF, said.
“However, our Price Cap forecasting service predicts rises in the coming months, making this a great time to lock in.”
How do I sign up?
To sign up, existing customers can do so via their online account or the EDF app, or new customers can sign up by visiting the website.
However, customers who sign up to the new tariff require a smart meter or need to agree to have one installed.
A smart meter provides real-time information about your energy consumption, whereas traditional meters require manual reading.
The technology saves customers the difficulty of having to take a meter reading themselves as it does it automatically.
If you want to install a smart meter speak to your energy provider and they should be able to help.
It is important to remember you do not need to sign up for EDF’s new tariff if you are happy with your provider.
Also customers should shop around for the best deal that suits their family and budget.
What are the pros and cons of a fixed tariff?
A fixed tariff can be a helpful way to make sure you’re not at the mercy of a fluctuating market if the price per unit looks like it’ll go up.
However, it is important to remember that it does not mean your bill will be the exact same each month.
Your supplier locks in the price you pay per unit, but not how many units you consume.
The more energy you use in a month, the more you will have to pay.
However, these tariffs can be a helpful way to protect yourself from price hikes if gas and energy prices go up.
These types of contracts can also be a helpful way to manage your monthly spending.
But if energy prices come down you will still have to pay the price you agreed at the start of your contract.
Many suppliers also expect customers to pay an exit fee if you change your mind.
It is always important to read your contract before you sign up and talk to them if you have any questions.
What are the pros and cons of a standard varial tariff (SVT)?
SVTs are typically more expensive than fixed deals as the price can vary as energy prices go up and down.
However, Ofgem’s energy price cap does put a limit on the maximum you can be charged.
The upside to using a SVT is that they are open ended and you will not be charged an exit fee if you wanted to switch.
Also the prices can go down as well as up, meaning you will get immediate access to lower energy costs.
But bear in mind, that also means you are not protected from price rises.
Should you switch?
It depends. If you lock into this fixed tariff then you won’t be able to leave for 12 months without paying a £25 per fuel fee.
At the moment, this tariff works out just £1 a year cheaper.
This is great if bills go up, as predicted as you would save more money. But if they fall then you could end up paying more.
Before switching always compare prices.
Understanding the energy price cap
The energy price cap was first brought in on January 1, 2019, by the regulator Ofgem.
The cap was introduced with the aim of preventing the millions of households then on expensive tariffs from being over charged.
As it stands, the price cap is updated every quarter or three months.
The price cap is currently £1,568, the lowest figure in two years.
The energy price cap works by setting a limit on the maximum amount suppliers can charge for each unit of gas and electricity.
It ensures that prices for people on default energy tariffs are fair and that they reflect the cost of energy.
That means despite the energy price cap being £1,568, you might pay more or less than this amount, depending on your usage.
The way you pay for your energy, where you live, your meter type, and how much you use will all affect your energy bill.
For example, households which pay using direct debit are around £100 better off a year than those who pay on receipt of their bills.
Ofgem also sets a maximum daily standing charge which is what households have to pay to have their home connected to the National Grid.
The dates when the levels will be announced next are as follows, according to the regulator.
- 1 October to 31 December 2024 – announced by August 27, 2024
- 1 January to 31 March 2025 – announced by November 27, 2024
- 1 April 2025 – 30 June 2025 – announced by February 25, 2025
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 grant schemes available to customers struggling to cover their bills.
But eligibility criteria varies 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 £1,500.
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, and 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.