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

Britain’s big energy suppliers including British Gas have quietly been introducing fixed tariffs for its customers following a fall in the Ofgem price cap.

Most households were moved 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 be longing for the stability of a fixed deal.

Thankfully some suppliers have started to quietly introduce deals as the market starts to calm and wholesale prices dip.

These deals are unlikely to be as favourable as they were prior to the crisis but are a move in the right direction. 

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

How do they compare?

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

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

British Gas currently has eight fixed tariffs on offer, with four available to new and existing customers.

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

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

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

It says the three-year fix ‘offers certainty and protects against rising costs over that period.’

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

While higher than some other deals, monthly bills will come in at £162, while the EDF one-year fix will see customers paying £159 a month.

Last month, Octopus Energy announced it would be acquiring Shell Energy’s 2million customers. 

Octopus declined to comment on what would happen to Shell’s existing fixed tariffs because the deal is pending regulatory approval.

The three deals all offer negligible savings when compared to Ofgem’s price cap in the immediate term. However, energy experts widely expect this to nudge slightly higher January, meaning if you locked in now, you may make some savings further down the line.

Octopus Energy offers 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 £16 saving against the 1 October price cap, which is set at £1,834 a year for a dual fuel household that pays by direct debit. While you will be saving, it’ll be a meagre £1.33 a month.

The best deal on the market currently is Utility Warehouse‘s Fixed Saver 7 tariff, which is available to new and existing customers. Households will pay £1,775 a year, making a saving of £57 a year, or £4.75 a month.

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

See below for Uswitch’s full-list of fixed tariffs:

Beware exit fees

Unlike standard variable tariffs, fixed tariffs tend to charge exit fees if you choose to leave the contract.

This could cost you up to £200 per fuel, depending on the supplier and how long the contract is.

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

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

Is it worth fixing?

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

For some households, having the peace of mind that if prices rise, you’ll be paying the same rate. It does mean that you will miss out on any potential savings, should unit rates fall.

The fixed deals on offer seem cautious, probably because wholesale prices remain volatile and the suppliers are hedging their bets.

Energy experts Cornwall Insight think it is unlikely that energy prices will significantly fall in the coming months. 

Dr Craig Lowrey, principal consultant at Cornwall Insight said: ‘Our predictions for 2024 show prices continuing to languish well above pre-pandemic prices – something which is currently forecast to remain the case for the remainder of the decade.’

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

Something else you might want to consider is that standing charges are creeping higher. 

Cornwall Insight predicts the typical electricity standing charge for homes on the price cap could reach 60p a day by next summer, with gas standing charges at 30p. 

This would bring your standing charge bill for next year to £328.50. A fixed tariff may help to protect you from any further hikes in charges.

Also, to get a fair comparison of whether it is worth switching to a fix, you’ll need to check the unit rates combined with the standing charge rates, to see how it compares to what you are paying now.  

Natalie Mathie, energy expert at Uswitch.com says: ‘With the price cap predicted to rise in January, households on standard variable tariffs rates might value the certainty offered by a fixed tariff.

‘Fixed tariffs may be priced similar to or slightly higher than standard variable tariffs, however you have the peace of mind that the rates will not change for 12 months.

‘If you’re thinking of switching to a fixed deal, pay attention to any exit fees, which could cost up to £200 per fuel. If you change your mind after the cooling-off period or spot a better deal you wish to switch to, you may need to pay to leave.

‘Make sure you look at the unit price and standing charge so you can understand how much you will pay for your energy usage and how it differs from what you are currently charged.’

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