Should you switch to a fixed energy tariff?

Energy bills increased again for millions of households in January 2025. Is now a good time to switch to a fixed energy tariff?

The Ofgem energy price cap went up by 1.2% for the period of January to March. This is on top of a 10% increase that occurred on 1 October last year.

It means that the price of energy for a typical household on a dual-fuel standard variable tariff who pays by Direct Debit is now £1,738 – although the exact price you pay will depend on your usage.

The energy price cap affects homes that are sitting on a standard variable tariff – roughly 28 million households.

This rise in energy bills comes amid fears that many pensioners could struggle with higher energy costs this winter given the eligibility rules for the Winter Fuel Payment have changed. MoneyWeek has rounded up all the support you can get from your supplier.

Considering January’s rise in energy bills, and the possibility of another rise coming in April, should you stay on the price cap or move to a fixed energy tariff? And what fixed deals are currently available? We outline your options.

How much does a fixed energy tariff cost?

While some seven million households have a fixed energy deal, about 26 million households are sitting on the energy price cap, according to data collected by Ofgem in October 2024. The current January to March price cap gives an average annual bill of £1,738.

The cap sets the maximum price that can be charged for each unit (kilowatt hour, or kWh) of energy and standing charges on a standard variable - or default - tariff. This limit stays in place for three months. The current price cap unit rates (1 January to 31 March) are:

Please be aware that these Ofgem figures are national averages, with your actual unit rates depending on where in the UK you live. You can find out more about prices in your area on the energy regulator's website.

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If you fix your energy, your unit rates will be locked in for a set period - usually a year. So, even if the price cap rises or falls, your unit rates and standing charges will remain the same. This is useful if you value the certainty of knowing exactly what you'll be paying for the year ahead, and could save you money against future price caps.

Energy consultancy Cornwall Insight, who are well-regarded for the accuracy of their forecasts, predict that the price cap will increase by 2.7% for the period of April to June. Entering into a fixed rate energy tariff that is lower than January’s price cap will mean you are protected from further energy price hikes that may occur later in the year. The energy price cap for 1 April to 30 June will be announced on 25 February, 2025.

Here are the top tariff options that are available direct to all new customers, and how they compare with the October price cap:

Deals that are cheaper than the October price cap

• Outfox the Market Fix'd Dual Jan25 v3.0 - This 12-month dual-fuel fix is available to new and existing customers and comes in at 5.8% less than the January cap. There are £50 dual-fuel exit fees if you choose to move before the deal finishes.
• E.ON Next Next Fixed 16m v2 - This tariff comes in 4.4% below the January cap. You must pay by monthly Direct Debit. It is available in both electricity-only and dual-fuel variants and has a £50 per fuel exit fee.
• E.ON Next Next Fixed 18m v16 - This 18-month fixed rate tariff is 4.3% below the January price cap. Like its 16-month variant, it is available as electricity-only or dual-fuel and costs £50 per fuel to exit.
• Outfox the Market 18mth Fix’d Dual Jan25 v6.0 - Coming in at 4.5% less than the price cap, this 18-month fixed rate tariff is available for dual-fuel only. There is a £50 exit fee.

Source: MoneySavingExpert.com (correct as of 30 January, 2025)

While these deals are widely available, there may be loyalty deals that only existing customers can access, which offer superior rates to those listed above. Check with your supplier to see if you can benefit from such a rate.

Bear in mind that some deals come with conditions, such as requiring a smart meter, or asking you to sign up for other services.

If you have an electric vehicle, there are specific tariffs available that could be cheaper than the deals mentioned above.

Is it time to fix your energy tariff?

After the price cap increased by 1.2% in January, now may be a good time to weigh up whether you should opt for a fixed rate energy tariff.

The question of whether to switch to a fixed rate tariff depends on your attitude to risk, and whether you believe energy bills will go up or down next year.

Locking into a fixed deal now that's 4% or 5% cheaper than the current price cap seems like a good idea as you will be paying less than customers on price cap tariffs, but beware of exit charges if you need to leave early.

Will you continue to save money as the year progresses? Cornwall Insight predicts energy bills will rise by 2.7% in April. According to forecasts from EDF energy’s price cap prediction service, energy bills will rise by 3% in April before dropping very slightly in July. So, it looks like switching to a fixed energy tariff could save you some money in the first half of 2025.

Commenting on whether consumers should switch to a fixed cost tariff because of future rises in the price cap, George Frost, Country Manager at iChoosr, which runs a collective energy switching scheme to save money on energy bills, told MoneyWeek: “The market can change and not all forecasts will be realised."

Frost added: “This can work both ways: if the market falls dramatically then it may be worth accepting small early termination fees to switch away from an agreed tariff.

“However, on the other hand, all households on fixed tariffs will be protected against price rises for 12 months even if the market rises, which seems the more likely outlook currently.”

For the latest price cap predictions, read 'Will energy prices fall in 2025?'.

Ofgem energy supplier switching rules change

If you do opt to switch, it’s worth being aware of newish rules brought in by the regulator Ofgem. Previously, suppliers had to complete a switch within 15 working days. Going over this limit would entitle the new customer to compensation.

But, as of 1 April 2024, suppliers have to complete customer switches within five working days (six if you enter into a contract after 5pm). Failure to do so will mean they have to pay affected customers compensation of £30.

If the supplier you’re moving to fails to switch you across in time, it’s worth complaining to them directly. Should they fail to pay you the compensation you’re due, you can escalate your complaint to the Energy Ombudsman, which can resolve the dispute.