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Energy bills will fall by £238 a year from April for a household using a typical amount of gas and electricity, following the announcement of the latest energy price cap.
This will bring the average annual bill down by 12.3% to £1,690, and marks the lowest energy price cap for more than two years.
Ofgem, the regulator, said that energy bills for the average household will have fallen by £690 by April since Russia’s invasion of Ukraine in February 2022. This caused a spike in wholesale energy prices, driving up costs for both suppliers and customers.
In recent months providers have finally started to launch fixed price energy deals, which vanished from the market amid the energy crisis. However, many of these tariffs are only available to existing customers and there aren’t any that offer significant discounts on the energy price cap.
If you’re considering switching your energy provider, it’s worth doing plenty of research so you can be certain you’ve found the best possible deal to suit your needs. Comparison websites such as MoneySuperMarket, Uswitch and Compare the Market enable you to compare the latest energy tariffs, whether you’re looking for a fixed or variable deal.
Craig Lowrey, principal consultant at Cornwall Insight, said: “Forecasts show energy bills returning to their lowest levels in over two years, providing a much-needed respite for a nation struggling with a cost of living crisis,” said Craig Lowrey, principal consultant at Cornwall Insight.
“Fairly healthy gas supply across the Atlantic, coupled with high storage levels in Europe, are helping to keep bills down. But we mustn’t get too complacent. Our energy system is still walking a tightrope, and we cannot be sure another political or economic crisis won’t send bills straight back up.”
However, energy bills remain high this winter, and the government won’t be providing the £400 energy rebate to reduce bills that it gave households last winter. Read more in our article The energy bills crisis: what can you do about soaring costs?
Here we answer your questions about your options when it comes to energy tariffs. We’ll regularly update this as the news around energy costs changes and it becomes possible to switch to a cheaper tariff.
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Which tariff are you on?
If you’re considering moving to a different energy tariff, your first step should be to establish which tariff you’re currently on. You’ll be on a variable tariff, the cost of which is determined by the price cap, if your fixed energy tariff has ended and you haven’t switched to another deal, or if you’ve never switched your energy tariff, or if you were with a supplier that’s gone bust and you’ve been moved to another provider. The majority of UK households are currently on the energy price cap guarantee.
The cap gives an estimate of the maximum amount per year that an average household using a ‘typical’ amount of energy will pay. However, it’s by no means a limit, as if you live in a large property, or use a lot of energy, you’ll pay more than this. Read more in our article What is the energy price cap?
What if you’re locked into a fix?
If you’ve locked into a fixed rate energy tariff at a higher rate than the energy price cap due to energy price rises, it’s worth seeing whether there are any exit fees to leave your current deal. If there aren’t, they are relatively low, or it’s due to finish soon anyway, you may find you’re better moving onto your provider’s default tariff, unless cheaper tariffs become available.
If you’re on a fix that costs less than the energy price cap, you’ll continue on this until your fixed term ends. When your fix ends, see if it’s possible to switch your tariff when prices start to come down.
What are the cheapest energy deals?
Default tariffs are still likely to be the cheapest overall option for households over the coming months, unless your supplier offers a fixed tariff to existing customers that’s significantly lower than the price cap. In the past, you’d always shop around for another competitive fixed rate tariff to move onto, as these lock in the unit rates and standing charges of your gas and electricity for a certain period of time.
Should I fix my energy prices?
As mentioned, there are some fixed deals from some energy suppliers. According to MoneySavingExpert, unless you can fix at 18% less than the current price cap, it’s predicted that you’ll pay more than staying on the price cap. At present, there aren’t any deals offering significant savings, so it isn’t a simple decision, and no-one can know for certain where prices will stand in the future.
Emily Seymour, energy editor at consumer association Which?, said: “Some fixed deals are currently available for close to the predicted April price cap but most of these deals will save consumers very little when it comes into force. With the price cap predicted to remain fairly stable for the rest of 2024, more competitive deals may become available in the coming months.
“As a rule of thumb, we wouldn’t recommend fixing a contract longer than 12 months, higher than the April price cap or with significant exit fees – in case circumstances change and you want to switch to a better deal.”
There aren’t any tariffs offering such a substantial discount on the energy price cap, although the E.on tariff below offers a 3% discount on any price cap.
