By offering customers a discount on their bill for switching to a two-year fixed tariff, E.On is signalling that supplier competition is heating up.
Fixed Tariffs Regaining Popularity
As the price of wholesale energy stabilises, suppliers have begun to reinstate fixed tariffs.
When new and existing customers transfer to its Next Fixed 24-month fixed tariff online, E.On will credit their bills with £50.
Unique Switching Incentive
While the majority of energy providers provide a switching incentive for new customers, E.On is the only provider to offer one to clients who transfer to a fixed deal.
Fixed tariffs are near the Ofgem pricing limit, so users won’t save much on their monthly bills.
Potential Savings and the Changing Energy Landscape
Nevertheless, in the event that prices resume their ascent, as is widely anticipated, households that lock in their plans at this time may begin to save money compared to those who were on a standard variable tariff.
Currently priced at £1,952, E.On’s two-year fixed tariff customers will pay £118 annually more than they would have if they had utilised the adjusted price limit, exclusive of the £50 credit.
In August, Ofgem announced that the price limit for the average household would decrease from £2,074 to £1,923. At the same time, it altered its definition of “average” energy consumption, as individuals are now consuming less electricity due to increased costs.
The old assumptions keep the price limit at £1,923, while the new consumption figures lower it to £1,834.
E.On is among a limited number of providers that provide two-year fixed tariffs.
Two-year fixed contracts are typically more expensive due to the unpredictability of supplier price movements over the course of one year, much less two.
If one does not require the assurance of knowing the energy bill amount for the upcoming months, transferring may not be a worthwhile endeavour.
It is noteworthy to mention that Ofgem has transitioned from biannual price cap calculations to trimonthly calculations. Implying that any fluctuations in prices will be reflected in your account more promptly.
In addition to incurring £300 in exit fees, customers who wish to terminate their E.On agreement early and are enrolled in both electricity and gas will be ineligible for the £50 rebate if the cancellation occurs within 30 days.
Customers have the option to transition to E.On’s 2-year plan and qualify for the £50 credit by November 7th. E.On will automatically apply the credit 30 days after the tariff’s commencement date.
The deal is only available to direct debit households and not to pay on demand or pay as you go consumers. Additionally, the installation of a smart meter presents a barrier.
Customers of E.On Next are eligible for reductions of up to £150 off a boiler, in addition to EV home chargers, heat pumps, and solar panels.
Industry Expert Predictions
According to energy industry experts consulted by This Is Money, energy market competition will intensify this winter.
Martin Young, a utilities equities analyst at Investec, predicted that as the installation of solar panels and the use of electric vehicles continues to increase, suppliers will shift their focus to providing innovative tariffs.
“EV growth will be equivalent to the growth of charge point installations; if you have a wall-mounted charger, you probably want an innovative tariff so you can charge your vehicle during the day when it is likely to be less expensive.”
“A supplier who is willing to offer innovative tariffs is what you require.” We anticipate that there will be a degree of competition in that domain.