With energy bills rising again for the majority of households in the New Year, is now the time to opt for a fixed energy tariff?
The Ofgem energy price cap went up by 10% on 1 October, and will rise by a further 1% in January.
It means that the typical annual bill for someone on a variable deal will reach £1,738 on New Year's Day - although the exact price you pay will depend on your usage.
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The energy price cap affects homes that are sitting on a standard variable tariff - roughly 27 million households.
A further rise in bills in January 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.
To ensure you don't get over-charged for your energy when the next price cap comes into effect, it's worth taking a meter reading on New Year's Day, or in early January.
So, with another rise in energy bills coming soon, 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 five million households have a fixed energy deal, about 27 million households are sitting on the energy price cap. The current energy price cap gives an average annual bill of £1,717 for typical usage.
The January to March price cap was announced last week by Ofgem to be £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 October to 31 December) are:
| Fuel | Price per kilowatt hour (kWh) | Standing charge (per day) |
| Gas | 6.24p | 31.66p |
| Electricity | 24.5p | 60.99p |
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.
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.
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
- EDF Energy Simply Fixed 1Yr Jan26 - This 12-month fix comes in at 6.3% less than the current price cap. It's available to new and existing customers, and there are no exit fees.
- Outfox the Market Fix'd Dual Nov24 v2.0 - This 12-month fix is available to new and existing customers and comes in at 6.5% less than the October cap. There are £50 dual-fuel exit fees if you choose to move before the deal finishes.
- Octopus Energy Octopus 12M Fixed November 2024 v2 - This 12-month fix is 6.3% cheaper, and there are no exit fees. It's available for new and existing customers.
- E.ON Next Next Fixed 12m v35 / Next Reward Days Fixed 12m v1 - These tariffs come in 5.6% below the October cap. You must pay by Direct Debit and manage your account online. Smart meters are required for the "Reward Days" tariff but not the standard fix. Customers who sign up to the Reward Days deal by 3 December get free electricity and zero standing charges on Christmas Eve, Christmas Day and Boxing Day. If you want to switch to a different deal, there are £100 dual-fuel exit fees.
- Sainsbury's Energy Sainsbury's Fix and Reward 12m V34 - This 12-month fix is 4.6% less than the October cap. You'll need to have or get smart meters to qualify. It's open to new and existing customers. New customers will get 4,000 Nectar points when signing up (2,000 for electricity-only) and two extra points for each pound spent in Sainsbury's stores (one extra point for electricity-only). Note the £100 dual-fuel exit fees if you switch before the deal ends.
Source: MoneySavingExpert.com (correct as of 25 November)
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 EV, there are specific tariffs available that could be cheaper than the deals mentioned above.
Should you fix your energy tariff?
When the energy crisis hit in 2021, energy suppliers all but stopped offering fixed energy tariffs to consumers. But since July 2022, when energy prices started to come down, deals have become more numerous and have become a bit more competitive.
This downwards trajectory peaked in early 2024, when the cheapest fixes came in hundreds of pounds cheaper thanks to falling wholesale prices. By June, you could still save £81 a year on average, according to the consultancy Cornwall Insight.
Under those conditions, a fixed deal made sense. But with the news that the October cap would soar, good deals disappeared from the market.
Now, with the January price cap set to increase further, it's a good time to weigh up your options.
The question of whether to switch to a fix 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 5% or 6% cheaper than the current price cap seems like a good idea, and it will also be cheaper than the January price cap.
But will you continue to save money as 2025 progresses? According to forecasts from Cornwall Insight, energy bills will fall by 1.4% in April before dropping slightly again in October. So, depending on how far the energy price cap falls, your fixed tariff could start to look expensive.
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, 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.
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