It’s also worth contacting your particular energy supplier and asking if there are any deals they are offering that might be worth considering. Here are a few deals that are currently available but bear in mind that these are frequently changing:
The tariff that’s most likely to be worth considering is E.on Next’s Next Pledge, which is available to new and existing customers. The tariff isn’t a fix, as it stands at 3% less than every price cap for a 12-month term (so it moves in line with the price cap, which is reviewed every three months) with £50 dual-fuel exit fees. The price changes each quarter in line with the price cap changes.
Another is EDF Energy’s Essentials one-year March 25 fixed at 18% less than the current price cap, with £100 dual-fuel exit fees. It’s available for new and existing customers, and the cheapest fixed-rate deal on the market at present.
Utility Warehouse is offering its Fixed Saver 15 12-month fix until 31 March 2025 for new and existing customers. It’s 20% less than the current price cap, but there’s a big catch – as you need to take out at least two other services with Utility Warehouse to qualify for the tariff. The tariff comes with £150 dual-fuel exit fees.
Utility Warehouse is also offering its Fixed 15 12-month fix until 31 March 2025 to new and existing customers. It’s 17.5% less than the existing price cap. However, to secure this tariff, you need to take out at least one other service with Utility Warehouse. You need smart meters, but the firm is offering a £50 credit if you get them installed if you’ve yet to do so.
Octopus Energy is offering the Octopus Tracker, a variable tariff for existing customers only. It’s not a fixed-rate tariff and prices can change daily, but it could be worth considering. Recently it’s been cheaper than the price can change quickly.
There are other fixed tariffs available, but they don’t necessarily offer a decent enough discount on the price cap to be worth considering, or come with onerous conditions attached. Keep an eye on your provider’s tariffs to see if any come up that are worth considering.
The energy price cap changes every three months and given the uncertain economic outlook, no-one can be certain where they will go next.
This article will be updated if any new fixed rate deals appear on the market that could save you money. Beware, though, that fixing when prices start to fall could potentially end up costing more in the long run. However, it’s worth checking what deals your existing supplier is offering, as those for existing customers can be worth taking up, and any good deals won’t be available for long.
Figures were correct at time of writing (27.03.2023)
What can you do if you’re struggling to pay your energy bills?
It’s an extremely tough time for households battling rising costs across the board, from energy to food and other general utilities. As a first step, it’s worth contacting your energy provider if you’re struggling and slipping into the red. They may be able to help with a payment plan, or make other suggestions. Read more in our article What can you do if you can’t pay your energy bills?
It’s important to check whether you might be eligible for some financial support from the government. People on low incomes and receiving benefits can receive £900 in three instalments this year as part of the government’s cost of living package. The £900 payment follows a £650 grant for people in receipt of means-tested benefits that was paid in two instalments last year. Read more in our article Cost of living payments: who will get the £900 and when will it be paid?
If you were born on or before 26 September 1955, check if you’re entitled to the Winter Fuel payment. This is a tax-free amount of between £100 and £300 to help pay your heating bills over winter, and the amount you receive depends on your age and anyone else in your household.
The government will also give an extra £300 to those receiving the Winter Fuel payment, with a further £150 payment to those receiving disability benefits.
Alternatively, you may be able to get money off under the Warm Home Discount Scheme, which is a one-off £140 discount on your electricity bill paid to your supplier between September and March. Find out more in our guide Are you eligible for help with heating costs?
If your home is poorly insulated, you may be able to make improvements through installing insulation. You can find tips on how to reduce your energy bills in our article Energy saving tips: how to reduce your bills.
It’s also well worth checking whether you might be able to reduce some of your other outgoings, so you can free up a bit of extra cash to help you cover rising energy costs. Our article Seven ways to save on your household bills explains how you may be able to make savings.
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Harriet Meyer is Deputy Money Editor at Rest Less. An award-winning financial journalist, she has more than 20 years' experience writing about personal finance for broadsheet newspapers, consumer websites and magazines. Previously, she worked as editor of The Observer's 'Cash' section, and was part of The Daily Telegraph's Money team. She's also worked as a BBC producer on radio money shows such as Wake Up to Money. Harriet lives in South West London with her partner, and giant cat. She enjoys yoga and exploring the world in her spare time.
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