Return of cheaper energy deals delayed again – but it’s good news for loyal customers --[Reported by Umva mag]

A BAN preventing energy firms from offering discounted energy deals exclusively to new customers could be extended again.

This week, the energy regulator has launched a new consultation, considering prolonging the ban until March 2026.

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The ban on acquisition-only energy tariffs, or BAT, was introduced in April 2022 to eliminate the often risky short-term discounted tariffs designed to entice customers to switch suppliers.

In March, energy watchdog Ofgem extended the BAT until 31 March 2025, at which point it was expected to end.

As a result, energy companies are prohibited from offering lower prices to new customers unless they provide the same deals to existing customers.

While it benefits loyal customers, who are not penalised for staying with their current supplier, experts have previously warned that it stifles market competition.

The latest consultation, open until November 6, will seek opinions from stakeholders on whether the ban should be extended further.

A spokesperson for Ofgem said: “Earlier this year we confirmed the ban on acquisition-only tariffs would remain in place until March 31, 2025, and our intention to consult on retaining it beyond this date.

“We look forward to hearing views from the public, consumer groups and charities, and industry on this proposal, and will consider all responses in our decision making.”

Ofgem plans to announce its decision in November 2024.

Many campaigners, including consumer champion Which?, had long advocated for the extension of the BAT to protect existing customers before the 2025 extension was confirmed in July.

In a letter to Ofgem, Which? and several energy suppliers warned of the risk of “a return to a market which discriminates against loyal customers”.

They also highlighted that lifting the ban could adversely impact customers in debt, who cannot switch suppliers and cannot access better deals with their current firm.

However, not everyone supports the ban. 

Consumer champion Martin Lewis has regularly voiced his opposition to it, arguing for the reintroduction of acquisition tariffs.

He believes that these tariffs would bring cheaper gas and electricity deals to the market.

Back in May, when the Ofgem floated the idea of lifting the ban, Martin Lewis said: “The energy market is broken.

“We need anything possible right now to stimulate competition and bring prices down.

“In March, I was staggered when Ofgem told me ‘there is evidence that removing the acquisition only tariff ban would benefit consumers’, but didn’t remove it ‘in case it was moving too quickly’.

“I disagreed and said we should throw the kitchen sink at getting people cheaper deals. So, this is better late than never.”

However, considering the broader energy market, several deals are available that could help you save money by switching providers.

TIME TO FIX?

In recent months, energy firms have started introducing price cap-beating fixed energy deals, though they’re nowhere near the levels seen before the energy crisis.

As prices went up, these tariffs were pulled as they couldn’t beat the price-capped standard tariff, which around 28 million households are currently on.

Fixed deals work to protect customers from bill hikes if Ofgem were to increase the price cap in the future.

However, you may risk paying more if Ofgem’s energy price cap continues to fall in the coming months.

You’re also likely to face hefty exit fees worth up to £150 to exit your contract early.

Several major suppliers, including British Gas, Octopus and Ovo Energy, are now offering cheap fixed deals.

At the moment, those on the standard variable tariff (SVT) have their rates capped by Ofgem at the following levels:

• 5.48p per kilowatt hour (p/kWh) for gas
• 22.36p per kWh for electricity
• A standing charge of 31.66p per day for gas
• A standing charge of 60.99p per day for electricity

For a typical household that uses an average of 11,500kWh of gas and 2,700kWh of electricity every year, these rates will cap bills at roughly £1,717.

As this is only an estimate for a typical household, you’ll pay more if you use more energy.

But if you’re offered a fix lower than October’s price cap, it’s always worth considering.

For example, Outfox the Market currently offers its Fix’d Dual Oct24 v4.0 tariff, which costs a typical household £1,566 a year – £151 less than Ofgem’s price cap.

This comes with a £25 exit fee per fuel – so £50 if you lock in with a duel fuel tariff.

Up next is SO Energy’s So Sweetcorn One Year – Green tariff costs a typical household £1,622 a year – £95 less than the price cap.

It’s important to consider that Ofgem’s price cap will be reviewed again in November, as it now changes every three months.

It means that bills could change again from January 1.

Remember to always compare prices before switching, as energy tariffs vary widely, and costs differ depending on where you live.

What are the alternatives?

Customers unwilling to commit to long-term fixed energy deals may want to consider flexible tariffs.

Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: “These will almost always be at or below the price cap.”

For example, E.ON Next‘s Pledge variable tariff offers a fixed discount of around three per cent on the price cap rates for 12 months.

It will save the average household around £50 a year but comes with a £50 exit fee if you switch before the year ends.

The deal is available to both new and existing customers.

EDF Energy’s Ensure Tracker works in a similar way and offers a £50 discount off the price cap’s standing charges for 12 months.

For a bigger reward but at a higher risk, Octopus Energy offers two variable tariffs which track wholesale gas and electricity costs.

Customers on the Octopus Tracker see their prices change daily, but unit rates have remained consistently lower than the price cap in recent months.

The Agile Octopus tariff works similarly to the Octopus Tracker, but the main difference is that the former’s prices change every half hour.

Remember that those wishing to switch to any of these tracker tariffs must have a smart meter.

What energy bill help is available?

There's a number of different ways to get help paying your energy bills if you're struggling to get by.

If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.

This involves paying off what you owe in instalments over a set period.

If your supplier offers you a repayment plan you don’t think you can afford, speak to them again to see if you can negotiate a better deal.

Several energy firms have grant schemes available to customers struggling to cover their bills.

But eligibility criteria vary depending on the supplier and the amount you can get depends on your financial circumstances.

For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.

British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.

You don’t need to be a British Gas customer to apply for the second fund.

EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.

Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).

The service helps support vulnerable households, such as those who are elderly or ill, and some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you’re struggling.

Get in touch with your energy firm to see if you can apply.

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