Energy prices are rising, should I fix my tariff?

With the January 2024 price cap announcement from Ofgem, you’ve probably heard that energy prices are rising to £1,928 for an average, dual-fuel, Direct Debit bill paying household each year (learn more about Ofgem’s changes to how an average household annual bill is calculated). Fixed tariffs are back on the menu at E.ON Next so, are you better off fixing your tariff now or staying on the standard variable tariff (SVT)? We’ve put together a helpful guide to support you in making the right decision for your home.

Included with a fixed tariff.

• No unexpected price increases. Current market conditions suggest that energy prices could fall in the middle of 2024 but rise towards the end of the year. By fixing your tariff you are protected from fluctuations in unit prices, meaning your energy price cannot increase or decrease during the length of your contract.

• Budget with confidence. Know exactly what you are paying for each unit of energy you use, allowing you to budget for your bills with confidence.

Not included with a fixed tariff.

• Flexibility. Whilst a fixed tariff offers more security, it comes at the cost of flexibility. Fixed tariffs have a set contract duration (usually one or two years). If you want to switch tariffs during this time you may be subject to exit fees.

• Prices may get lower. The flip side of being on a tariff that doesn’t change with the price cap, is that if prices get lower you will be fixed at a higher energy price until the end of your contract.

Our Next Pledge tariff.

Did you know that we have a tariff with prices that stay below the price cap? Our Next Pledge Tariff costs less per unit than the price cap unit rate, whether it goes up or down. With our Next Pledge tracker tariff you’ll get energy prices guaranteed to stay £50 below the Ofgem price cap. T&Cs apply. Get a quote today.

Energy market predictions.

To help keep you informed, we have summarised the latest (November 2023) price cap forecasts. These figures are not guaranteed, and are for your guidance only.

Ofgem announced on 23 November 2023 that energy unit prices will rise in the January price cap period (Jan-Mar 2024). This means the price you pay for your energy will go up, and the average household bill² will be higher. However, current forecasts predict that prices could decrease in the middle of 2024 before rising again at the end of the year.

According to forecasts prices are expected to fall in April with a decrease in the summer before rising again towards the end of 2024. This means that right now you may find that fixed tariff deals appear to be more expensive than the current standard variable tariff price (SVT). However, as the fixed tariff deals will not increase with the price caps, you may save money over the full term of your contract if prices rise. Just be aware that this is not guaranteed and predictions can change over time to reflect changes in the energy industry.

The energy market has stabilised significantly but unexpected changes could happen at any time. Geopolitics has a huge influence on energy prices, so a further escalation in the war in Ukraine, the conflict in the Middle East or tensions rising further over Taiwan could see the wholesale gas price rise, which would eventually lead to higher bills again. Ongoing discussions over how the price cap is calculated and other energy legislation may also have an impact on energy prices in 2024, causing these predictions to change.

Is now the best time to fix my tariff?

Unfortunately, like you, we cannot see into the future - which means you can never be certain when the best time is to fix your energy tariff. We recommend instead weighing how much you value the certainty of a fixed price with the affordability of your fixed tariff quote.

If you feel that you can comfortably afford the energy price you are quoted for the next 1 to 2 years, then you may enjoy the security that comes with a fixed tariff. You will be protected from price increases, and can feel confident that your bills are within your budget for the duration of your contract. No more stress around price cap announcements, instead sit back and relax.

However, if you would prefer to wait and see how the market develops, you may be able to get a better quote in the future. Just be aware that this is not guaranteed, and you also risk your energy prices increasing. 

Ultimately, the decision to get a fixed tariff, and when, is up to you. There really is no right answer. So unless you stumble across a time traveller from the future, be wary of anyone telling you otherwise. (And let’s be honest, if you did, you’d be asking for lottery numbers not fixed tariff prices. We know we would!).

If you’re looking to join E.ON Next it’s quick and easy to get a quote. Already a customer? Login to your account dashboard to see what tariffs are available to you.

Fixed tariff not what you're looking for? You may want to consider Next Pledge, which guarantees your prices will always be £50* a year lower than Ofgem’s price cap (for an average dual fuel customer). Find out more about Next Pledge via your online account.

What about the EPG?

Since July 2023 you have no longer received government support from the Energy Price Guarantee (EPG), which kept the maximum energy price at £2,500 a year for an average household. No longer receiving this government support will not increase the cost of your bills. This is because the price cap is already below the current £3,000 (From 1 July 2023) threshold, so you are already paying less than you were under the EPG. This government scheme ends 31 March 2024.

Struggling to pay.

If you are struggling to pay your bills we are here to support you. From free debt advice from our partner StepChange, to grants from the E.ON Next Energy Fund that will help you pay your energy bills or replace essential appliances. Find out more about the support on offer and see if you are eligible for help with your energy bills.