The update to the Energy Price Cap means bills are expected to fall by an average of 17% from July and a number of energy providers are starting to offer fixed rates again for existing customers
The Ofgem price cap is set to fall to £2,074 a year for a typical household paying by direct debit from July 1, compared to £2,500 a year under the Energy Price Guarantee. The Ofgem price cap limits what you pay for each unit of gas and electricity you use, plus the maximum daily standing charge.
But Martin Lewis’ MoneySavingExpert.com website has issued an urgent warning for anyone considering a fixed energy deal, the Mirror reports. Being on a fixed rate deal means you are protected if the Ofgem price cap rises - but if prices fall, you could be stuck paying a higher amount.
Analysts at Cornwall Insight expect typical bills to fall again to £1,959 a year from October but they could then rise again to £2,026 a year from January 2024.
The MSE team has looked at these predictions to provide an explanation of what you need to know if you’ve been offered a fixed deal.
The MSE team said: “Based on current predictions, a fixed deal under July's price cap looks to be a decent deal, while anything on or just above it could be worth considering if you value price certainty."
Four major energy companies are now offering fixed deals to selected existing customers:
So Energy: 12-month fix from 1 July 2023 - £2,036 a year with typical use (£150 exit fee)
British Gas Select Jul24: £2,044 a year with typical use (£200 exit fee)
E.ON Next Loyalty Fixed v3: £2,050 a year with typical use (£150 exit fee)
Ovo Energy 1 Year Fixed: £2,220 a year with typical use (£150 exit fee)
If you're coming off a fixed energy tariff and don't renew, you'll automatically be moved to your supplier's standard variable tariff (SVT), which pay the rates set by the Ofgem price cap.
The following average rates for those paying by direct debit on an SVT will kick in from July:
7.51p per kilowatt hour (p/kWh) for gas
30.11p/kWh for electricity
A standing charge of 29.11p per day for gas
A standing charge of 52.97p per day for electricity
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