Energy bill warning for 320,000 due to come off cheap fixed deals who could end up paying £410 more if they don’t act
MORE than 320,000 households could save a combined £133million on their energy bills by the end of July.
It comes as hundreds of thousands of billpayers reach the end of their fixed energy deals.
Fixed deals protect customers from bill hikes if Ofgem were to increase the price cap in the future.
However, you may risk paying more if Ofgem’s energy price cap continues to fall in the coming months.
Ofgem’s price cap was much higher last summer, with a typical household forking out £2,074 a year.
At the time, competitive fixed deals lower than the price cap started returning to the energy market, resulting in 324,715 consumers switching in June and July 2023.
In June 2023, the cheapest available deal was from So Energy, priced £1,950 a year for the average home with typical consumption.
However, those 12-month deals will end by July 2024, and consumers will automatically be added to the price cap unless they sign up for another fixed tariff.
The current price cap, which runs until the end of June, is set at £1,690, meaning that the average household with typical usage would save around £260 when moved onto the standard price-capped variable tariff from their current fixed deal.
However, the recently announced Ecotricity One Year Fixed Tariff is cheaper, at £1,540 a year – £410 cheaper than the cheapest fix available in June last year.
If all of the affected households signed up for the cheapest deal currently available, they would save £133 million.
Elise Melville, energy expert at Uswitch.com, said: “Households who signed up for a fixed energy tariff last summer should get a new deal as soon as possible, as they could save hundreds of pounds.
“Those whose tariff started in July last year need to act now – as they can leave their current tariff up to 49 days before it ends without paying any exit fee.
“The deals available are the lowest we’ve seen since late 2021, with some fixes even cheaper than the predicted forthcoming price cap, which will be announced next week.
“Consumers wanting to benefit from these cheaper deals may need to act fast to lock in these rates while they are available.
“Signing up to a fixed deal is the only way to lock in certainty over what you will pay for a set period of time, and prices are expected to rise again this winter.”
It’s important to note that if your current fixed deal doesn’t expire in June or July, you’ll likely face hefty exit fees worth up to £190 to exit your contract early.
TIME TO FIX?
Energy firms have started introducing price cap-beating fixed energy deals in recent months, though nowhere near the levels seen before the energy crisis.
Several major suppliers, including British Gas, Octopus and Ovo Energy, are now offering cheap fixed deals.
At the moment, those on the standard variable tariff (SVT) have their rates capped by Ofgem at the following levels:
- 6.04p per kilowatt hour (p/kWh) for gas
- 24.50p/kWh for electricity
- A standing charge of 31.43p per day for gas
- A standing charge of 60.10p per day for electricity
For a typical household that uses an average of 11,500kWh of gas and 2,700kWh of electricity every year, these rates will cap bills at roughly £1,690.
As this is only an estimate for a typical household, if you use more energy, you’ll pay more.
But if you’re offered a fix that’s lower than April’s price cap, it’s always worth considering.
For example, Ecotricity is currently offering its Green 1 Year Fixed tariff, which costs a typical household £1,540 a year – £150 less than Ofgem’s price cap.
This comes with a £75 exit fee per fuel – so £150 if you lock in with a duel fuel tariff.
Up next is EDF Energy’s EDF Essential 1Yr May25 tariff which will set a typical household back £1,580 a year – £110 less than the price cap.
Octopus Energy’s 12M Fixed tariff costs the same, but there are no exit fees if you leave early.
It’s important to consider that Ofgem’s price cap will be reviewed again later this month, as it now changes every three months.
It means that bills could fall again and current predictions from Cornwall Insight forecast that they’ll hit £1,540 a year for the average household from July 1.
How do I calculate my energy bill?
BELOW we reveal how you can calculate your own energy bill.
To calculate how much you pay for your energy bill, you must find out your unit rate for gas and electricity and the standing charge for each fuel type.
The unit rate will usually be shown on your bill in p/kWh.The standing charge is a daily charge that is paid 365 days of the year – irrespective of whether or not you use any gas or electricity.
You will then need to note down your own annual energy usage from a previous bill.
Once you have these details, you can work out your gas and electricity costs separately.
Multiply your usage in kWh by the unit rate cost in p/kWh for the corresponding fuel type – this will give you your usage costs.
You’ll then need to multiply each standing charge by 365 and add this figure to the totals for your usage – this will then give you your annual costs.
Divide this figure by 12, and you’ll be able to determine how much you should expect to pay each month from April 1.
FLEXIBLE TARIFFS?
Customers unwilling to commit to long-term fixed energy deals may want to consider flexible tariffs.
Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: “These will almost always be at or below the price cap.”
For example, E.ON Next’s Pledge variable tariff offers a fixed discount of around three per cent on the price cap rates for 12 months.
It will save the average household around £50 a year but comes with a £50 exit fee if you switch before the year ends.
The deal is available to both new and existing customers.
For a bigger reward but at a higher risk, Octopus Energy offers two variable tariffs which track wholesale gas and electricity costs.
Customers on the Octopus Tracker see their prices change daily, but unit rates have remained consistently lower than the price cap in recent months.
For example, in the last 30 days, people living in Southern England on the Octopus Tracker paid a maximum of 20.3p per kWh for electricity and 4.81p per kWh of gas, which is 4.2p and 1.23p cheaper than the price cap per fuel.
The Agile Octopus tariff works similarly to the Octopus Tracker, the main difference is the former’s prices change every half hour.
Remember that those wishing to switch to any of these tracker tariffs must have a smart meter.