Fixed-rate energy deals have returned to the market as households brace for a sharp rise in the price cap next year. The energy price cap increased by 4 per cent on 1 October, meaning the average household paying by direct debit can now expect to pay around £1,723 annually. Energy suppliers are predicting the cap could surge to as much as £2,192 in January, significantly higher than a previous forecast of £1,999 a year from market forecaster Cornwall Insight based on figures from 28 September.
According to price comparison website Uswitch, there are currently 34 fixed deals priced below the predicted January rate. The cheapest available this week is a 24-month tariff from Outfox Energy, priced at £1,827 annually for a household paying by direct debit. This is £104 above October's price cap but £345 below the predicted January level, with exit fees of £100 per fuel. Molly Hudson, energy expert at Uswitch, noted that the forecasts for January suggest energy bills could jump by 26 per cent just as households use the most gas and electricity.
The return of fixed-rate deals marks a significant shift from the energy crisis that began in late 2021, when affordable fixed tariffs became scarce and many comparison sites paused their switching services. For years, the common advice was that most people would be better off on variable deals subject to the Ofgem price cap, leaving 22 million households locked into those arrangements. Energy suppliers had even pulled deals following the escalating conflict in the Middle East, but more than 20 are now available once again.
Hudson advised that fixing now would protect households from a significant jump at the exact point when weather is coldest and heating is working hardest. On a fixed tariff, unit costs and standing charges remain the same over the contract length, helping households budget predictably. Under October's price cap, unit costs stand at 26.32p per kilowatt-hour for electricity and 7.97p per kilowatt-hour for gas, with standing charges of 54.83p and 29.68p per day respectively. However, EDF Energy, which is predicting the January cap will reach £2,192, said its confidence in that forecast is low, as the market can easily be influenced by international events and political tensions.
For savers and households on variable-rate tariffs, locking in a fixed deal now could protect against further sharp rises in January and provide certainty over monthly bills during the winter months when energy use peaks. Switching to a fixed tariff from a variable one means your bill still depends on how much energy you use, but the unit rate per kilowatt-hour and standing charges will not change for the duration of the contract.