Martin Lewis: Are you an E.on customer? Here's an easy way to cut what you pay for energy
Many E.on Next customers could make an easy saving on their energy bills over the next year by switching to the firm's 'Pledge' tariff, according to MoneySavingExpert.com founder Martin Lewis, who shared the tip in a new video briefing today (Thursday 21 September).
You can watch Martin's full explainer below. For a full rundown of your options, see Stick, switch or fix your energy tariff?
Watch: Martin Lewis explains how E.on Next's tracker tariff works and why it's worth considering
"Are you an E.on energy customer? If you are, this is an important heads up because there's an easy way many of you can pay less for the energy that you use over the next year. I'm Martin Lewis from MoneySavingExpert.com, and I just wanted to bash out this quick video briefing about the E.on Next Pledge Tracker version two tariff that's only available for E.on's existing customers.
"So what's this all about? Well, the reason I'm interested in it is it gives you a discount off the Price Cap. So there's a big decision for people at the moment whether they want to get a fixed tariff or not. A fixed tariff locks you in to pay a set rate over the next year, whether that will work out depends on predictions of what's going to happen to the Price Cap.
"This isn't one of those. This is something different, which is why it needs an explainer. This is, for one year, a fixed discount off the Price Cap. The discount will be roughly 3%. It has regional variances and it depends on usage. But let's say it's going to be roughly 3% cheaper. So you pay 3% less than whatever the Ofgem-set Price Cap is.
"Now the Price Cap is due to drop by 7% on the 1 October. That's locked in. It's then due to rise, or it's predicted to rise – I should be careful, that's not set in stone – by around 6% on the 1 January. And then the crystal ball prediction on the 1 April is it will drop again. But whatever happens to the Price Cap, if you're on this particular tariff, you will pay less than the Price Cap.
"So the decision about whether to fix or not is quite tricky. And there’s a full ‘Should I fix?’ guide on MoneySavingExpert.com where you can read that, but if you're not sure what to do and you're just going to sit on the Price Cap and this suits you, well, it's a no brainer because it's cheaper than the Price Cap.
"So whatever the Price Cap is, wherever it moves up or down, you're going to be paying slightly less. How much does 3% equate to? Well, on that mythical typical usage figure, which is mostly nonsense, but just to give you an idea, it's around £50 cheaper a year. Let me give you some of the details of the tariff.
"It's dual fuel or electricity only, you must pay by direct debit. You must have or get a smart meter to get it. And that might put some of you off. For others, that won’t be a problem. If you choose to leave within the year, you'd pay £25 per fuel. So £25 electricity, £25 per gas, early exit penalties. You apply on the website.
"This isn't for everyone, but certainly if you're sticking with E.on and you're planning to stay on the Price Cap or don’t know what to do, well, this is a pretty easy way just to pay less for the energy that you use. I hope this helps. Far more details on MoneySavingExpert.com as always."
E.on Next's Pledge tariff is only available to existing customers who pay by direct debit
Here are the key details of the deal:
- Tariff: E.on Next 'Next Pledge Tracker 12m V2', available for existing E.on dual-fuel and electricity-only customers.
- Who can get it: Existing E.on Next customers who apply through its website. You need to be logged in, and navigate through to 'tariff renewals' to get a quote. You must pay by direct debit and agree to get smart meters if you don't already have them.
- Price: This tariff isn't fixed and instead will track at around £50 a year (3%) below the Price Cap on average. From Sunday 1 October, someone with typical usage will pay £1,870 a year on this tariff compared with £1,923 a year on the Price Cap, though your actual bill and rate will depend on usage and region.
- Early exit fees: You're locked into this tariff for a year and you'll have to pay £50 for dual-fuel or £25 for electricity-only to leave early. The previous version of this tariff had no exit fees, but this is no longer available to new signups.
E.on Next's tariff will save customers £50 a year on average compared with the Price Cap
If you're on a standard tariff, the rates you pay are governed by the Energy Price Cap. This is set by energy regulator Ofgem and changes every three months in January, April, July and October. The current Price Cap rates cover the period from 1 July to 30 September 2023. The next Price Cap rates will cover 1 October to 31 December 2023.
As prices vary by the region we can't publish every one, but as an example, below are the unit rates that will be in place for it and the Price Cap from 1 October for the South west region. Do check how it'll work for your region before signing up.
|E.on Next 'Next Pledge' rates (1)||
Energy Price Cap
|Gas||Unit rate per kilowatt hour (kWh)||6.88p||7.10p|
|Daily standing charge||29.11p||29.11p|
|Electricity||Unit rate per kilowatt hour (kWh)||26.26p||27.18p|
|Daily standing charge||58.28p||58.70p|
Some have complained about rates being higher than quoted when they sign up to Eon's Pledge tariff - but you will get the cheaper rates come 1 October
After we published this story, a number of existing E.on customers have been in touch to complain about confusing pricing - stating that the rates they are provided in confirmation emails they receive when they sign up to the tariff are higher than those quoted on E.on's website.
