As the new year approaches, households are bracing for another uptick in energy costs. Ofgem’s upcoming 0.2% price cap increase will see the average customer potentially paying £1,758 annually. However, Chancellor Rachel Reeves’ recent Budget announcement could offer some relief with an estimated £150 in savings.
To combat rising costs, many households are shifting to fixed energy deals, with around 21 million customers already making the switch. While fixed deals do not guarantee a stagnant bill, they lock in a set unit rate for a specific period, dependent on individual usage.
Switching to a fixed deal could lead to significant savings, with average potential savings of around £230 for customers on standard variable tariffs. The process is quick and easy, and customers may not even need to change suppliers to benefit from better deals. Additionally, having a smart meter does not impede the switching process.
Several fixed deals currently undercut Ofgem’s price cap, with options like Ecotricity’s EcoFixed – 1 Year Oct 25 v1 and Outfox Energy’s Fix’d Dual Dec25 12M v1.0 offering competitive rates. These deals come with exit fees but can provide substantial savings for consumers.
Energy Secretary Ed Miliband has urged suppliers to pass on the promised £150 savings to fixed-rate customers, potentially leading to even lower bills from April onwards. With wholesale prices falling, now is an opportune time for households to consider locking in a fixed rate before the price cap rises in January.
According to Suzanne Edwards, an energy expert at Uswitch.com, households could save approximately £228 by switching to the cheapest fixed deal, especially if they haven’t fixed their rates in over a year. Conducting an energy comparison can help identify cost-effective options and potentially reduce energy expenses significantly.