Major energy supplier to pull fixed tariff cheaper than price cap in HOURS – and more could follow

HOUSEHOLDS have just hours left to secure one of the cheapest fixed energy deals on the market before it disappears.

As Ofgem's price cap hike approaches in October, those looking to cut their gas and electricity bills need to act swiftly.

Ovo Energy, which supplies over four million households, is set to withdraw its 1 Year Fixed 23 August 2024 tariff at 11.59pm tonight (August 27).

Available through Uswitch, Confused.com, and directly from Ovo, this tariff costs a typical household £1,625 annually - £57 more than the current price cap.

However, with around 29 million customers currently on standard variable tariffs tied to Ofgem's price cap, bills are expected to rise by £149 starting October 1.

This increase means a typical household on a standard variable tariff will pay £1,717 a year from that point onward - up from £1,568.

So switching to Ovo Energy's fixed deal could save these customers approximately £92 a year from October. 

The 12-month fixed offer includes a £50 exit fee per fuel or £100 for a dual fuel tariff.

However, to benefit from these savings, customers must switch before midnight.

While not the absolute cheapest fixed deal available, it is the most affordable option among the nation's largest energy suppliers.

Those switching to Outfox the Market direct could save £125 with its cheapest fix.

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.

Elise Melville, energy expert at Uswitch.com, comments: "After falling to their lowest level for two years in July, energy prices are on the rise once again – a cruel blow to households, just as we head into the colder months.

"Those frustrated by the thought of rising bills should consider opting for a fixed deal, while there are potential savings to be had. 

"There are a number of 12-month deals available, including an exclusive tariff via Uswitch from the well-known supplier OVO Energy, which offers an average saving of £92 – but you'll have to be quick as it’s ending at midnight tonight."

"Now is the time to act if you spot a deal 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, this risk is minimal as analysts at Cornwall Insight predict that the energy price cap will rise again in January.

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.

Which suppliers are offering the best-fixed deals?

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

Its Fix'd Dual Aug24 v4.0 tariff costs a typical household £1,592 a year.

This means it is £125 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.

Next is Ovo Energy's tariff, which costs a typical household £1,625 a year but ends this evening.

It comes with a £50 exit fee per fuel or £100 if you lock in with a dual fuel tariff.

Octopus Energy's 12M Fixed August 2024 v3 costs £1,626 a year - £91 less than Ofgem's 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.