The second Warm This Winter Tariff Watch report, published on 1 October 2023, found 337 fixed price tariffs on the market that are more expensive than the Ofgem price cap then in force, with 206 of them still more expensive than the predicted January price cap1. The report was commissioned by the Warm This Winter campaign and produced with Future Energy Associates2.
Consumers on those tariffs pay more than the cap, and the report puts the average exit fee for leaving a fixed tariff early at £1381. Exit fees vary widely by supplier. Ecotricity charges the highest average, at £150, while Good Energy tariffs carry no exit fee at all1. Among the largest suppliers, 6% of British Gas tariffs have no exit fee, against 12% at E.ON, 14% at EDF and 15% at OVO1.
| Supplier | Average exit fee | Share of tariffs with no exit fee |
|---|---|---|
| Ecotricity | £150 | 0% |
| British Gas | £62 | 6% |
| E.ON | £29 | 12% |
| EDF Energy | £66 | 14% |
| OVO Energy | £37 | 15% |
| ScottishPower | £66 | 40% |
| Octopus Energy | £75 | 99% |
| Good Energy | £0 | 100% |
The report also states that energy firms' operating costs make up £242, an average of 13%, of customers' bills1. Within that, firms spend almost as much on marketing, including sponsoring football teams and event venues and making TV adverts (about 11% of operating costs), as on operating customer contact centres (about 12%)1. Operating costs feed into the standing charges households pay1.
On profits, the report says suppliers are expected to make an additional £140m over the next 12 months because of price cap changes that came into force on 1 October, taking projected 12 month profits to £1.88bn, an 8% increase on the first Tariff Watch report1. That equates to an average £64.70 profit per customer per year, up by £4.701. The first report, published in August 2023, had put projected profits at £1.74bn2.
"With energy prices subject to change, customers should exercise extreme caution when thinking about switching and fixing and we would call on companies to waive exit fees so people can switch easily to the cheapest tariff available."
Fi Waters, spokesperson for the Warm This Winter campaign, said the £242 per customer spent on operating costs "adds insult to injury for UK households struggling to stay warm this winter"1.
Why it matters for households
A fixed tariff sets unit rates and standing charges for a contract term, so the bill does not move with the cap. When the cap falls below the rates a household has fixed at, that household pays more than someone on a standard variable tariff, and leaving early can trigger an exit fee. The report's figures show how many fixed deals sit above the cap and how much it can cost to leave one, which is the trade-off at the centre of any fixed tariff versus staying on the price cap decision.
The operating cost figure matters because it sits inside standing charges, the daily amount paid whatever the usage. A household's control over its own bill is limited to usage and to the terms it signs up to, and the report's exit fee table shows those terms differ sharply between suppliers, including on when an exit fee is payable.
What happens next
The report says unit costs have fallen in recent months but are expected to rise again in January 20241. It identifies rates for a one year fixed tariff that would save money over the next 12 months: for a direct debit customer, electricity standing charge of 53p per day and gas 30p per day, with unit rates of 27p per kWh for electricity and 7p per kWh for gas1. It states that only one dual fuel fixed tariff on the market was below those levels, with prices correct as of 2 October 20231. Tariff Watch is described as a series of quarterly reports2.
Sources2 cited
- Fixed price tariffs could trap customers on higher bills, endfuelpoverty.org.uk
- Tariff Watch, warmthiswinter.org.uk