First Utility launches UK's cheapest energy deal

The cheapest energy deal on the market has been launched, but how does it match up to other offers around?

Energy is expensive at the best of times, and as the headlines seem to be full of stories about the price continually rising, it’s good when a cheap deal is launched, like the latest offering from First Utility.

The energy company crashed into the tables this week with the cheapest duel fuel deal on the market, replacing the EnergyFixed deal from Scottish Power.

The deal

First Utility’s plan is called the iSave Fixed V3 and the rate is set until 31 December 2013. Not only is this the cheapest deal on offer, it’s also fixed for the longest time, so it’s a good option for people who want the security of knowing their energy payments won’t change during this time.

Average bills, with the First Utility plan, come in at £1,040 a year, which is £309 cheaper than the most expensive deal on the market from Scottish Power’s standard plan.

It’s also £218 cheaper than the average energy bill from the big six providers so if you’re looking to switch, the odds are it’ll probably save you money.

Market competition

Energy providers are not exactly in favour at the moment and over the past year complaints are up to the Energy Ombudsman about them.

Stories like the recent 15% profit hike for Centrica, the company which owns British Gas, don’t help either as at the moment there is no sign of these savings being passed down to consumers.

However, First Utility’s deal comes just two weeks after Scottish Power brought out the lowest-price fixed deal, which is hopefully a sign the energy providers are starting (slowly) to roll out competitive deals to customers.

* based on average dual fuel tariff costing £1,345 per year in Oct 2011  (Source: OFGEM) and adjustment of £23 for recent price drops

The benefits of switching

Loyalty doesn’t pay in the energy market and staying with one provider will ultimately leave you paying out more than if you regularly switch to the best deal available.

However, despite the benefits of switching, last year it was at an all-time low. And there was a 25% drop in people switching in the first quarter of 2012 compared to the same time a year ago.

Apathy is the main reason for people sticking with the same plan, but switching could save you an average of £260 a year, so it’s really not worth putting off.

We have a step-by-step guide explaining exactly how to switch but remember - timing is everything. If you’re in a fixed deal there may be penalties to pay if you switch early so if you’re not eligible, read our piece on 10 other ways to save on your energy bills.

More on energy bills:

How to complain to your energy supplier

Are fixed fas and electricity deals cheaper?

The best and worst energy bills

British Gas suspends staff over energy sales at the supermarket