Ten fixed energy tariffs became newly available on the UK market in July 2023, double the five that were available across the first few months of 2023, according to the first Warm This Winter Tariff Watch report, produced by the End Fuel Poverty Coalition with Future Energy Associates (FEA)1. The same report found that the number of suppliers offering customer tariffs rose from 26 in April 2023 to 29 in July 20231.
"So far in July alone, this number has doubled, with 10 fixed tariffs newly available on the market."
The report also set out what it described as the best available terms from 1 July: a one year fixed tariff with an exit fee below £80, gas unit charges of 6.5 p/kWh with a gas standing charge of 29 p/day, and electricity unit charges of 30 p/kWh with an electricity standing charge of 52 p/day1. FEA said such a tariff, with an annual cost below £1,946 for a direct debit household with average consumption, might suit some high-use households1. It added that other customers were advised to stay on variable tariffs for now, and that the advice should not be seen as formal financial advice1.
The report's wider figures cover the cost of the default tariff. It said the profit suppliers are permitted to make on the average variable tariff customer rose from £27 in spring 2017 to a high of £130 in early 2023, and stood at £60 per customer at the time of publication1. Extrapolated across 29 million households, that permitted profit equates to £1.74bn over the next 12 months, the report said, excluding any profit from fixed tariffs and from Ofgem's Covid and Ukraine allowances1. Ofgem was looking to increase the permitted profit margin further, to as much as 2.4% from later in 2023, the report added1.
Regional variation in the default tariff was also reported. On electricity, the average standing charge was 56.85 p/day and the average unit rate 32.1 p/kWh, with Manweb highest for standing charge at 65.8 p/day and London lowest at 41.9 p/day; Seeboard had the highest unit rate at 33.2 p/kWh and Yorkshire the lowest at 31.1 p/kWh1. On gas, the average standing charge was 33.5 p/day, with Scottish Power and Scottish Hydro highest at 33.9 p/day (£124 a year); Swalec was the most expensive region for unit rates at 7.73p/kWh and East Midlands the cheapest at 7.34p/kWh1. Gas standing charges were unchanged from April to July at 29.11 p/day in every region1.
| Default tariff measure | Figure reported |
|---|---|
| Electricity average standing charge | 56.85 p/day |
| Electricity average unit rate | 32.1 p/kWh |
| Gas average standing charge | 33.5 p/day |
| Gas standing charge, all regions, April to July | 29.11 p/day |
Why it matters for households
A fixed tariff sets the unit rate and standing charge for a defined period, so the bill depends on how much energy the home uses rather than on later changes to the price cap. The report's figures show that the choice widened in July 2023 but that the terms attached to those deals varied widely, including on exit fees, which determine what it costs to leave early. For a household weighing fixed-rate energy tariffs, the difference between a fixed deal and the price cap turns on the unit rates and standing charges on offer against expected use, and on whether the exit fee would cancel out any saving from moving again.
The regional figures matter because standing charges are paid regardless of how much gas or electricity a home uses, so a higher daily charge raises the floor cost of supply in that area. The report said electricity standing charges were unchanged from April to July and gas standing charges were unchanged in every region, meaning households continued to pay record high standing charges through July, August and September1. It also said further data on the impact of standing charges would be published in future reports1.
What happens next
The report said campaigners plan to run the Tariff Watch report quarterly as the energy crisis continues1. Ofgem was looking to increase the permitted profit margin to as much as 2.4% from later in 20231. No further dated steps were reported.
Sources1 cited
- Energy suppliers could bank £1.74bn profit in next 12 months, endfuelpoverty.org.uk