Should I fix my energy?

Close-up of energy bills and Smart Meter on a kitchen worktop

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last updated 12 June 2023

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Switching suppliers to bag a cheaper energy tariff may seem like a distant memory, but with wholesale energy prices falling and the energy price cap to drop from £3,280 to £2,074 from July, we look at new fixed-price energy tariffs.

Households are currently protected against rising energy prices until the end of June, thanks to the government's Energy Price Guarantee (EPG). This caps the average annual household energy bill, based on typical usage, at £2,500.

But the EPG will end in July when a lower energy price cap - £2,074 - will kick in.

Data analyst Cornwall Insight predict energy bills for a typical household could then drop to around £1,960 for the final three months of the year.

Right now, as of 12 June, households have access to fixed deals as low as £2,035.

British Gas, Ovo Energy, Eon and So Energy are offering fixed deals to existing customers that work out the same or just above Ofgem's price cap over the next year.

We explain what is going on, what fixed deals look like and if it is a good idea to fix your energy tariff.

The return of fixed-price energy tariffs

So Energy's So Jasmine tariff is the cheapest fix currently - it gives an average bill of £2,035 a year. You'll have to switch quickly however as it is available to a "limited number of existing customers". If you change your mind, it has a £150 exit fee.

British Gas' fix gives an average bill of £2,044 a year. If you change your mind, it has a £200 exit fee.

Eon Next's one-year fixes gives an average bill of £2,050 a year. If you change your mind, it has a £150 exit fee.

Ovo Energy's one-year fix gives an average bill of £2,220 and you don't have to be an existing customer to get it - you simply switch to its standard variable tariff and then fix. Again, if you change your mind, it has a £150 exit fee.

Why are fixed-price energy tariffs coming back?

From July the energy price cap is falling to £2,074. The energy price cap is then predicted to fall to £1,960 from October, according to analyst Cornwall Insight.

It means we are probably going to see fixed teriffs come back onto the market.

Most of us are on a standard variable tariff that moves in line with the energy price cap and so a fixed rate deal could be tempting.

Firstly, because it gives you certainty for your finances.

Secondly, if you look at current forecasts it doesn't look like the energy price cap is going to fall that much - and in fact they could rise again.

More fixed deals are expected to become available as we head towards the summer. Comparison sites including Uswitch, Comparethemarket and Go.Compare are offering potential switchers the chance to leave their details to get alerts when new deals become available.

Octopus Energy was the first to unveil a new deal, albeit a relaunch of its energy tracker deal, which will go on sale in July.

This will enable customers to track and pay the wholesale price of energy, rather than the standard default price.

Should I fix my energy tariff?

A fixed energy deal needs to be at an average bill of £2,035 a year in order for a household to be better off than staying on a variable tariff that tracks Ofgem's energy price cap.

The only energy fix currently (as of 12 June) is the So Jasmine tariff from So Energy.

But Uswitch is urging households to think carefully before committing to a fixed deal, because they may not save money.

Why?

Dr Craig Lowrey, Principal Consultant at Cornwall Insight said: “Unforeseen geopolitical events can easily disrupt the wholesale market again. Fixing energy tariffs is a gamble, the market may go down as well as up, and households run the risk of getting locked into bills higher than the price cap.”

Forecasts aren't always right - and some have shown themselves to be overly pessimistic.

For example in 2022 it was predicted the price cap would go over £6,000 - this proved grossly incorrect when the price cap rose to £3,000 instead.

It shows it could be a mistake to rush into a fixed rate tariff when markets are still volatile based on energy price forecasts that end up being incorrect.

Do you want to be on a fixed energy deal and see the energy price cap fall?

Also, if the situation changes - for example, wholesale prices rise again and predictions for October's price cap also go up again - it's worth keeping an eye on what the Government does because over the last 12 months it has a track record of providing financial support when it knows the energy price cap is adversely affecting households.

However, if you want certainty for your energy billsyou may be happy to pay a bit extra than the energy cap in order to protect yourself from future rises.

Ruth Emery is contributing editor at The Money Edit. Ruth is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. Outside of work, she is a mum to two young children, a magistrate and an NHS volunteer.

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