Does YOUR energy deal have an exit fee? Some new flat rates come with fines of up to £300
- Fees for leaving flat-rate energy tariffs can run into the hundreds of pounds
- But many of these deals are uncompetitive, leaving consumers stranded
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Many customers on fixed energy tariffs find that the deals don’t save them any money – and can have exit fees of up to £300 to get out.
Most UK households are on variable energy deals capped by a price cap set by regulator Ofgem, with the average home paying around £1,843 a year.
With energy bills predicted to remain high for years to come, many households are eager to secure a fixed-rate energy deal – one that is cheaper than price-capped alternatives, as was the case before the energy crisis hit .
But a new report by the End Fuel Poverty Coalition has found that of the fixed-rate energy deals currently on the market for new and existing customers, only one – from Utility Warehouse – is cheaper than remaining on a capped tariff.
Underpowered: Many fixed-rate energy deals actually cost more by remaining on rates capped by Ofgem’s price cap
Meanwhile, there are 337 fixed rate deals already taken out by consumers charging them higher unit rates than the price cap.
Many of these deals also have high exit fees, which can cost up to £300 per household, adding further barriers to switching from non-competitive rates.
Exit fees are the fee consumers pay for leaving a contract early. The highest exit fee of £300 is from Outfox the Market.
Three energy companies – So Energy, Utility Warehouse and Ecotricity – have early exit fees on all their fixed rate deals.
Just one in twenty (6 per cent) of British Gas tariffs come with no exit charges – and the firm’s average exit charge is £62.
Only 12 per cent of Eon fares have no exit charges, with the figure being 4 per cent for EDF and 15 per cent for Ovo.
Some energy companies do not charge exit fees at all, with almost all Good Energy, Octopus and Cooperative Energy tariffs having no exit fees.
Simon Francis, co-ordinator of the charity End Fuel Poverty Coalition, said: “As energy prices are subject to change, customers should be extremely careful when thinking about switching and adjusting and we will be calling on companies to waive exit charges , so people can easily switch to the cheapest tariff available.’
A Utility Warehouse spokesperson said: “Our market-best Fixed Saver 7 tariff allows customers to fix their energy at £59 below the current price cap until November 2024.
“Our fixed rates come with an exit fee if the customer chooses to leave before the end of the fixed term.”
How can I tell if a fixed rate deal is good?
To find out if an energy deal is cheaper than you’re paying now, compare the unit price and fixed charge with what you’re currently paying. These rates must be included in your bills.
The average home pays rates capped by Ofgem’s price cap, which means 53p per day for fixed charges for electricity and 30p for gas, while unit electricity rates are 27p per kilowatt hour (kWh) and 7p/kWh for gas.
The huge variable is what happens to Ofgem’s price cap in the future. It may be possible to lock in a cheaper deal now, only to see the price cap drop significantly, leaving you paying more.
It’s also worth looking at any exit fees in case you need to exit a deal early.
What is the future of energy bills?
Ofgem is not making predictions about how the price cap will change in the future, although chief executive Jonathan Brearley previously warned customers that he “can offer no certainty that things will ease this winter”.
However, Cornwall Insight analysts make energy bill price forecasts that are usually very accurate.
Cornwall Insight reckons 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.