20 Feb 2024

How to get out of your fixed energy tariff

Will you be paying too much when the energy price cap drops?

Sarah IngramsPrincipal researcher & writer

The price cap on energy bills is expected to drop by around 16% on 1st April, according to the latest predictions. We're expecting to find out the new rates this Friday 23rd February.

If you've fixed your energy prices over the past few months, you could end up overpaying by hundreds of pounds, compared to those paying the price-capped figures.

Last month several big energy suppliers offered fixed deals costing between £1,800 and £1,900 a year, for the typical gas and electricity user.

If you switched to one of them you'll be saving money right now, compared with the current price-capped rate, which works out at an annual £1,928 for the typical user.

But the price cap is expected to be lower between April and June 2024, and for the rest of the year.

If you're on a fix, and using the typical amount of energy, you'd pay at least £45 more than you need to in the three months from April to June. If the price cap stays at a similar level for the next year, you'll overpay by at least £180.

Read on to find out how to leave your fixed deal, or know more about the energy price cap.

Are you paying too much for energy?

If you've fixed an energy tariff, compare the rates you're paying against the new price-capped rates, when they're announced.

Look at the daily standing charge and unit rate (the price you pay per kilowatt hour of energy), rather than the overall amount. What you pay depends on your usage so figures based on 'typical users' won't be exactly right for you.

If your fixed deal's rates are higher, you'll be paying more than those on variable tariffs from 1st April.

It might not be straightforward to work out - for example, if the new price-capped unit rates are lower than what you currently pay but the standing charge is higher.

If so, multiply your current rates by your energy use over the past year in kWh. Then multiply the new price-capped rates by your use to compare the results.

You can find your energy use in kilowatt hours in your online account, app or statement.

Can't find them? See how to estimate your energy use.

Can you leave your fixed energy tariff?

Fixed deals set the rates you pay for the length of your contract. They're often 12 months long, but we've also seen two and three-year fixed deals.

You can choose to leave a fixed deal but will often need to pay an exit fee. If so, this should have been made clear when you signed up.

Do you have to pay to leave your energy deal?

Check your online account, app or latest statement if you're not sure whether your tariff has a fee to leave early. It should state the end date of your tariff and any exit fee you'd have to pay to leave before then.

Exit fees for a 12-month fixed tariff are typically £75 per fuel.

Exit fees for longer tariffs are higher. We've seen a £200 per fuel cost of leaving a two-year fixed tariff early.

You don't have to pay the exit fee to leave if you're in the last 42-49 days before the tariff ends.

Should you switch energy supplier to save money?

Take into account any fees you'll have to pay to leave your tariff early when working out whether you could save money by switching.

Here's an example of what we mean:

Current dual fuel tariff cost: £1,928
New, cheaper variable tariff cost: £1,620
Exit fee: £150 (£75 per fuel)
Annual saving: £158 (cost difference between current and new tariffs, minus exit fee)

If you decide to switch back to a variable tariff that follows the price cap, bear in mind it's currently expected to drop a little further in summer (1 July), and increase slightly again in autumn (1 October), but remain lower than predicted rates for 1 April. How it changes over the 12 months could affect your savings.

Use our energy bill calculator to get an estimate of how much your bills will be on a price-capped tariff over the next year.