Households are stuck on expensive energy deals and unable to save money by moving away – as just one fixed rate tariff out of 11 on the market works out cheaper than the Ofgem price cap.

Even then, the cheaper deal – from Utility Warehouse – has strings attached, as consumers will need to take out other utility bills through the firm to get the best rate.

At the moment, most homes in the UK are paying energy bills limited by the price cap set by regulator Ofgem.

The price cap is an average of £1,834 a year from October 1 to December 31, and applies to households on variable-rate energy tariffs paying by direct debit.

Energy headache: Consumers have to work out unit rates and standing charges to find if a deal is cheaper for them - and even then it means taking a gamble on the future of energy prices

Energy headache: Consumers have to work out unit rates and standing charges to find if a deal is cheaper for them - and even then it means taking a gamble on the future of energy prices

Energy headache: Consumers have to work out unit rates and standing charges to find if a deal is cheaper for them – and even then it means taking a gamble on the future of energy prices

Consumers are crying out for the return of cheaper fixed rate energy deals, but research from Future Energy Associates found these are in short supply.

There are only 11 fixed rate energy deals on the market for new and existing customers, of which only one works out cheaper than a current price-capped deal.

Future Energy Associates also found there are an astonishing 337 pre-existing fixed rate energy deals costing consumers more than they would pay on a variable-rate tariff – and many have expensive exit fees if customers want to leave.

The cheapest fixed rate deal is the Utility Warehouse Fixed Saver 7, which is £1,775 until November 2024 – £59 a year cheaper than the average home pays on a price-capped tariff.

However, that rate is only available if customers add two other utility bills to the package alongside the energy deal.

Fiona Waters, spokesperson for the Warm This Winter charity group, said: ‘Anyone trying to find savings in the energy market is on a hiding to nothing. Even if you can navigate the complicated and confusing array of tariffs, there’s barely anything in the way of real deals.

‘We have found only one fixed tariff that is less than the price cap, and that comes with strings attached as you have to bundle other utility bills in it to be eligible. The government and energy industry seems to think that Britain’s broken energy system is fixed, but households trying to find an affordable deal to get them through this winter know otherwise.’

Why have I seen two figures for the Ofgem price cap? 

  • There are two figures for average energy use for the October 1 price cap – £1,923 and £1,834
  • The reason is that from October 1, Ofgem not only changed the price cap but also what it calls average energy use
  • This is because consumers have been using less energy than the regulator thought 
  • Using the old assumptions, the price cap fell from £2,074 a year to £1,923 on October 1
  • The £1,834 figure is far lower than £1,923, but does not mean consumers are magically being charged that much less than they were

However, consumers may still be able to find cheaper energy prices than those offered by the Ofgem price cap.

Other than using less energy, consumers can save money on gas and electricity in two ways.

Firstly they may be offered a fixed-rate energy deal by their provider that is cheaper than they are paying now.

There are two sorts of fixed rate energy deal: those for new customers and those for existing customers only.

Energy firms do not have to make the details of fixed rate deals for existing customers public – meaning you will not see these rates by shopping around.

But your energy firm may contact you with details of a special fixed rate, which could work out cheaper than the price you pay currently.

Secondly, consumers may be able to save money by taking out two variable-rate energy deals, one for gas and one for electricity.

The cheapest variable tariff that Future Energy Associates found for electricity is the Fuse Saver deal from Fuse Energy.

In tests run by Future Energy Associates, this deal cost the average user £878.27 a year, compared to £931.90 staying on the Ofgem price cap – a £53.63 saving a year.

Meanwhile the cheapest gas variable tariff is the Home SVT October 2023 v1 deal, from Home Energy.

In the same tests, this deal worked out at £863.62 a year for the typical households, compared to £914.50 on the Ofgem price cap – a saving of £50.88 a year. 

However, you may find that these particular tariffs do not work out the cheapest for you. This is because energy firms do not always offer the same pricing depending on where you live and a host of other factors.

How can I tell if a fixed rate deal is a good one?

To work out if an energy deal is cheaper than you are paying now, compare the unit rate and standing charge with what you currently pay.

The average home is paying rates limited by the Ofgem price cap, which means 53p a day in electricity standing charges and 30p for gas, while electricity unit rates are 27p per kilowatt-hour (kWh) and 7p/kWh for gas.

The massive variable is what happens with the Ofgem price cap in the future. It might be possible to lock into a cheaper deal now, only to see the price cap fall significantly, leaving you overpaying. 

What is the future for energy bills?

Ofgem does not make predictions about how the price cap will change in the future, although chief executive Jonathan Brearley has previously warned customers that he ‘Can’t offer any certainty that things will ease this winter’.

However, analysts at Cornwall Insight makes energy bill price predictions that are normally very accurate.

Cornwall Insight thinks the typical household will pay £2,032 from January 1, falling to £1,964 in April, £1,917 in July and then rising again to £1,974 next October.

Big profits for energy suppliers

Energy suppliers are now set to make an additional £140million in profit on the nation’s energy bills over the next 12 months, thanks to changes to the Ofgem price cap from October 1 that allow energy firms to charge more to recoup earlier losses.

The new rules mean that firms now make an average £64.70 profit per customer per year, up by £4.70 per customer.

End Fuel Poverty Coalition coordinator Simon Francis, coordinator of the End Fuel Poverty Coalition, commented: ‘With energy prices subject to change, customers should exercise extreme caution when thinking about switching and fixing and we would call on companies to waive exit fees so people can switch easily to the cheapest tariff available.’

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