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New energy deal – 3% off energy bills available for almost anyone for a year

E.on Next has opened its 'Pledge' variable tariff to new, as well as existing, direct debit customers. It promises a 3% discount (about £50 a year on typical use) on the Price Cap for a year. We've full info below. 

Watch: Martin Lewis explains how E.on Next's tracker tariff works and why it's worth considering

Here's MoneySavingExpert.com founder Martin Lewis explaining exactly how the E.on Pledge tariff works, plus whether it's worth fixing your energy. For a full rundown of your options, see Stick, switch or fix your energy tariff?

Update: Since first publishing this story in December 2023, analysts at Cornwall Insight have updated their Price Cap forecasts and now predict a 15% drop over the next year. This means some of the info about fixing your energy tariff in the clip below (which was recorded on 12 December, before these new predictions) no longer applies. The info in the rest of this story was updated on 23 January 2024, and for the latest on fixing your energy tariff, see our Should you fix? guide.

Martin Lewis explains how E.on's tracker tariff works.
Embedded YouTube Video

From The Martin Lewis Money Show Live on Tuesday 12 December 2023, courtesy of ITV. All rights reserved. Watch the full episode on ITV Hub.

E.on Next's Pledge tariff is now available to new and existing customers

Here are the key details of the deal:

  • Tariff: E.on Next 'Next Pledge'.
  • Who can get it: New and existing dual-fuel and electricity-only customers who pay by direct debit. Existing customers need to be logged in, and then navigate through to 'tariff renewals' to get a quote. New customers can get a quote and apply through its website.
  • Price: This tariff isn't fixed and instead will track at about £50 a year (3%) below the Price Cap on average. Currently, someone with typical usage will pay £1,878 a year on this tariff compared with £1,928 a year on the Price Cap, though your actual bill and rate will depend on usage and region.
  • Smart meters: You must have them, or agree to get them, to get this deal.
  • 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.

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 regulator Ofgem and changes every three months in January, April, July and October. The current Price Cap rates cover the period from 1 January to 31 March 2024.

As prices vary by region, we can't publish every one, but below are the average unit rates that will be in place for the 'Pledge' tariff and the Price Cap. Do check how it'll work for your region before signing up.

E.on Next's tracker deal: Average standing charges and unit rates

  Rates from 1 January to 31 March 2024
E.on Next 'Next Pledge'  Energy Price Cap
Gas  Unit rate per kilowatt hour (kWh) 7.20p 7.42p
Daily standing charge 29.60p 29.60p
Electricity Unit rate per kilowatt hour (kWh) 27.69p 28.62p
Daily standing charge 53.35p 53.35p

Assumes payment by direct debit and includes VAT (at 5%).

If you were planning to stay on the standard price-capped tariff, this deal is a no-brainer

If you're planning to stay on the Energy Price Cap, this deal is a no-brainer as you're guaranteed to pay less than the Cap – regardless of how it changes in future.

Here's how E.on Next's tariff compares with the Energy Price Cap now and with future predictions, based on typical use:

How E.on Next's tariff compares with Energy Price Cap predictions

Price Cap dates

Typical annual dual-fuel direct debit bill

E.on Next 'Next Pledge' tariff (i)

Current Energy Price Cap

1 January 2024 to 31 March 2024

£1,928

 

£1,878
1 April 2024 to 30 June 2024
Price Cap prediction
£1,620 (ii)

£1,570 (iii)
1 July 2024 to 30 September 2024
Price Cap prediction
£1,497 (ii) £1,447 (iii)

1 October 2024 to 31 December 2024

Price Cap prediction

£1,542 (ii) £1,492 (iii)
Based on new annual gas consumption of 11,500kWh and new annual electricity consumption of 2,700kWh. (i) Assumes the Pledge tariff remains £50 below the Cap as promised. (ii) According to the latest prediction (on 22 January 2024) from analysts at Cornwall Insight. (iii) Price is based on being £50 less than Cornwall Insight's Price Cap predictions.

What's trickier to compare is whether you could save more by fixing (or by waiting and then fixing later)

It's clear that this tariff will be cheaper for the next 12 months than staying on a price-capped tariff. But that isn't the only option. Here we run through the scenarios:

  • You fix your tariff now. Our current best guess, based on the latest Price Cap predictions published by analysts at Cornwall Insight on Monday 22 January 2024, is that only fixes priced 12.5% under than January's Price Cap are likely to be worth considering. That doesn't leave you with many options, however.

    - Octopus has an existing-customer 12-month fix that's 9% under the January Price Cap (though you can switch to its standard tariff and then move to its fix to get it).
    - Ovo also has a 12-month fix for new and existing customers that is 9% cheaper – but you have to take boiler cover for a year, which will reduce the saving.  

    That said, there's a short term saving to be had by fixing at any level below the January cap over the winter months, when you use the most energy – and if the predictions go the other way, not fixing now could cause financial challenges for some as the year goes on.

    While Pledge is likely to be cheaper than the current fixed tariffs available over the next 12 months, 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). For full info on suppliers' fixed deals, plus our 'Is this fix worth it?' calculator, see Should you fix?
  • You stay on your current price-capped tariff in the hope that a much cheaper fix comes along in a few months. There's no guarantee anything much cheaper 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 your current supplier's price-capped tariff – you wouldn't have to pay any exit fees. 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

Other than fixing, there are three areas to focus on...

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