Home Money British Gas unveils energy deal promising to beat Ofgem price cap until at least July

British Gas unveils energy deal promising to beat Ofgem price cap until at least July

by Elijah
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Price destroyer?: British Gas's new energy deal promises to beat the price cap, but not forever
  • Britain’s largest energy company has a new tariff that promises to reduce the price cap.
  • The deal only promises to save households money on energy bills through July

British Gas has launched a fixed-rate energy deal that promises to beat Ofgem’s price cap until at least July.

Britain’s biggest energy company has introduced its Price Promise tariff, which costs £1,699 a year for the average dual-fuel home.

That’s £229 below Ofgem’s current price cap level of £1,928 a year.

The selling point of the agreement is that it also promises to exceed the maximum price starting in April, when Expert analysts at Cornwall Insight say this figure will be reduced to £1,620 a year.

Price destroyer?: British Gas’s new energy deal promises to beat the price cap, but not forever

However, this price reduction agreement only applies for the first five months, or one-third of the total duration of the 15-month agreement.

After that point, British Gas customers can end up paying more than any price-capped tariff and face high exit fees for leaving early.

Catherine O’Kelly, British Gas, said: “We are always looking for ways to help our customers save and we want to ensure they feel the benefits of lower energy costs as soon as possible and can take advantage of them while using more energy in the home. winter period.

“They also have peace of mind that if the peak price drops in April and is cheaper than this rate, we will lower our rates to beat it.”

What is Ofgem’s maximum price?

The price cap set by energy regulator Ofgem limits how much energy companies can charge customers in variable tariff deals.

Most homes are now on variable rate energy tariffs due to an extreme shortage of cheap fixed rate deals.

The price cap works by limiting how much an energy company can charge customers for units of energy and its ongoing charge.

But it doesn’t limit how much customers pay overall, so bills will vary.

Is the new agreement good?

To determine if the British Gas deal is cheaper than your current deal, use a price comparison tool on energy company website.

An example of a two-bedroom, two-person home currently paying £131 per month for gas and electricity is listed at £102.63 per month with the Price Promise offer, a saving of £28.37 per month.

But of course, that saving only applies until April, when Ofgem resets its price cap again.

British Gas has not said how much it will charge customers for the Price Promise tariff last April, but promises to beat whatever the new price cap is.

That means customers will pay a rate below the maximum price until the maximum price is reset again, in July.

Beyond that point, British Gas has made no promises that its tariff will exceed Ofgem’s price cap.

That could mean customers who agree to the Price Promise deal today risk paying rates above Ofgem’s price cap for up to 10 months, as the deal is set for 15 months.

Exiting the Price Promise agreement before the end of the 15 months means paying quite high exit fees.

What are the departure fees?

Exit rates for the Price Promise tariff are £75 each for gas and electricity.

This is high by historical standards, when departure fares typically maxed out at £30 per fuel, and many deals didn’t include them at all.

Unfortunately, fuel output charges of £75 are about average now, as energy companies have been increasing these charges.

There are no exit fees for the Price Promise if you switch to another British Gas fixed tariff, although these fees may be even higher with the energy company’s other fixed tariffs.

For example, exit fees are £200 each per fuel on British Gas’ The Fixed One 24M v5 energy tariff.

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