Major energy suppliers have NO plans to offer customers cheaper fixed rates in the near future…despite the price they pay for energy falling
- Returning fixed rates can reduce energy bills for customers
- Ovo is currently the only energy supplier to offer one
- We asked the UK’s biggest energy companies if they were planning to bring them back
Energy prices are widely expected to fall from July, with the new limit set to be announced this Thursday by regulator Ofgem’s.
Analyst Cornwall Insight’s forecast for the new price cap is £2,053 for an average household over the period July to September 2023.
This would undercut the government’s energy price guarantee – the reduced rate most people currently pay – by £447.
Customers have faced skyrocketing energy bills, but this could change with the announcement of Ofgem’s energy price cap
Currently, consumers are unaffected by the price cap due to the Energy Price Guarantee, which limits a typical household’s energy bill to £2,500 per year.
But starting in July, utility bills will drop below that and return to the price cap.
Flat rates used to be the norm, making household bills significantly cheaper than the price cap if they signed a multi-year supplier deal.
These disappeared more than a year ago due to the energy crisis. But with wholesale energy prices – the cost that energy companies pay for the power they supply to customers – falling, This is Money asked the UK’s largest energy suppliers if they had any plans to bring back flat rates to help their customers save money. to spare.
Will fixed rates pay off?
One flat energy tariff is already available for UK customers.
Ovo was the first energy company to reintroduce a one-year fixed-price tariff of £2,275 per annum in March, £225 less than the energy price guarantee.
To get this rate you must already be an Ovo customer and there is a £150 exit charge for dual-fuel or £75 for electricity only.
Customers who have already signed up may regret their decision if the price cap falls to a level cheaper than the tariff on Thursday. But other suppliers could see the new price cap and decide to offer firm deals that undercut them in an effort to win over new customers.
This Is Money asked the UK’s largest energy suppliers if they intend to follow suit and introduce flat rates.
A spokesman for Scottish power said, “We currently have no plans to launch any new fixed-price fares.
“With the height of the price cap expected to drop on July 1, existing customers who have our standard variable rate will automatically benefit from the corresponding price reduction from that date.”
Standard variable rates are the ‘standard’ rate of an energy supplier.
These are usually the most expensive gas and electricity rates, because suppliers can change the unit price at any time in addition to the wholesale price.
If you have a standard rate, the rates you pay are subject to a limit. That cap is currently set by the Energy Price Guarantee, but is likely to return to Ofgem’s price cap on Thursday when it’s cheaper.
EDF said it will continue to monitor the market and relaunch firm deals when it is best for customers.
It has an email alert that you can sign up for to let you know when they have firm deals available again, implying they will return.
British natural gas does not currently offer fixed rates, but is accepting new customers. Customers can choose to switch providers even if they cannot get a cheaper rate, for example if they are not satisfied with the service of their current energy company.
A spokesman for British Gas added that if it has fixed rates, it will never have exit fees for internal switching.
| Rate | With a maximum price of £2,500 | If the prize limit is £2,053 | If the price limit is £1,975 | If the prize limit is £2,055 |
|---|---|---|---|---|
| Ovo 1 year fixed March 23, 2023 for £2,275 | £250 | -£222 | – £300 | – £220 |
| Calculations based on Cornwall Insight’s final energy price cap forecast on May 19, 2023 | ||||
Should customers consider a fixed energy tariff?
Customers should think carefully about moving to flat rates when they re-enter the market.
They can save you money if energy prices remain high, but you can also pay more than the energy price cap if it continues to fall.
Commenting on flat rates, Cornwall Insight said: ‘We hope that more competitive flat rate energy tariffs will reappear as prices begin to stabilise, giving consumers additional options to manage their energy costs.
Uswitch suspects the reason we haven’t seen any firm deals apart from Ovo is that other vendors may be waiting for confirmation from Ofgem on the final price cap level from July 1.
They added: “Once this is announced on Thursday, we hope it will give suppliers confidence in numbers and the ability to offer fixes.”