Over 270 energy tariffs more expensive than price cap

4 July 2023 17:56   By Lyndsey Burton

Warm This Winter has discovered there are 274 fixed energy tariffs in the market currently priced above the new cap.

While the Energy Price Cap dropped to £2074 for an average user in July, many households may still be paying more as fixed tariffs aren't protected.

Future Energy Associates, who compiled the research, found as many as 1.5 million energy customers were on one of 274 fixed tariffs priced above the cap.

While the Energy Price Guarantee still protects customers at £3,000, those on these fixed tariffs could be paying up to £926 a year more than they should be.

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Fixed energy tariffs

Ofgem's Energy Price Cap only applies to standard variable tariffs, or SVTs, and doesn't apply to fixed rate tariffs.

This means customers on fixed energy tariffs who took them out when prices were higher, could now be paying more than they would be if they were on their provider's SVT.

The Warm This Winter campaign obtained charts from industry analysts Future Energy Associates, which show households on 274 different tariffs fixed the price of their energy bills above the level of the new Energy Price Cap.

Rather than the reduction in price seen by most energy customers, households on one of these fixed tariffs will see their bills increase by an average of £500 per year, while some could be affected by as much as £926.

While the Energy Price Guarantee (EPG) is still in place, it has risen to £3,000, which means customers who aren't protected by the price cap, will now pay more before the EPG comes into effect.

While the EPG is set to remain in place until March 2024, it's concerning to know some of the fixed tariffs found by Future Energy Associates have an annual price as high as £5426 for an average user paying by Direct Debit, that's two and a half times the current price cap.

Switching to SVT

Ofgem's position for a while has been to advise energy customers to move to their provider's Standard Variable Tariff (SVT) where they can, as this is protected by the price cap.

While the majority of energy customers have now been moved to an SVT, as this is the tariff customers move to automatically when their fixed deal ends, this research reveals more than 1.5 million households are still on fixed tariffs.

These tariffs are from a range of energy suppliers, including Scottish Power, EDF, Octopus, London Power, M&S Energy, Co-operative Energy, British Gas, Utility Warehouse, Ebico Living, SSE and So Energy.

Future Energy Associates found 800,000 households on 52 of these tariffs could be penalised for trying to switch before their fixed rate deal ends, with leaving charges ranging from £50 to as much as £400.

However, as many as 700,000 households could leave penalty free, which is perhaps advisable now the price cap has reduced.

It's also worth pointing out the research excluded deals from green energy suppliers GEUK and Ecotricity whose tariffs aren't subject to the energy price cap in any case, and while customers of these firms may be choosing them out of principle, people should also consider household budgets if switching to an SVT protected by the cap would be better for them.

Price cap

Now the Energy Price Cap is lower than the Government's EPG and protecting consumer prices again, its back in the spotlight as to whether it should be reformed or scrapped entirely.

Not surprisingly its main critics are energy firms, who feel the price cap makes it difficult for suppliers to offer competitively priced tariffs. While other firms, such as Octopus Energy have been more in favour, commenting, "Ofgem's price cap has been critical in protecting consumers in the crisis and ensuring falling costs get passed on to customers."

Greg Jackson, CEO of Octopus Energy, believes Ofgem should keep the price cap in place, without lowering it before the coming winter to ensure consumers are protected from rising prices over the coldest months.


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