Home Money New energy deal is 13% a year cheaper than Ofgem’s price cap: Is it worth signing?

New energy deal is 13% a year cheaper than Ofgem’s price cap: Is it worth signing?

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New energy deal is 13% a year cheaper than Ofgem's price cap: Is it worth signing?
  • Outfox the Market Deal Set for 12 Months, Beats Price Cap Predictions
  • The deal also has no early repayment charges, making it a solid option.

Outfox the Market has launched a new fixed rate energy deal that reduces average energy bills by up to 13 percent.

The Fix’d Dual Apr24 v1.0 deal offers electricity at around 13 per cent cheaper than Ofgem’s average price cap bill, and gas at 9 per cent cheaper.

For average gas and electricity usage, that works out to £1,543.94 a year – £146.06 cheaper than keeping the price cap – but exactly how much you pay depends on where you live and how much energy you use.

The deal, which launched this month, has a fixed duration of 12 months and has no early exit fees.

This makes it a tempting alternative to the current typical energy bill of £1,690 a year, Ofgem’s price cap level. So is it worth signing up?

Ofgem’s price cap limits how much energy companies can charge households in variable tariff energy deals, paying by direct debit, for gas and electricity units and ongoing charges.

Most households in the country were on fixed-rate, not capped-price, energy deals until energy prices began to rise in late 2021 and energy companies began to stop offering solutions.

This was because dozens of energy suppliers collapsed when rising energy prices forced them to buy energy for far more than they could charge consumers, thanks to fixed tariffs that fixed prices.

For households with standard meters, Ofgem’s price ceiling has been set at 24.5 pence per kilowatt-hour (kWh) for electricity and 6.04 pence per kWh for gas from April 1, with permanent charges of 60.1 pence and 31.43 p per day respectively.

These figures will apply until Ofgem resets its price cap in July and then again in October.

But the Outfox the Market Fix’d Dual Apr24 v1.0 deal charges 21.22 pence per kWh for electricity (13 per cent cheaper) and 5.55 pence per kWh for gas (9 per cent cheaper) .

However, it charges 60p per day in standing charges for electricity and 30.94p per day in petrol, making it only slightly cheaper than the maximum price standing charges.

Expert analysts at Cornwall Insight predict the average price-capped bill will fall to £1,559.61 a year in July, then rise to £1,636.44 in October and rise slightly to £1,634.20 in January 2025.

That means anyone on the Outfox the Market flat rate will save £15.67 a year between July and October compared to a capped-price bill, £92.50 between October and the end of 2024 and £90.26 during the first three months of 2025.

This assumes that Cornwall Insight’s predictions are correct and that this example home uses what Ofgem considers an average energy use, which is 2,700 kWh per year of electricity and 11,500 kWh of gas.

What are the alternatives to overcome the market agreement?

Unfortunately, there are few rivals for the Fix’d Dual Apr24 v1.0 tariff, as there are still very few competitive energy deals available that beat the capped price maintenance.

Money could only find one other energy deal above the ceiling price, from Eon Next.

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This is due to a lack of competition between energy companies, compounded by Ofgem policies designed to stifle the launch of any energy deal that is much cheaper than the norm.

E.on Next Next Pledge Rate

It is a variable tariff energy deal that promises to keep £50 below the maximum price for 12 months – around 2.9 per cent annual savings at current energy prices.

However, you will need to register to manage your energy account online and you will need to have a smart meter installed.

However, you may be able to find a cheaper fixed-rate energy deal if your supplier offers you a “secret” tariff.

Many energy companies have been striking deals that are cheaper than the cap price, but only for existing customers.

The companies are not required to make the details of these agreements public, so none do.

If you receive such an offer, be sure to check how the unit rate, ongoing charge and overall annual cost compare to what you pay now and what effect it will have on your energy bills in the future.

It’s also worth checking for early repayment charges, which penalize customers who want to close a deal early.

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