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Consumers should be wary about fixing their energy costs below Ofgem’s forthcoming price cap, an industry expert has warned.
Robert Buckley, head of relationship development at Cornwall Insight, was speaking to Utility Week in response to the news that So Energy is offering customers a fixed tariff that is cheaper than the regulator’s cap, following a significant dip in wholesale prices.
The 12-month deal will cost average consumers £2,047– £27 cheaper than July’s price cap for a typical household. It is available to existing So Energy customers, as well as a limited number of customers of comparison service Uswitch.com.
Asked whether he thought fixing tariffs now represented a good deal for consumers, Buckley said: “The market is incredibly volatile. In fact today, it’s gone up by a good 4-5% so any supplier putting out any kind of fix, they are doing so in a very volatile environment.
“The first thing to say is fixes are good because they help customers who want to budget, they will have certainty of that price for the 12 months.
“Whereas our cap numbers out for the next couple of quarters are below £2,000 at the moment, we have got no surety that that will continue.”
He added: “You’ve got to be a little bit careful in just taking the fix that you see against the average of the cap forecasts…”
Cornwall Insight’s latest forecasts, calculated from market closing prices on 12 June 2023, predict the cap is due to fall below £2,000 to £1,933 in Q4 this year, while rising slightly to £1,944 in Q1 2024.
Buckley also said that he did not think there will be a return to very cheap deals, akin to the ones available before the pandemic.
He said: “The Cornwall view on wholesale energy prices is that they are not going to go back to the levels that we saw before 2021, that may or may not be right.
“The other thing is we are now in a world where we have got a much tighter regulatory framework, there are much firmer expectations personally on the way that directors, management, conduct themselves and how their business plans show that they have got enduring business models.
“One would hope that competition would return as the market stabilises, but we’ve tried to get a framework where we have rational competition and not the irrational competition that we had, judging in hindsight.”
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