With a turbulent couple of years of high energy prices, and the market starting to re-open again; is it finally time to start fixing your energy again? For many years, a fixed-rate deal has been the cheapest option for households looking to save money on their gas and electricity.
We’re going to dig into this, to help you decide if grabbing a fixed-rate deal now is the right choice for you.
The majority of UK households are on a standard variable tariff with unit prices changing each month. This price is typically managed by Ofgem’s price cap. In the period of October 2022 to June 2023, everyone not on a fixed deal was managed by the government’s Energy Price Guarantee. As the price cap has dropped below the £2,500 threshold, it is now back in play. Great news for households as many suppliers are starting to release some competitive energy deals again.
So the big question needs to be answered. Should you jump on a fixed deal? And if so, how long?
You may be eager to get to the answer, and the truth is that the answer is not as straightforward as ‘yes’ or ‘no’.
|Energy Price Cap From July 2023||Current Energy Price Guarantee|
|Electricity||30.11p (kWh)||33.21p (kWh)|
|Gas||7.51p (kWh)||10.31p (kWh)|
Should You Fix Your Energy?
Looking at what is expected to happen, although not a guarantee, energy prices are going to continue to fall but only slightly before rising again in January. These are only predicted to be slight fluctuations from the current price. That means if you spot a great deal on a fixed rate now, it may well be worth considering.
The price cap is very unlikely to drop to the pre-energy crisis level again, or at least for a long time. Many experts, including Martin Lewis, have said any energy suppliers offering a deal a little less or more than the current cap may be worth considering for the sake of price certainty.
Should I Fix My Business Energy?
Whilst business energy prices have been volatile like the domestic market, there has still been the ability to switch and fix rates. Suppliers are now offering much more competitive prices, and business energy prices are typically following the same trends as the domestic market.
As fixing your business energy does not impact eligibility for the Energy Bill Discount Scheme, it is worth exploring what deals are on the market.
Energy suppliers are changing their energy tariffs daily. This means you may need to compare prices regularly to find a deal that is better than future price cap projections.
Does The Price Cap Apply To Fixed Rates?
Ofgem’s energy price cap does not apply to fixed-rate energy tariffs. It applies if you’re on a default variable energy tariff regardless of the payment method.
However, the energy price guarantee introduced in October 2022 is expected to protect those on fixed-rate tariffs.
Can You Pay More Than The Energy Price Cap?
Ofgem was created in 2019 to place a cap on the amount energy suppliers can charge for gas and electricity. The cap refers to the price per kWh. This is the amount an energy supplier can charge you per unit of gas and electricity you use.
The headline-grabbing amounts refer to average UK household usage and can cause some confusion when households are charged more than this figure. In this case, usage is more than the average household but you will not be charged more than the energy price cap.
What Help Is Available For Energy Bills?
The UK Government has announced an Energy Support Scheme to help combat some of the rising energy costs.
Here’s what support is available and who they are available to:
£400 Energy Grant
All households, regardless of their situation, will automatically receive a £400 energy grant from October 2022 onwards. This will not need to be repaid and you do not need to apply to receive this. Your energy suppliers will automatically apply for the grant - so you don’t have to do anything to receive it.
The government are still announcing specific details regarding pre-payment meters.
There’s additional support for struggling UK households, specifically those receiving means-tested benefits. Eligible households will get £650 paid directly into their bank accounts in two lump sums. The first instalment will be received in July and the second in autumn 2022. This money is tax-free, does not count towards the benefit cap and will not impact any existing benefits.
In addition, those reliant on disability benefits will receive an extra £150 on top of the £650 stated above.
Pensioner Energy Help
This year pensioners will automatically receive an extra £300 with their usual Winter Fuel Payment to help with the rising energy bills.