Homes on fixed energy agreements will see their bills reduced (but it’s better to change)
According to comparison site USwitch, no major provider is currently offering flat rates due to soaring wholesale energy prices. This is because when a customer signs a fixed rate agreement, their supplier must pre-purchase a year’s energy supply, which takes into account expected gas price increases during that time.
Last night Scottish Power’s website said: ‘With energy prices at record highs, you are unlikely to be better off switching supplier at this time.
But many customers may have been tempted to enter into fixed deals before Ms Truss intervened, as prices were expected to continue to rise. Regulator Ofgem was due to raise the typical bill price cap from nearly £2,000 to over £3,500 from October 1.
Some customers have been offered quotes of up to £16,000 per year for their energy use under a fixed agreement.
Clients who are nearing the end of their fixed rate are now advised to automatically switch to the variable rate protected by a price cap, rather than re-fixing.
Some providers charge exit fees of up to £600 for customers who leave offers before the end of the term, according to USwitch.
However, there has been speculation that the government will force providers to waive these fees.
Amid the panic over forecasts the average household could pay up to £6,616 a year for their energy, some customers have locked themselves into expensive fixed rate deals in hopes of protecting themselves from further increases.
But the announcement that Ms Truss would freeze the price cap from October could see those same customers pay multiple exit fees as they scramble to switch back to the cheaper variable rate.
Energy companies have been left in the dark about the details of Ms Truss’s policy, and some are awaiting further guidance from the government to make a decision on exit fees.
The Department of Business, Energy and Industrial Strategy has been approached for comment.