New energy offer guarantees your bills will be cheaper for a whole year

Newport city centre
-Credit: (Image: John Myers)

A new energy deal has been launched which could save millions of households money on their energy bills. EDF Energy has launched a new deal offering customers a tariff that is below the energy price cap.

The new EDF Ensure tracker tariff is effectively a discounted version of the price cap which is set by regulators Ofgem and dictates how much the typical household pays for their energy bills.

The new tariff tracks under the price cap which means it is guaranteed to fall below whatever the cap is at any given time meaning you are guaranteed to save money if your energy consumption is similar to a typical household. To get the latest money stories straight to your inbox twice a week sign up to our newsletter here.

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How does the EDF Energy tracker tariff work?

The new EDF Ensure tracker tariff is effectively a discounted version of the cap that will be £50 cheaper over a 12-month period, according to MoneySavingExpert. Energy bills are made up of your energy use plus standing charges (the fixed daily charge for having access to gas and electricity) and the way the tariff works involves lowering standing charges rather than unit rates.

EDF told MoneySavingExpert it will apply the same fixed discount on the price cap standing charges to all payment methods across all regions (standing charges vary widely by region). Therefore you get a flat £25 discount on electricity and/or a flat £25 on gas over 12 months.

The tariff is open to most people including dual-fuel or gas- or electricity-only customers and allows most payment methods including direct debit, pay in receipt of bill, and prepayment meter customers. However you are only eligible if you either have a smart meter or are prepared to have one installed.

The deal might be more beneficial to some households than others. Because bills are made up of your energy use plus standing charges people who use less energy generally see standing charges make up a greater proportion of their total bill. These customers who use less energy are therefore the ones likely to see the greatest benefit from the EDF tariff as it is easy to cut your bills without reducing your usage. If your usage makes up a greater proportion of your bills it might be less useful to you and you might want to consider a different deal. You can read more about the existing offers here.

However when choosing a deal you should always consider the fact you will be locked into it for a fixed period – usually 12 months – and could end up paying more money than the price cap, which changes every three months, if it drops significantly.

Crucially the cap is not expected to do this and is actually predicted to rise later this year so fixing your bills may not be such a bad option right now – especially if you value certainty. It should be noted that the new price cap will come into effect from July 1 and is set to drop 7% from its current level. You should factor that into any decision to fix your bills now. You can read more about the upcoming price cap change here.