E.on told MoneySavingExpert.com that there is indeed a mismatch between the prices customers are quoted online and what they receive in confirmation emails. It told us, however, that the prices customers are quoted online are "accurate and reflect the price they will pay from 1 October. The price they received in the interim represents the price before 1 October. We realise that this appears confusing to some customers and we are working to make the experience clearer."
This means that if you sign up to the tariff before the 1 October, when the new lower Price Cap starts, you will be given higher prices that relate to the current Price Cap that was introduced on the 1 July. This should change on Sunday, but it's important check your account on or just after that date to ensure the new rates are reflected in your tariff.
If you were planning to stay on E.on's price-capped tariff, this deal is a no-brainer
If you're planning to stay on the Energy Price Cap and you're already an E.on Next customer this deal is a no-brainer as you're guaranteed to pay less than the Cap – regardless of how it changes in future.
We know that the Energy Price Cap will fall by 7% from Sunday 1 October compared with July to September rates. It's then predicted to rise slightly from 1 January 2024, then fall in April and again in July. We don't yet know any unit rates beyond 31 December 2023 but we've predictions from analysts based on current wholesale prices, which are used to determine the Cap.
Here's how E.on Next's tariff compares with the Energy Price Cap both now and compared with predictions, based on typical use:
Price Cap dates
Typical annual dual-fuel direct debit bill
E.on Next 'Next Pledge' tariff (1)
Current Energy Price Cap
New Energy Price Cap
1 October 2023 to 31 December 2023
|1 January 2024 to 31 March 2024
Price Cap prediction
|1 April 2024 to 30 June 2024
Price Cap prediction
|1 July 2024 to 30 September 2024
Price Cap prediction
|£1,917 (2)||£1,867 (3)|
|Based on annual gas consumption of 12,000kWh and annual electricity consumption of 2,900kWh. (1) Assumes the Pledge tariff remains £50 below the Cap as promised. (2) According to the latest prediction (on 25 August 2023) from analysts at Cornwall Insight. (3) Price is based on being £50 less than Cornwall's Price Cap predictions.|
What's trickier to compare is whether you could save more by fixing (or by waiting and then fixing later)
- You fix your tariff now. E.on doesn't currently offer a fix that's likely to be competitive. Its current cheapest is a 12-month deal that's about 2% less than July's Price Cap. However, our current best guess, based on today's predictions of the Price Cap over the next 12 months, is that only fixes more than 5% below July's Price Cap are likely to be worth considering (and that number also depends on current predictions being right).
Some other suppliers are offering fixed deals right now – a few are open to all, such as those offered by British Gas, Sainsbury's Energy, Shell Energy and So Energy, but most are for suppliers' existing customers only, such as those offered by Octopus Energy and Ovo (though you can switch to their standard variable tariffs to access the fixed deals). Only the Octopus fix is likely worth considering – but for full info on suppliers' fixed deals, plus our 'Is this fix worth it?' calculator, see Should you fix?
Yet fixes provide price certainty, and if the Price Cap were to rise higher than all predictions, what you pay on the E.on Next Pledge tariff would also rise (whereas a fix would see you keep the same rates till it ended).
- You stay on E.on's price-capped tariff in the hope that a much cheaper fix comes along in a few months. There's no guarantee a tariff like this will launch in the next 12 months. However, if it does, in this scenario, you'd be free to move to it without paying exit fees. But you would have been overpaying compared with the Pledge tariff until that point.
- You take the E.on Next Pledge deal (and are willing to pay the exit fees to move to a much better deal). Paying the £25 per fuel exit fees to secure a much bigger saving down the line may make economic sense for some.
However, in the scenario above – staying on E.on's price-capped tariff – you wouldn't have had to pay them. This one's very hard to predict, as whether you'd be worse off depends on a) if a tariff does come along with a much bigger saving, b) when in the 12 months that tariff comes along, and c) your usage (the unit rates are lower on the Pledge deal, so if you use more, you save more compared with the Price Cap).
In the scenario of taking the Pledge tariff and being willing to switch later, if you did lose out, it'd likely be not by more than a few tens of pounds.
What you should be doing now to help yourself
- Try to cut your energy usage. There are lots of ways to easily reduce what you use. Try our interactive energy-saving tool, where you can click around a virtual house to find out how much appliances cost to run and how to cut back. Also, see our Energy saving tips guide, the Energy mythbusters guide for less clear-cut issues, and our Heat the human guide.
- Check you're paying the right amount. You can use our Energy Price Cap Calculator to see how much you'll pay from Sunday 1 October.
- Have you got all the help you qualify for? If you can't pay, check our Struggling to pay – energy help guide, which has info on all the cost of living support schemes.