Energy prices are falling, should I fix my tariff?
Great news! With the April price cap announcement, you’ve probably heard that energy prices are going down to £1,690 for an average household each year (learn more about Ofgem’s changes to how an average household annual bill is calculated). With energy prices dropping to the lowest they’ve been since the summer of 2022 fixed tariffs are back on the menu at E.ON Next.
Did you know that we have a tariff with prices that stay below the price cap? Our Next Pledge tariff costs less per unit than the price cap unit rate, whether it goes up or down. With our Next Pledge tariff you’ll get energy prices guaranteed to stay £50 below the Ofgem price cap. T&Cs apply. Get a quote today. So, are you better off fixing your tariff now or staying on the standard variable tariff (SVT)? We’ve put together a helpful guide to support you in making the right decision for your home.
Included with a fixed tariff.
No unexpected price increases. Current predictions suggest that, energy prices could fall further in the middle of 2024. By fixing your tariff you are protected from fluctuations in the price cap, meaning your energy price cannot increase during the length of your contract.
Budget with confidence. Know exactly what you are paying for each unit of energy you use, allowing you to budget for your bills with confidence.
Not included with a fixed tariff.
Flexibility. Whilst a fixed tariff offers more security, it comes at the cost of flexibility. Fixed tariffs have a set contract duration (usually one or two years). If you want to switch tariffs during this time you may be subject to exit fees.
Prices may get lower. The flip side of being on a tariff that doesn’t change with the price cap, is that if prices get lower you will be fixed at a higher energy price until the end of your contract.
Energy market predictions.
To help keep you informed, we have summarised the latest (February 2024) price cap predictions. These figures are not guaranteed, and are for your guidance only. Ofgem announced on 23 February 2024 that energy unit prices will fall from 1 April 2024. This means the unit price you pay for your energy will go down, and the average household bill(2) will be lower. According to the latest predictions prices are expected to decrease in the middle of 2024. This means that right now you may find that fixed tariff deals appear to be more expensive than the current standard variable tariff price (SVT). However, as the fixed tariff deals will not increase or decrease with the price caps, you may save money over the full term of your contract if prices rise as predicted. Just be aware that this is not guaranteed and predictions can change over time to reflect changes in the energy industry. The energy market has stabilised significantly in the last few months, but unexpected changes could happen at any time. Geopolitics has a huge influence on energy prices, so a further escalation in the war in Ukraine, the Middle East or tensions rising further over Taiwan could see the wholesale gas price rise, which would eventually lead to higher bills again. Ongoing discussions over how the price cap is calculated and other energy legislation may also have an impact on energy prices in 2024, causing these predictions to change.
Is now the best time to fix my tariff?
Unfortunately, like you, we cannot see into the future - which means you can never be certain when the best time is to fix your energy tariff. We recommend instead weighing how much you value the certainty of a fixed price with the affordability of your fixed tariff quote. If you feel that you can comfortably afford the energy price you are quoted for the next 1 to 2 years, then you may enjoy the security that comes with a fixed tariff. You will be protected from price increases, and can feel confident that your bills are within your budget for the duration of your contract. No more stress around price cap announcements, instead sit back and relax. However, if you would prefer to wait and see how the market develops, you may be able to get a better quote in the future. Just be aware that this is not guaranteed, and you also risk your energy prices increasing. Ultimately, the decision to get a fixed tariff, and when, is up to you. There really is no right answer. So unless you stumble across a time traveller from the future, be wary of anyone telling you otherwise. (And let’s be honest, if you did, you’d be asking for lottery numbers not fixed tariff prices. We know we would!).
If you’re looking to join E.ON Next it’s quick and easy to get a quote. Already a customer? Login to your account dashboard to see what tariffs are available to you.
What about the EPG?
Since July 2023 you have no longer received government support from the Energy Price Guarantee (EPG), which kept the maximum energy price at £2,500 a year for an average household. The price cap is already below the current £3,000 (From 1 July 2023) threshold, so you are already paying less than you were under the EPG. The government's EPG ends on 31 March 2024.
Struggling to pay.
If you are struggling to pay your bills we are here to support you. From free debt advice from our partner StepChange, to grants from the E.ON Next Energy Fund that will help you pay your energy bills or replace essential appliances. Find out more about the support on offer and see if you are eligible for help with your energy bills.
Next Pledge tariff terms & conditions: Next Pledge tariff can provide up to £50 savings, applied as a reduction on unit rates split across both electricity and gas (£25 saving per fuel) based on an Ofgem typical medium usage. Next Pledge is a 12 month fixed term tariff with prices changing to stay below price cap every three months. Requires payment by Direct Debit and a Smart meter installation where possible. There are no exit fees with this tariff.
1 Energy prices forecast are for a dual fuel energy customer paying by Direct Debit. 2 An average household, according to Ofgem, is a 2-3 bedroom home with 2-3 residents, and average household energy use of 12,000kWh of gas use and 2,900kWh of electricity use per year.
*This tariff comes with 100% renewable electricity and guarantees that your prices will always be £50 a year lower than Ofgem’s price cap (for an average dual fuel customer). You’ll see the £50 saving as reduced unit rates split across both electricity and gas (£25 saving per fuel). We’ll automatically update your prices every three months in line with the price cap and give you two weeks notice of any price change. If the government’s energy price guarantee returns we'll move you back to our standard variable tariff - you’ll need to contact us if you want to stay on Next Pledge. You’ll need to pay by monthly Direct Debit and manage your account online and you also agree to have a smart meter installed where eligible. There are no exit fees with this tariff.