British Gas has launched a fixed-rate gas and electricity deal that offers a 12% saving over most existing price-capped tariffs, adding a new choice to the hard-to-navigate home energy market.
For the past two winters, consumers have largely been spared having to seek out the cheapest deal, because, in almost all cases, it was their supplier’s price cap-protected standard tariff.
However, in recent months new tariffs have been launched – most offering fixed prices and designed to lock customers in for at least a year.
British Gas’s new Price Promise May 25 is a 15-month fix with a 12% discount on the current price cap.
It then guarantees to be at least £1 per fuel under April’s price cap (based on typical use) when it is announced in the next few weeks.
Customers carry on paying the same fixed rate for the remainder of the term – until May 2025.
On 1 January, price-capped tariffs all rose 5% to an average of £1,928 a year, but they are set to drop by 15% in April, according to latest estimates. There is also predicted to be a 10% fall in capped bills from July to September.
But this is by no means certain, and will depend on how the markets move over the spring and summer. Regulator Ofgem sets the cap every three months according to wholesale prices.
So is this latest offer a good deal? Those signing up will enjoy lower prices between now and 1 April, a small price rise after that, and price certainty at those rates until May 2025.
If wholesale energy costs spike again, those who signed up will be sitting pretty, as their neighbours’ bills start rising.
However, if energy prices have peaked and are returning towards those seen before the Ukraine conflict, then those on the deal could end up overpaying, albeit not by much.
The British Gas tariff will appeal to those on fixed incomes who would rather know what they will be paying for the next year or so. If you later decide to get out, you will pay a hefty £150 in exit fees.
If that doesn’t suit you, two other deals might. E.ON’s Next is a variable tariff that offers a £50 saving against the price cap for the next 12 months. If the cap falls, so will its prices.
Equally, if it is increased next autumn, customer bills will be too. Essentially, you are being rewarded with a £50 a year saving for switching.
The last one worth looking at is Octopus Energy’s Loyal one-year fixed-rate deal offering prices 13% below the current cap. To sign up you have to have been with Octopus for at least eight months.
There are no exit fees, so if prices fall later in the year you can jump on to another deal – or back on to a price-capped standard tariff.
