UK firms pull fixed energy deals as Iran war pushes up prices

UK energy suppliers are withdrawing numerous fixed-price tariffs from the market in response to a surge in oil and gas prices triggered by the escalating conflict involving the US, Israel, and Iran. According to data from the price comparison site Uswitch, the availability of fixed deals has dropped sharply since the weekend, while the costs of the remaining plans have risen significantly.

Energy UK, the industry body representing suppliers, explained that the present volatility in the wholesale fuel market has made it challenging for companies to commit to fixed prices for a year or more. Household energy expenses have climbed steeply in recent years, causing many consumers to face difficulties managing bills alongside other rising costs such as food and services.

Although wholesale energy prices have decreased from their 2023 peak, they remain substantially above levels seen prior to Russia’s full-scale invasion of Ukraine. This week, prices surged again following the outbreak of the recent Middle Eastern conflict, which has disrupted oil and gas production and transportation across the region.

The implications of these developments are already evident in the energy market. Data from Uswitch shows that fixed tariffs have plummeted from 38 on Saturday to just 15 by Thursday, with prices rising from a range of £1,509–£1,898 to between £1,640 and £2,194. While removing fixed tariffs and introducing new offers is a normal part of supplier competition, MoneySuperMarket reports a sharp increase in the number of tariffs withdrawn — 65 this week alone compared to just 14 last week. Among the UK’s ‘Big Six’ energy companies, only Octopus and EDF currently offer fixed-price deals, with E.On reportedly maintaining one as well, whereas British Gas, Ovo, and Scottish Energy have withdrawn theirs.

The government’s energy price cap ensures that customers on variable tariffs will not face price hikes until at least July, and those on fixed deals will remain protected until their contracts expire. However, Ned Hammond, Energy UK’s deputy policy director, warned that if gas prices stay elevated for several more weeks, it could significantly influence future price caps. Meanwhile, Octopus has temporarily introduced exit fees for customers leaving fixed tariffs early due to the wholesale price spike, stating, “We can no longer absorb the full cost of the energy we buy in advance for new fixed‑tariff customers if they choose to leave us during the period of the fix.” British Gas is focusing on more flexible tariff options such as its Cap Tracker plan, which is designed to stay priced below the cap. EDF similarly emphasized its vigilance over market conditions while aiming to provide competitive and fair options for consumers

Read the full article from The BBC here: Read More