Energy tariff £350 below cap tipped to spark war on bills

HOPES of an energy price war have been triggered following the launch of a tariff £350 a year cheaper than the current cap.

The fixed-rate deal from EDF is the cheapest since October 2021 – before the energy crisis and price spike caused by the war in Ukraine.

The 12-month tariff works out at £1,581 a year based on typical use, which is the equivalent of £347 a year less than the current cap. It is also £109 – 6.5 per cent – less than the new lower price cap of £1,690 that comes into effect on April 1.

Industry insiders believe rival firms will try to beat the deal, potentially bringing relief to millions of households.

Existing EDF customers can access the new deal directly with the company. Others will be able to sign up through the comparison site Uswitch.com. It comes with an exit penalty of £75 per fuel if customers choose to switch to a rival supplier within the 12-month term, but this will not apply if switching to another EDF fixed tariff.

According to James Mabey, an analyst at energy industry experts Cornwall Insight, there is ‘an increase in fixed-rate tariffs hitting the market, providing households with the assurance bills won’t unexpectedly spike in the coming year’.

However, he warned that households should exercise caution before they commit to any fixed deal, explaining: ‘While short-term savings may seem enticing, if the price cap drops later in the year you may end up paying more over the duration of the contract.

Will Owen, energy expert at Uswitch.com, said: ‘It’s great to see some competition in the market again, especially from a highly rated supplier such as EDF. We’re hopeful this will encourage more suppliers to price competitively to give customers financial relief who have been under the cosh for years.’

He also claimed there will be a rush to benefit from the deal, saying: ‘We don’t expect this to be available for long, and EDF reserves the right to remove the offer at any time.’

Emily Seymour, content editor at Which?, added: ‘With prices falling and predicted to remain fairly stable for the rest of 2024, hopefully more competitive deals may become available in the coming months.’

‘Customers are under the cosh’