Big energy suppliers like British Gas have quietly introduced fixed tariffs – how do they compare?

Britain’s major energy suppliers, including British Gas, have been quietly introducing flat rates for their customers since Ofgem’s price cap fell.

Most households were switched from a fixed to a variable tariff during the energy crisis as wholesale prices soared.

While variable tariffs are regulated by Ofgem’s price cap, which fell from £2,074 a year to £1,834 this month, many households will still long for the stability of a fixed deal.

Fortunately, some suppliers have quietly begun to introduce deals as the market begins to calm down and wholesale prices fall.

These deals are unlikely to be as profitable as they were before the crisis, but they are a move in the right direction.

We look at the details of the best electricity and gas fixed deals, how they compare and whether it’s worth checking out.

How do they compare?

Ofgem’s price cap sets out the amount customers will pay for a typical household that uses gas and electricity and pays by direct debit.

This means households will pay £1,834 for the year after Ofgem lowers the cap and what it considers ‘average’ energy use.

British Gas currently offers eight flat rates, with four available to new and existing customers.

Its ‘Fixed Oct24 v2’ and ‘The Fixed One v25’ tariffs are for a year, with customers paying an average of £1,953 and an exit charge of £75/fuel.

Its two-year fix is ​​slightly higher at £1,975, with an exit charge of £100/fuel, and one-year and two-year fixes are available to new customers.

EDF offers a slightly better deal with the average customer paying £1,914 for both a one-year and three-year fix. This is available to new and existing customers.

It said the three-year fix “offers certainty and protects against rising costs over this period.”

Shell Energy is offering fixed deals to both new and existing customers with a fix until January 2025 for £1,944.

Although higher than some other deals, monthly bills will be £162, while EDF’s one-year fix will see customers pay £159 a month.

Last month, Octopus energy announced that it will acquire 2 million Shell Energy customers.

Octopus declined to comment on what would happen to Shell’s existing fixed rates as the deal awaits regulatory approval.

All three deals offer modest savings compared to Ofgem’s price cap in the immediate term. However, energy experts widely expect this to push January slightly higher, meaning if you locked in now, you could make some savings down the road.

Octopus Energy is offering a slightly better deal with a one-year fix for £1,818 under the new Typical Domestic Consumption Value (TDCV).

Uswitch says this would be a saving of £16 against the price cap from October 1, which is set at £1,834 a year for a dual-fuel household paying by direct debit. Although you will save, it will be a paltry £1.33 per month.

The best deal on the market right now is Utility warehouseSaver 7 flat rate available to new and existing customers. Households will pay £1,775 a year, saving £59 a year or £4.91 a month.

However, to get this deal, households must sign up for other utilities with the company.

See the full list of Uswitch flat rates below:

Beware of exit fees

Unlike standard variable rates, fixed rates tend to incur exit fees if you decide to leave the contract.

This could cost you up to £200 per fuel, depending on the supplier and the length of the contract.

For example, you will be charged £75 per fuel on EDF’s one-year deal and £200 per fuel on the three-year fix to “reflect the risks involved in offering a longer-term fix”.

British Gas customers will be charged £75 per fuel on a one-year contract and £100 on a two-year deal.

Is it worth fixing?

The volatility of the energy market makes it difficult to predict what the bills will be a year from now. That’s why it’s hard to say definitively whether a fixed deal is the best option.

For some households, the peace of mind that if prices go up, you’ll pay the same rate. This really means you’ll miss out on any potential savings if unit prices fall.

The fixed deals on offer appear cautious, possibly because wholesale prices remain volatile and suppliers are hedging their bets.

Energy experts Cornwall Insight believe energy prices are unlikely to fall significantly in the coming months.

Dr Craig Lowry, principal consultant at Cornwall Insight, said: “Our forecasts for 2024 show prices continuing to fall well below pre-pandemic levels – something that is currently forecast to remain the case until the end of the decade.”

It is also worth remembering that the first three months of the year usually see higher wholesale prices.

Something else you might want to consider is that ongoing fees creep higher.

Cornwall Insight predicts that the typical fixed electricity charge for price-capped homes could reach 60p a day by next summer, with fixed gas charges of 30p.

This will increase your standing charge bill for next year to £328.50. A flat rate can help protect you from further fee increases.

Also, to get a fair comparison of whether it’s worth switching to fixed, you’ll need to check the unit rates combined with the fixed charges to see how it compares to what you’re paying now.

Natalie Matti, energy expert at Uswitch.com says: “With the price cap set to rise in January, households on standard variable tariffs may appreciate the security offered by a fixed tariff.

“Fixed rates may be priced similar to or slightly higher than standard variable rates, but you have the peace of mind that rates won’t change for 12 months.

“If you’re thinking of switching to a fixed deal, look out for any exit charges, which can cost up to £200 per fuel. If you change your mind after the cooling-off period or spot a better deal you want to switch to, you may have to pay to leave.

“Make sure you look at the unit price and the fixed charge so you can understand how much you’ll be paying for your energy use and how it differs from what you’re currently being charged.”