A little-known energy supplier is offering customers deals that guarantee they pay the cheapest price on the market.
Fuse Energy, founded by two former employees of the banking app Revolut last July, will offer three electricity tariffs cheaper than the price cap and competitors.
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Two of them will be fixed energy deals, including an Economy 7/10 which gives cheaper rates at off-peak times.
All will be priced below Ofgem’s energy price cap, meaning customers at the supplier could shave up to £56 a year off of their energy bill.
Not only will they beat the price cap, the supplier also said that it will lower the unit rates and standing charges on all the tariffs any time a competing supplier tries to undercut the prices, in a promise it’s calling Fuse Protect.
Alan Chang, the companies co-founder, told The Sun that Fuse will refund the difference if at any point its tariffs are found not to be the cheapest on the market at any point.
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A new single-rate 12-month fixed deal costs a typical household £824.96 a year.
The company is also dropping the prices of its standard variable tariff (SVT) to £835.76 a year for a typical household.
An SVT can go up or down at any time, though no higher than the price cap set by Ofgem, while a fixed deal is when you lock in a set price for a certain period – though in this case it can go down if a cheaper deal is offered by another supplier.
The app-based energy supplier is also launching a fixed and SVT multi-rate deal – which also more commonly known as Economy 7 or Economy 10 tariffs.
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These work by charging households less for electricity that is shifted and used outside of peak times.
The firm’s multi-rate SVT costs a typical household that shifts 40% of its usage off-peak £1,090.90 a year.
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Its multi-rate 12-month fixed deal costs typical households that shift 40% of their usage off-peak £1,079.28 a year.
If you decide to stay put on a standard variable tariff, it’s worth noting your energy costs can change every three months when the price cap is adjusted to reflect wholesale costs.
Martyn James, consumer rights expert, said of the deals: “This is great news – on paper at least – for readers who have been stuck on duff deals and extraordinarily expensive tariffs for nearly three years, as the energy crisis killed off switching suppliers because prices stayed the same across the market.
“A ‘best price’ standard variable rate seems like the best option, given the ongoing volatility of the market.
“But as always, check the small print, before signing up.
“This means checking the guarantee and the exit fee if you want to take on a fixed deal.
“The only downside to these tariffs is that they’re electricity-only, so if you have gas central heating, you’ll still need to take out a gas-only tariff elsewhere.
“Customers will also need a smartphone to sign up.”
However, we’ve crunched the numbers and if you were to take out Fuse’s single-rate SVT at £835.76 a year and the best gas-only tariff available right now, you’d still pay substantially less than on a duel-fuel tariff with one firm.
British Gas’ gas-only SVT costs £819.72 for a typical household across the year, so combined with Fuse’s SVT tariff, you can expect to pay £1,655.48 a year.
That’s £34.70 cheaper than any dual-fuel SVT charging Ofgem’s price cap rates, which would set a typical household back £1,690.18 a year.
SHOULD I SWITCH?
To determine whether a new energy deal is significant enough for you to make a switch, you first need to find out what you’re currently charged.
You’ll then need to compare the unit rates offered by your own energy company and those you’re looking to switch to with Ofgem’s energy price cap rates.
Ofgem’s energy price cap currently determines what most people on a standard variable gas and electricty tariff will pay.
However, individual suppliers still have the ability to set their own unit rates and standing charges as long as they don’t breach this cap.
As Fuse’s deals are electricty-only it’s important to compare these rates with the price cap set for electricty for those who pay by direct debit.
Since April 1, Ofgem’s price cap for those on the SVT on an electricty-only tariff is as follows:
- 24.50p/kWh for electricity
- A standing charge of 60.10p per day for electricity
This means a typical household that uses 2,700kWh of electricty over 12 months, will pay £880.87 a year if they’re charged these rate.
Those on an Economy 7 or Economy 10 tarriff who’s rates and standing charges are capped by Ofgem have paid the following rates since April 1:
- 30.35p/kWh for electricity (peak times)
- 13.05p/kWh for electricity (off-peak times)
- A standing charge of 59.55p per day for electricity
This means a typical households that uses 3,900kWh of electricty (40% off peak) on a mutli-rate tariff over 12 months, will pay £1,131.13 a year if they’re charged these rate.
