Major energy supplier launches cheapest deal among biggest firms that’s £68 less than the price cap – is it worth it?

A MAJOR energy supplier with five million UK customers has launched a fixed energy deal that claims to be the cheapest on the market.

New and existing customers who sign up for EDF Energy‘s Essentials Fixed 1Yr Sep25v2 tariff are promised savings of £68 a year.

This plan costs a typical household £1,649 per year, making it cheaper than Ofgem’s upcoming October price cap.

Starting October 1, the 29 million customers on standard variable tariffs linked to Ofgem’s price cap will see their annual bills increase by £149, rising from £1,568 to £1,717.

If these households were to switch and take up EDF’s offer, they’d save £68 over the next 12 months.

The tariff is available to new and existing EDF customers and requires a smart meter or an agreement to have one installed.

The 12-month fixed offer includes a £25 exit fee per fuel or £50 for a dual fuel tariff.

Rich Hughes, director of retail at EDF, said: “Energy prices had been decreasing, but we are all too aware that because of increases to the price cap, this will change shortly.

“We know customers will be concerned and we want to do all we can to help.

“Locking into the cheapest energy-only deal in the market protects them from future upcoming price rises.”

EDF Energy’s offer is the cheapest among the country’s largest energy suppliers, including British Gas, Octopus and Ovo Energy.

It comes just days after Ovo Energy pulled their own cheap fixed deal, which had topped the charts for big suppliers and could have saved a typical customer £132 from October.

However, EDF Energy’s latest offer isn’t the cheapest among all energy suppliers.

For example, those switching to Outfox the Market could save £105 with its Fix’d Dual Aug24 v5.0 tariff.

This is the cheapest no-string fixed deal currently available on the open market.

Elise Melville, energy expert at Uswitch.com, said: “Energy prices will rise for millions of households from October, so now is a good time to shop around for a fixed deal.

“The current cheapest fixed deal available is £1,612 from Outfox The Market for households with average usage, which is £105 less than the October price cap.

“EDF’s one-year fix is priced at £1,649 and offers a competitive saving of £68, making it the next best deal on the market, and the cheapest of the large suppliers.

However, the best deals could be pulled at any time.

It’s not unusual for suppliers to reprice or remove their fixed energy tariffs in reaction to fluctuating wholesale market conditions.

Ellie added: “There are several deals offering households a saving from October, so it’s worth moving quickly if you find one that’s worth switching to.”

How do fixed deals work?

Fixed deals work to protect customers from bill hikes if Ofgem were to increase the price cap in the future.

Customers on their supplier’s standard variable tariff see their energy prices change every three months, as these are tied to Ofgem’s price cap.

However, those who lock into a fixed energy deal are charged the same gas and electricity rates throughout the contract’s term.

Of course, doing so carries a slight risk of you paying more than those on the standard variable tariff if Ofgem’s energy price cap were to fall within your deal’s term.

However, experts say this risk is minimal as analysts at Cornwall Insight predict that the energy price cap will rise again in January.

The price cap is reviewed every three months in Oct, Jan, April and July, and can go up or down depending on what’s happening in the wholesale energy market.

From October 1, those on the standard variable tariff (SVT) have their rates capped by Ofgem at the following levels:

• 5.48p per kilowatt hour (p/kWh) for gas
• 22.36p per kWh for electricity
• A standing charge of 31.66p per day for gas
• A standing charge of 60.99p per day for electricity

For a typical household that uses an average of 11,500kWh of gas and 2,700kWh of electricity every year, these rates will cap bills at roughly £1,717 .

As this is only an estimate for a typical household, if you use more energy, you’ll pay more.

But if you’re offered a fix that’s cheaper than October’s price cap, it’s always worth considering.

Outfox the Market is currently offering the cheapest deal on the open market to new and existing customers.

Its Fix’d Dual Aug24 v5.0 tariff costs a typical household £1,612 a year.

This means it is £105 cheaper than Ofgem’s October price cap.

It comes with a £25 exit fee per fuel or £50 if you lock in with a dual fuel tariff.

EDF’s offer, highlighted above, comes second costing a typical household £1,649 a year.

Octopus Energy’s 12M Fixed August 2024 v4 costs £1,656 a year – £61 less than Ofgem’s October price cap.

This deal also comes with no exit fees, so customers are free to ditch and switch supplier at anytime they wish.

Other firms may offer offer prices which beat those in the table above.

But, these often cost customers more by forcing them to take out an extra service, like boiler cover, which isn’t always necessary.

For example, Ovo Energy offers a 1 Year Fixed + Boiler Cover 04 September 2024 tariff costs £1,560 a year.

That’s £157 cheaper than the October price cap.

However, this doesn’t include the cost of boiler cover, which starts at £15 a month for the cheapest product or an extra £180 a year.

In total, it would mean this deal would cost £1,740 a year, making it £23 more expensive than the October price cap.

Remember to always compare prices before switching, as energy tariffs vary widely, and costs differ depending on where you live.

What are the alternatives?

Customers unwilling to commit to long-term fixed energy deals may want to consider flexible tariffs.

Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: “These will almost always be at or below the price cap.”

For example, E.ON Next‘s Pledge variable tariff offers a fixed discount of around three per cent on the price cap rates for 12 months.

It will save the average household around £50 a year but comes with a £50 exit fee if you switch before the year ends.

The deal is available to both new and existing customers.

EDF Energy’s Ensure Tracker works in a similar way and offers a £50 discount off the price cap’s standing charges for 12 months.

For a bigger reward but at a higher risk, Octopus Energy offers two variable tariffs which track wholesale gas and electricity costs.

Customers on the Octopus Tracker see their prices change daily, but unit rates have remained consistently lower than the price cap in recent months.

For example, in the last 30 days, people living in Southern England on the Octopus Tracker paid a maximum of 22.5p per kWh for electricity and 5.22p per kWh of gas.

The Agile Octopus tariff works similarly to the Octopus Tracker, but the main difference is that the former’s prices change every half hour.

Remember that those wishing to switch to any of these tracker tariffs must have a smart meter.