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

A new fixed-rate energy deal has launched from Outfox the Market that undercuts average energy bills by up to 13 per cent.

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

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

The deal, which launched this month, is fixed for 12 months and has no early exit fees.

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

 The Ofgem price cap limits how much energy firms can charge households on variable-rate energy deals, paying by direct debit, for units of gas and electricity and standing charges.

Most households in the country had fixed-rate energy deals, not price-capped ones, until energy prices began rising in late 2021 and energy firms began to stop offering fixes.

This was because dozens of energy providers collapsed when the rise in energy prices meant they were being forced to buy power for far more than they could charge consumers, thanks to fixed-rate tariffs that locked in prices.

For homes with standard meters the Ofgem price cap has been set at 24.5p per killowatt-hour (kWh) for electricity and 6.04p per kWh for gas since 1 April, with standing charges at 60.1p and 31.43p a day respectively.

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

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

However, it does charge 60p per day in electricity standing charges and 30.94p for gas, making it only slightly cheaper than price-capped standing charges.

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

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

That is assuming Cornwall Insight’s predictions are correct, and that this example household uses what Ofgem deems average energy use, which is 2,700 kWh a year of electricity and 11,500 kWh of gas.

What are the alternatives to Outfox the Market’s deal?

Sadly, there are few rivals to the Fix’d Dual Apr24 v1.0 tariff, as there are still very few competitive energy deals available that beat staying put on the price cap.

This is Money could only find one other energy deal that beat the price cap, from Eon Next.

This is due to a lack of competition among energy firms, worsened by Ofgem policies designed to stifle the launch of any energy deals that are much cheaper than the norm.

E.on Next’s Next Pledge tariff

This is a variable-rate energy deal that promises to stay £50 below the price cap for 12 months – about a 2.9 per cent a year saving at current energy prices.

However, you will need to sign up to manage your energy account online, and must have a smart meter fitted.

You may be able to find a cheaper fixed-rate energy deal if your supplier offers you a ‘secret’ rate, however.

Many energy firms have been bringing out deals that are cheaper than the price cap, but only for existing customers.

The firms are not obliged to make the details of these deals public, and so none do.

If you get such an offer, make sure to check how the unit rate, standing charge and overall yearly cost compare with what you pay now, and what energy bills are likely to do in the future.

It is also worth checking for any early repayment charges, which penalise customers who want to leave a deal early.