Energy supplier launches ‘cheapest’ fixed deal which is £347 less than the price cap
A MAJOR energy supplier has launched a fixed energy deal that is £347 less than Ofgem’s current price cap.
EDF Energy offers new and existing customers the opportunity to fix their energy bill at a cheaper rate than those on the Standard Variable Tariff (SVT).
EDF’s new “EDF Essentials 1Yr Mar25V6” tariff allows customers to set their energy prices at an average cost of £1,581.
For the average household this will be £347 cheaper than sticking with the SVT, which is linked to Ofgem’s price cap.
This has capped average gas and electricity bills at £1,928 per year since January 1.
The cap will then drop from the current rate of £1,928 to £1,690 per year on April 1.
However, EDF Energy’s latest fixed tariff will still be £109 per year cheaper than the next price cap.
Customers who wish to subscribe to EDF’s new fixed contract will pay the following rates for a period of one year:
- 5.62p per kilowatt hour (p/kWh) for gas
- 23.74p/kWh for electricity
- A flat rate of 32.04 pence per day for gas
- A flat rate of 40.78p per day for electricity
The deal is currently available to new customers from any supplier via Uswitch.com.
However, existing EDF customers can access the same fixed deal directly through the supplier.
Will Owen, energy expert at Uswitch.com, said: “It’s great to see some competition back in the market, especially from a well-known and highly regarded supplier like EDF.
“Customers have been plagued by sky-high prices for years, so it’s a big step to see rates priced lower than the upcoming cap, and the cheapest we’ve seen since late 2021.
“At £1,581 for the average household, this should be worth considering for those looking to take advantage of falling interest rates and lock in price certainty for 12 months.
“If you decide to stay on a standard variable tariff, it’s worth noting that your energy costs will change every three months in line with the price cap.
“We do not expect this deal to be available for long, and EDF reserves the right to withdraw the deal at any time. We hope this will encourage more suppliers to offer competitive pricing so that customers can finally get choice – and financial relief – in their energy bill.”
Do I have to sign a permanent energy contract now?
Customers who conclude a fixed energy contract receive the same gas and electricity rates for the duration of the contract.
This means that prices will remain the same throughout and customers will not face large bill increases if Ofgem were to increase the price cap.
However, if prices drop in the future, you could end up paying more. So it is important to assess the true value of these offers.
From 1 July, Ofgem will introduce the following new maximum fares for those on the SVT:
- 6.04p per kilowatt hour (p/kWh) for gas
- 24.50p/kWh for electricity
- A flat rate of 31.43p per day for gas
- A fixed amount of 60.10 pence per day for electricity
For an average household using an average of 11,500 kWh of gas and 2,700 kWh of electricity annually, these rates will limit the bill to around £1,690.
But since this is only an estimate for an average household, you will pay more if you use more energy.
If you are offered a solution that is lower than the April price limit, it is always worth considering.
However, before we agree to a new solution, it’s important to understand that Ofgem’s energy price cap will be reviewed again later this year.
The regulator reviews the cap on unit rates for those on the standard rate every three months.
This means that annual energy bills could fall further in 2024 when the next price cap comes into effect in July.
What are the alternatives?
Customers who do not want to commit to long-term fixed energy agreements may want to consider variable rates.
Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: “These will almost always be at or below the price limit.”
For example, E.ON Next’s variable rate Pledge offers a fixed discount of approximately three percent on the price cap rates for twelve months.
It will save the average household around £50 a year, but will incur a £50 exit fee if you switch before the end of the year.
The deal is available to both new and existing customers.
For greater reward but higher risk, Octopus Energy offers two variable rates that follow wholesale gas and electricity costs.
Customers on the Octopus Tracker see their prices change daily, but unit prices have remained consistently below the price ceiling in recent months.
For example, in the last 30 days, people living in southern England on the Octopus Tracker paid a maximum of 19.1 pence per kWh for electricity and 4.29 pence per kWh for gas, which is 9.52 pence and 3.13 pence cheaper than the price ceiling per fuel .
The Agile Octopus tariff works in the same way as the Octopus Tracker, the main difference being that the former’s prices change every half hour.
Please note that those wishing to switch to one of these tracker tariffs will need to have a smart meter.
What energy bill help is available?
There are a number of different ways to get help paying your energy bills if you’re struggling to make ends meet.
If you get into debt, you can always approach your supplier to see if they can put you on a repayment plan before imposing a prepayment meter.
This means that you pay off what you owe in installments over a certain period.
If your supplier offers you a payment plan that you don’t think you can afford, contact them again to see if you can get a better deal.
Several energy companies have subsidy schemes available for customers who have difficulty paying their bills.
But the eligibility criteria varies depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers who are struggling to pay their energy bills can receive grants worth up to £1,500.
British Gas is also providing assistance through its British Gas Energy Trust and Individuals Family Fund.
You don’t have to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power are all also offering grants to struggling customers.
Thousands of vulnerable households are missing out on extra help and protection by not registering with the Priority Services Register (PSR).
The service helps support vulnerable households, such as the elderly or ill, and some of the benefits include advance warning of power cuts, free gas safety checks and extra support if you’re struggling.
Contact your energy company to see if you can submit an application.