Urgent! Only one cheap energy tariff left

by Neil Faulkner on 20 August 2010  |  1 comment
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I don’t follow the crowd, but even I think this tariff is too good to be true – and you’d better hurry if you want to get it, as it's being withdrawn tomorrow morning!

Cheap capped and fixed tariffs have been selling out. According to Energyhelpline, they're being replaced with equivalent deals that are 5% to 10% more expensive. Energy pricing is a complicated business, so we can't assume that this will happen to ordinary tariffs, but let's take a look at the best of what's left for the specials.

In my test of an average user in Farnborough, Hants, there is just one supplier still offering fixed or capped tariffs still below £1,000. That's Ovo's Energy Fixed tariff, which is fixed for 12 months at an estimated  £921. (It's estimated because the charge for each unit you use will remain the same, but the amount you use varies.)

To put this into context, the next cheapest fixed or capped tariff is npower's Go Fix 3, which costs £146 more at £1,081. The cheapest variable-rate tariffs, on the other hand, are cheaper than Ovo's fixed tariff. That's normal, as variable rates come with greater risk. However, in my test the cheapest variable tariff, E.ON's Save Online v2, is just £46 cheaper than Ovo's fix at £875.

If like most people you've not switched supplier since you last moved house, or ever, then you're likely on a supplier's standard tariff. Here's how the cheapest variable and cheapest fixed tariffs I've just mentioned compare to standard tariffs in my Farnborough example:

Two best tariffs versus the standard tariffs

This is just an example. The cheapest tariff for you depends on your area and usage. Whilst those differences aren't usually as staggering as with insurance comparisons, they can be significant. You should do your own comparison.

I hate not to be contrary, but..

I don't mindlessly follow the crowd. I've shown before how standard energy-switching guidance is wrong and usually encourages switching too often and at the wrong times, such as in Big energy price hikes to come and You're making the same mistake again. However, like other commentators right now, I find the fixed Ovo tariff at just 5% more than the cheapest variable tariff to be a good price.

I must also add my voice to the rest to say that Ovo's tariff is unsurprisingly getting a lot of publicity and so if you want to take advantage of it you'll have to get in soon before it is withdrawn tomorrow morning (Saturday). Energy suppliers typically buy an amount of wholesale energy and gas, fix a price for it, and, when it's sold, that's it.

If you're too late, then go for Ovo's New Energy fixed tariff instead, which comes in only £24 more expensive a year at £945.

Another bargain fixed tariff

Not all fixes are equal. Whilst no other fixed tariffs come close in price to Ovo's, some of them fix your price for much longer, and that's worth paying more money for. Here are two that stand out the most. One of them I shall be lightly recommending in a minute:

ScottishPower Fixed Energy January 2014 – that's a fix for around three and a half years – comes with the benefit of an annual boiler service and unlimited callouts. Read the terms and conditions before signing up. If you need this level of boiler cover, it makes the price much more attractive, as that sort of thing might cost about £150 per year (less if you don't want an annual service). But did I mention you should read the terms and conditions first?

If you need the boiler cover and can't get a very cheap deal separately, and presuming you like what you read in the small print (i.e. it compares favourably with your own provider) this is a reasonable fixed-price deal. If you deduct £150 for boiler cover then this tariff will be cheaper than 'normal' tariffs if they were to go up in price 10% this year and every year until January 2014. That's true whether you went with Ovo's fix or E.On's cheap variable rate.

That's not an amazing price, but it's roughly fair. Many British Gas customers who took out a seemingly very expensive long-term fix several years ago were laughing by the end of it, having saved a great deal over all, but we don't know if that will happen again. This tariff certainly isn't for bargain hunters, but for people trying to lock in their energy price for a long time.

EDF Energy Fixed Price 2015 – a five-year fix – is less attractive. Although it costs just slightly more for a longer fix, it comes with no great benefits that make the high cost more worthwhile. I calculate that if variable prices rose an average 10% per year starting tomorrow, it would still be more expensive overall.

More: Avoid these massive hidden energy charges | Earn interest from your energy supplier

Remember to run your own comparison as prices vary.