Cornwall Insight has warned that the fixed energy tariffs currently available are an average of £133 more than the predicted April Default Tariff Cap (price cap).
According to Cornwall Insight’s Domestic Tariff Report, the cheapest fixed-rate tariff of the 35 currently available in the market is £1,753 per year, £133 more than the market researcher’s most recent prediction for the April (Q2) price cap at £1,620 – 16% lower than the current cap.
Although the April price cap (announced by Ofgem in February) could still shift from Cornwall Insight’s prediction, the organisations noted that as the regulator is currently two-thirds into its observation winder – used to calculate the cap’s wholesale element, which is the biggest contributor to the final price – “substantial change is unlikely.”
At present there are six fixed tariffs only available to existing customers and 29 available to both new and existing customers, bringing the total to 35 available in the market, according to Cornwall Insight.
The Market Stabilisation Charge (MSC) – which requires all domestic suppliers that acquire a new customer to make a payment to the supplier losing a customer – was identified by the market researcher as part of the cause for a lack of lower-priced fixed-rate energy deals available in the market.
This requirement will end on 31 March 2024.
Additionally, Cornwall Insight noted that “suppliers’ hands are also tied” by the acquisition tariffs ban (BAT), preventing them from enticing new customers through cheaper deals than those on offer to existing customers.
“After a slow comeback, fixed energy deals have started to attract more customers, with the guaranteed rates proving increasingly appealing to those seeking to protect themselves from further economic instability,” said James Mabey, analyst at Cornwall Insight.
“With some fixed energy tariffs dipping below the existing price cap, it’s understandably tempting to sign up. However, there is a risk these deals might not translate to actual savings come April, when a significant decrease in the price cap is projected. It is important consumers weigh the immediate appeal of a slightly lower price against the potential for larger savings down the line.
“It is hoped that the end of the Market Stabilisation Charge will be a turning-point for fixed energy deals. With this burden lifted, suppliers will have greater flexibility to offer competitive fixed price tariffs, providing much-needed stability and peace of mind for struggling households.”