New energy supplier launches for the first time in years and you could save over £70 – but there’s a major catch
A NEW energy supplier has entered the market for the first time in over 18 months after dozens of providers went bust.
Fuse Energy, founded by two ex-employees of the banking app Revolut, is offering customers a brand-new electricity tariff.
The deal would cost the average household £989.35 a year thanks to a low standing charge.
It would mean that a typical customer who opts to switch their electricity bills from another provider would pay £77.18 less per year.
However, there’s a major catch to Fuse Energy’s offering.
Notably, new customers need to download the supplier’s app on the App Store or Google Play.
This is the only way for newbies to sign up to the tariff.
And if you still rely on gas to heat your home and fuel cooking appliances you’ll also need to take on a gas-only tariff with another supplier.
Kara Gammell personal finance expert at MoneySuperMarket said: “The energy market has been hibernating for over 18 months, so it’s a sign of hope on the horizon as consumers are starting to be provided with more options.
“This new offering from Fuse Energy could save you a considerable amount on your electricity over the term compared to today’s energy prices.
“But, when considering any kind of tariff, take a moment to think about if it’s right for you.”
Under Ofgem’s July price cap, a typical household on a supplier’s default gas and electricity tariff pays no more than £2,074 a year.
Right now, 29million customers on the standard variable tariff (SVT) pay roughly 30.1p per kilowatt hour (kWh) for electricity and 7.5p per kWh for gas.
A standing charge of 52.97p for electricity per day and 29.11p for gas per day is also applicable.
This means that the average household using 2,900 kWh of electricity per year would pay roughly £1,066.53.
But Fuse Energy’s new tariff charges customers 30.38p per kWh for electricity and a daily standing charge of just 29.68p.
This means that the average household using 2,900 kWh of electricity per year would pay roughly £989.35 – £77.18 less than those on Ofgem’s capped SVTs.
Natalie Mathie energy expert at Uswitch said: “Fuse Energy is launching as an electricity-only provider, so you can’t directly compare overall costs with the price cap which refers mostly to dual fuel customers.
“While the cost per unit of electricity is marginally higher than the price cap, the standing charge appears to be cheaper, which will help towards lowering bills.
“A reduced standing charge will be appealing to low consumption households, as more of your energy bill will be directly related to how much energy you use.
But it’s always important to understand that this is a variable tariff, so these prices can go up as well as down.
Ofgem’s energy price cap will be reviewed again later this year.
The regulator used to set the price cap every six months. But since August last year, it now reviews the cap on unit rates for those on the default tariff every three months.
This means that annual energy bills may drop further into 2023 when the next price cap comes into force in October.
When asked if it’s wise to switch to Fuse Energy’s tariff now, Kara said: “It’s not a straightforward question because energy prices remain uncertain, which means deals could rise or fall in price in the coming months.
“One benefit of switching now is that you’ll start to make savings straight away.
“But price is one consideration alongside other factors like customer service.
“So, waiting for more other offers to become available could outweigh any short-term savings.”
How can I spot a good deal?
Since July 1, customers on the SVT tariff, which is protected by Ofgem’s price cap, pay the following typical rates:
- 7.51p per kilowatt hour (p/kWh) for gas
- 30.11p/kWh for electricity
- A standing charge of 29.11p per day for gas
- A standing charge of 52.97p per day for electricity
It means that a household with typical usage can expect to pay £2,073.98 a year.
If you’ve been offered rates and/or standing charges below this level, it’s worth considering the switch.
Be aware that if you want to exit a fixed energy deal, you may have to pay hefty exit fees.
How do I calculate my bill?
To calculate how much you pay on your current deal, you will need to find out both your unit rate for gas and electricity and the standing charge for each fuel type.
The unit rate will usually be shown on your bill in p/kWh.
The standing charge is a daily charge that is paid 365 days of the year – irrespective of whether or not you use any gas or electricity.
You will then need to note down your own annual energy usage from a previous bill.
Once you have these details you can work out your gas and electricity costs separately.
Multiply your usage in kWh by the unit rate cost in p/kWh for the corresponding fuel type – this will give you your usage costs.
You’ll then need to multiply each standing charge by 365 and add this figure to the totals for your usage – this will then give you your annual costs.
Divide this figure by 12 and you’ll be able to work out how much you should expect to pay each month from July 1.