Households could save up to £173 a year by switching to fixed energy deal

With higher energy bills looming and warnings of worse to come in the new year, many households could save up to £173 a year by switching to a fixed deal.

Millions of households in Great Britain will face the highest energy charges in three years after it was announced that the government’s price cap will rise again in October. This will be the second increase in three months.

However, moving to a fixed tariff would enable people to avoid this increase and one that has been widely predicted for January. These tariffs offer a set standing charge and unit costs for a certain period; often one or two years.

Related: No more UK energy bills support likely before price cap rise

Gas and electricity prices will rise by 4% from 1 October under the new cap, after climbing 13% at the start of July. This will take the rate for 22 million households on default tariffs to the equivalent of £1,723 a year, based on typical gas and electricity usage, and will kick in just as many people will probably be turning the heating back on.

However, even the energy regulator for Great Britain, Ofgem, has gone into Martin Lewis mode, extolling the money-saving benefits offered by a fixed tariff.

“Savings are available by choosing a fixed tariff, which are available at £100 or more below the October price cap,” it says.

About 11m homes (35% of the total) are already on fixed tariffs and will not be affected by the rise announced this week. They will be protected from price increases until their current deal comes to an end.

Price comparison websites say many households could save decent sums by switching to one of the cheapest fixed energy tariffs on the market.

Doing a quick check using one of these sites will show you what is available for your household based on your personal usage.

At the time of writing there were plenty of fixed energy deals available that beat the new October figure, “offering households certainty over what they’ll pay through the coldest months, regardless of what happens to wholesale prices”, says Uswitch.com.

The cheapest is a fixed tariff from Fuse Energy priced at £1,550 a year for a typical-usage home – which is £173 below the October cap figure, and £113 below the current cap. This deal is available in various forms: there is one that lasts for 14 months – Fuse Energy August 2026 Fixed (14m) V1 – being offered by Uswitch and Confused.com, as well as Fuse Energy itself.

Meanwhile, MoneySuperMarket offers a version of it that is fixed for 18 months, called Fuse Energy August 2026 Fixed (18m) V10.

There are several other fixed deals available from suppliers including Co-op Energy, Octopus Energy, E.ON Next and Ecotricity that offer people typical savings (versus the October price cap) of more than £100 a year. Some of these deals are exclusive to one or more comparison sites but in many cases you can get them direct from the supplier.

The advice to consider switching to a fixed tariff has been given extra weight by the prediction that the pain is only going to get worse.

According to analysts at Cornwall Insight, bills are forecast to rise by a further 9% in January, just when temperatures may be at their lowest. If that happens, the typical household bill will climb by £149 to about £1,872 a year. However, the January 2027 figure will not be confirmed until November, and a lot could happen between now and then.

Before you switch, you will need to check how long remains on your contract and whether there are any exit fees, says Gareth Kloet at Go.Compare.

October’s cap would have been even higher if the government had not announced a temporary VAT cut on domestic electricity. This will reduce the tax from 5% to zero between 1 October this year and 31 March 2027, resulting in a £45 a year saving for a typical household (this has been reflected in the new cap).

The VAT cut will benefit those currently on fixed tariffs as well as those whose bills are pegged to the price cap – the discount will be automatically applied to people’s accounts by suppliers.

Many suppliers offer tariffs with cheaper electricity to smart meter customers for power consumed outside of peak times, says Ofgem, so it is worth asking about those.

Because the price cap is based on typical usage, aside from shopping around for a better deal, the best way to keep bills under control is to cut your energy use wherever possible.

You may want to check to see if you qualify for help, says Sarah Coles at the investment platform AJ Bell. Initiatives include the warm home discount scheme, which will reopen in October and is a one-off £150 discount off your electricity bill.