Be aware that these figures are for the average households and if your usage is higher expect to pay more.
As of today, Fuse’s SVTs and fixed deals offer unit rates and standing charges that are lower than those offered under Ofgem’s energy price cap.
We’ve crunched the numbers to work out how much you can save by switching.
FUSE’S STANDARD VARIABLE TARIFFS
From today, those signing up to Fuse’s single-rate SVT electricty-only tariff will pay the following rates:
- 23.20p/kWh for electricity
- A standing charge of 57.36p per day for electricity
This means that a typical household that uses 2,700kWh of electricty over 12 months, will pay £835.76 a year – £45.11 less than the rates offered under Ofgem’s price cap.
Those signing up to Fuse’s multi-rate SVT electricty-only tariff will pay the following rates:
- 29.45p/kWh for electricity (peak times)
- 12.28p/kWh for electricity (off-peak times)
- A standing charge of 57.59p per day for electricity
This means a typical households that uses 3,900kWh of electricty (40% off peak) on a mutli-rate tariff over 12 months, will pay £1,090.90 a year – £40.23 less than the rates offered under Ofgem’s price cap.
Fuse will adjust the unit rates and standing charges offered each time Ofgem revises its energy price cap.
FUSE’S FIXED TARIFFS
Customers who lock into a fixed energy deal are charged the same gas and electricity rates during the term of the contract.
This means that prices will stay the same throughout and customers won’t face large bill hikes if Ofgem was to increase the price cap.
It’s always been a fact that if prices fall in the future, you could end up paying more.
Should I take on a fixed energy deal now?
HOUSEHOLDS that lock into a fixed energy deal are charged the same gas and electricity rates during the entire term of the contract.
The deals protect customers from bill hikes if Ofgem were to increase the price cap in the future.
Natalie Mathie, energy expert at comparison site Uswitch, says: “The energy market remains volatile, so it can be hard to predict whether opting for a fixed deal or sticking with a standard variable tariff will work out cheaper in the long run.”
If you lock into a fixed deal now and prices fall in the future, you will usually have to pay a hefty exit fee to switch back to the standard variable tariff.
But a fixed energy deal can be worth signing up for if you are after long-term peace of mind.
Emily Seymour, energy editor at consumer champion Which?, says: “As a rule of thumb, we wouldn’t recommend fixing anything higher than the unit rates or standing charges in your current deal, or for longer than a year.”
However, as a way to shake up the industry, Fuse has committed to lowering the unit rates and standing charges offered on all it’s tariffs each time a competing supplier tries to undercut its prices.
From today, those signing up to Fuse’s electricty-only single-rate 12-month fixed tariff will pay the following rates:
- 22.80p/kWh for electricity
- A standing charge of 57.36p per day for electricity
This means that a typical household that uses 2,700kWh of electricty over 12 months, will pay £824.96 a year – £55.91 less than the rates offered under Ofgem’s price cap.
Those signing up to Fuse’s electricty-only multi-rate 12-month fixed tariff will pay the following rates:
- 29.06p/kWh for electricity (peak times)
- 12.12p/kWh for electricity (off-peak times)
- A standing charge of 57.59p per day for electricity
This means a typical households that uses 3,900kWh of electricty (40% off peak) on a mutli-rate tariff over 12 months, will pay £1,079.28 a year – £51.85 less than the rates offered under Ofgem’s price cap.
Both deals come with a £50 exit fee, although if you switch to a Fuse SVT tariff within the 12-month period this fee will be waived.
WHAT ARE THE ALTERNATIVES?
Customers unwilling to commit to long-term fixed energy deals may want to consider tracker tariffs.
Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: “These will almost always be at or below the price cap.”
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 19.8p per kWh for electricity and 4.23p per kWh of gas, which is 4.7p and 1.81p 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.
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Remember that those wishing to switch to any of these tracker tariffs must have a smart meter.
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.
