Major energy supplier launches fixed deal cheaper than price cap and it’s for new customers – is it worth it?

A MAJOR energy supplier has launched a new fixed deal that's lower than the new price cap - and it's available to new customers.

So Energy is offering energy deal that's fixed for 12 months, costing £2,047 – £27 less than the average cost of bills from July.

Comparison site Uswitch announced the new tariff will be available to a limited number of new customers via its website.

The deal is the first that's on offer to customers that are not already with a supplier.

Existing So Energy customers can sign up to the same tariff directly with the company.

Households that have already signed up to receive alerts for exclusive deals will be first in line for the deal, before it is offered to all Uswitch.com users.

Uswitch energy spokeswoman Natalie Mathie said: “Most of the fixed energy deals currently available are for existing customers only, so the fact that we can offer this to new customers is an encouraging sign that competition is returning to the market.

“At £2,047 for the average household paying by direct debit, this is reasonably priced compared to the upcoming July price cap and could be worth considering."

The tariff comes just a few weeks after Ofgem announced that typical gas and electricity bills will be capped at £2,074 a year from July 1.

This will take effect when the government's Energy Price Guarantee, which limits the typical domestic energy bill to £2,500, expires in a month's time.

The fall in Ofgem's price cap will reward households battling the cost of living with a £426 annual saving.

Few providers are so far offering fixed deals, and those that are available are typically only for the supplier’s existing customers.

For example, Ovo Energy is offering existing customers a one year fixed tariff costing £2,220 with a £150 exit fee.

Meanwhile E.ON Next is offering customers its Loyalty Fixed v3 costing £2,050 with the same exit fee as Ovo Energy.

Ms Mathie continued: “Signing up to a fixed deal means locking in price certainty for the duration of the fix, although your bill will still depend on how much energy you use.

“Those on standard variable tariffs will see energy costs change every three months with the price cap."

Energy tariffs give customers bill stability over a set period, so you can avoid any price hikes during its set period.

But you could end up being stuck paying more if prices fall in future so it's important to assess the real value of these offers.

Consumer champion Martin Lewis has already issued his advice to customers about fixing their bills: "Based on current predictions, a fixed deal under July's price cap looks to be a decent deal, while anything on or just above it could be worth considering if you value price certainty."

Do note as well that even though the So Energy tariff is cheaper than the July cap, it may not be cheaper in the months thereafter.

That's because the price cap updates every three months, and can rise or fall, depending on wholesale costs.

That means the tariff might not be the best deal by October this year, or even by January and April 2024.

The regulator used to set the price cap every six months. But since August last year, it now reviews the cap on unit rates for those on the default tariff every three months.

This means that annual energy bills may drop further into 2023 when the next price cap comes into force in October.

And remember the price cap is only an estimate for a typical household - so if you use more energy you'll pay more.