Fixed Deals Costing More Than Standard Variable Tariff
Thousands of energy customers in the UK are paying more than necessary for their gas and electric this winter after locking in to fixed deals in an effort to save money. Over 300 fixed energy deals are now more expensive than the standard variable tariff, which is subject to a price cap. This means that households are paying hundreds of pounds more than they would on the variable tariff.
Fixed Deals Disappear as Suppliers Can't Beat Price Cap
Fixed deals became scarce when energy costs skyrocketed, as suppliers were unable to offer prices lower than the price cap. Currently, around 29 million households are on the default price-capped tariff, while just over one million are locked into a fixed deal. Fixed deals involve paying a set cost for a specific period, usually several years. While fixing can save money if prices increase, there is a risk of paying more if prices fall.
Fall in Price Cap Leaves Fixed Deal Customers Paying More
Some customers locked in to fixed deals during the peak of the energy crisis, anticipating that prices would only continue to rise. Others opted for fixed deals over the summer when tariffs became available again due to falling wholesale energy prices. However, the subsequent fall in the price cap for standard variable tariffs means that households on 311 fixed deals are now paying an average of £695 more per year.
Exit Fees and Waiving Them
Customers who wish to leave a fixed energy tariff before its end date often face significant exit fees ranging from £50 to £400. However, those on 57 of the deals can switch to their supplier's standard variable tariff without incurring any fees. The End Fuel Poverty Coalition is calling on energy companies to waive exit fees, enabling customers on expensive fixed deals to switch easily to the cheapest available tariff. In some cases, even if there is an exit fee, it may still be worth paying as overall savings can still be made. Customers struggling with energy costs can request their supplier to waive the fee, although suppliers are not obligated to do so.
British Gas Tariffs Affected
Customers on 49 British Gas tariffs are currently paying more than the average household on the standard variable tariff. Only seven tariffs do not charge an exit fee, making it advisable for customers on these tariffs to consider switching. The exit fees for affected tariffs range from £80 to £200, depending on the specific tariff. It is worth noting that some tariffs have no exit fee, including Electric Driver Exclusive Sep24, Electric Driver Sep24, Loyalty Jun24, and various Smart PAYG tariffs.
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