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Ofgem issues ‘think before you fix’ warning as fixed-rate energy deals return

Emma Lunn
Written By:
Emma Lunn
Posted:
Updated:
27/11/2023

The energy regulator has told households to consider their options before switching to a fixed energy tariff.

The regulator Ofgem tweeted last week: “Think before you fix. Fixed-rate energy tariffs have seen a return to the market but check if they are right for you. Prices are still unpredictable and signing up for a fixed rate now might mean you miss out if prices fall in the future.”

The next Ofgem announcement on the energy price cap is scheduled for 25 August – this cap will apply from 1 October to 31 December 2023.

The price cap currently stands at £2,074 a year for dual-fuel households with typical energy use, paying by direct debit.

This figure actually sets the unit rates you’re charged for gas and electricity, as well as the standing charges. So you may be paying more or less than this for your energy, depending on your usage.

Fixed rates are back, but beware

Fixed energy tariffs pretty much disappeared during the energy crisis – but now they are back. Currently about half a dozen fixed energy tariffs work out cheaper than the current price cap, with Utility Warehouse and Ovo Energy both offering deals that work out to less than £2,000 per year.

But before you sign up, it’s a good idea to have a look at the predictions for the next price cap.

Analysts at Cornwall Insight predict that the energy price cap for a typical dual fuel, direct debit billpayer will fall to £1,860 from October, before rising to around £1,960 in January.

So if you sign up to a fixed tariff with an average cost of more than £2,000 a year now, you could be paying more than necessary for your energy come October.

All the fixed tariffs on offer at the moment come with exit fees of at least £75 per fuel – so it will be pricey to switch away from them if you change your mind later.