The fixed energy tariffs that are CHEAPER than the price cap and could save you money this winter

ENERGY firms are battling to offer newbies price cap-beating fixed energy deals.

It comes just hours after the energy regulator Ofgem confirmed the new energy price cap, which affects the 29 million households on the standard variable tariff.

The cap will rise from £1,568 to £1,717 on October 1.

It means a typical household will see their annual duel-fule bill rise by £149.

However, customers opting to lock into the cheapest fixed energy tariff now could save £125 a year.

These work by charging customers the same gas and electricity rates for the entire term of the contract, protecting customers from future bill hikes.

Several major suppliers, including Outfox the Market, are currently offering fixed deals that are cheaper than October’s energy price cap.

Richard Neudegg, director of regulation at Uswitch.com, said: “The news of a 10% rise in energy rates from October is a harsh reminder of how quickly the energy market can reverse course.

“The good news is, households don’t have to put up with the uncertainty of rising bills, as right now, there are fixed deals available that are cheaper than the new price cap.”

However, you’ll need to be quick to take advantage of the savings these offers yield.

Suppliers often reprice or remove their fixed energy tariffs from the market if wholesale gas prices are forecast to rise.

So it’s wise to compare the best offers now to ensure you get the best deal before prices rise in October.

Here’s everything you need to know about fixing your bills.

How do fixed deals work?

Fixed deals work to protect customers from bill hikes if Ofgem were to increase the price cap in the future.

Customers on their supplier’s standard variable tariff see their energy prices change every three months, as these are tied to Ofgem’s price cap.

However, those who lock into a fixed energy deal are charged the same gas and electricity rates throughout the contract’s term.

Of course, doing so carries a slight risk of you paying more than those on the standard variable tariff if Ofgem’s energy price cap were to fall within your deal’s term.

However, this risk is minimal as analysts at Cornwall Insight predict that the energy price cap will rise again in January.

From October 1, those on the standard variable tariff (SVT) have their rates capped by Ofgem at the following levels:

• 5.48p per kilowatt hour (p/kWh) for gas
• 22.36p per kWh for electricity
• A standing charge of 31.66p per day for gas
• A standing charge of 60.99p 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 £1,717 .

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 cheaper than October’s price cap prediction, it’s always worth considering.

Which suppliers are offering the best-fixed deals?

Outfox the Market is currently offering the cheapest deal on the open market to new and existing customers.

Its Fix’d Dual Aug24 v4.0 tariff costs a typical household £1,592 a year.

This means it is £125 cheaper than Ofgem’s October price cap.

It comes with a £25 exit fee per fuel or £50 if you lock in with a dual fuel tariff.

Next is Ovo Energy‘s tariff, which costs a typical household £1,625 a year.

It comes with a £50 exit fee per fuel or £100 if you lock in with a dual fuel tariff.

Octopus Energy’s 12M Fixed August 2024 v3 costs £1,626 a year – £91 less than Ofgem’s October price cap.

Remember to always compare prices before switching, as energy tariffs vary widely, and costs differ depending on where you live.

What are the alternatives?

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.

EDF Energy’s Ensure Tracker works in a similar way and offers a £50 discount off the price cap’s standing charges for 12 months.

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 22.5p per kWh for electricity and 5.22p per kWh of gas.

The Agile Octopus tariff works similarly to the Octopus Tracker, but the main difference is that 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.