Households in Great Britain hoping to fix their gas and electricity bills in a desperate attempt to avoid the worst of the price rises are facing quotes as high as £3,500 a year – with the exception of E.ON customers.
In the face of market turmoil and soaring wholesale gas prices, most of the UK’s domestic energy suppliers have either stopped offering customers the chance to move to a fixed-price tariff or have priced them at £3,000 and above.
Scottish Power’s Fixed Price May 2023 M2 tariff now costs an astonishing £3,500 a year for average use – compared with the current cap of £1,277 a year. A host of other suppliers are quoting at least £3,000 a year to customers looking to fix.
British Gas said this week it had pulled its fixed-price tariffs, adding it would not be fair to offer customers “fixed prices based on this price volatility right now”.
However, there is one ray of hope, provided you are an existing E.ON customer. On Monday the supplier pulled the last remaining fixed-price tariff to compete with the variable rates on offer after it was highlighted by the MoneySavingExpert founder, Martin Lewis, and swiftly sold out.
However, E.ON is still offering existing customers a one-year fixed tariff – Fix 1 Year v 12 – which costs £2,270 a year for average consumption. This is £299 more than the new price cap, which comes in on 1 April, but considerably less than tariffs available on the open market.
It is probably a good bet if you qualify, not least as there are no exit fees to pay, meaning customers can leave in the unlikely event that prices start falling again. It is also unlikely to be around for long. Customers new to E.ON would have to pay £3,158 for a one-year fix.
Octopus Energy has a similar but slightly less attractive deal. While its standard one-year fix costs £3,200 for average use, it also has a Loyal Octopus fixed tariff, which is 20% cheaper – £2,560 a year. It is only available for those customers who have been with the firm for at least eight months, which rules out anyone who was switched to it when their supplier collapsed last autumn.
For the rest of us, it is going to be a difficult year energy-wise. About 22 million households are on tariffs capped by the regulator, Ofgem, meaning direct debit customers will typically be paying just under £2,000 a year from 1 April, and then as much as 50% more from October and through next winter.
This week analysts at Cornwall Insight said they expected the average dual-fuel bill to rise to £2,900 a year when the cap changes again in October. Others have warned that households could be paying £3,000 a year next winter.
On Wednesday the war in Ukraine sent UK wholesale gas prices – the price paid by energy companies – as high as £4.50 a therm, up from £2.50 a day before. It then settled at about £4. A year ago, suppliers were paying about 35p a therm.
The comparison website Energy Helpline, said: “As we expect energy prices to continue to climb over the coming months, a deal which on the face of it may seem like poor value today could actually be worth switching to when you factor in potential future price rises.”
Joe Malinowski of the comparison site the Energy Shop said: “If wholesale gas prices double from here again, then £3,000 deals start to make sense but these tariffs are already pricing in a lot of future risk.
“Depending upon how the situation (in Ukraine) unfolds, gas prices could literally go anywhere. The best we can hope for is that wholesale gas prices don’t go up much more. All other scenarios are varying degrees of bad.”