Is the new Utility Warehouse deal worth it?

Utility Warehouse are offering broadband for just £19.99 per month for 18 months for anyone also willing to switch their energy deal.

However, the savings on energy are questionable, and customers could end up paying more than if they kept services separate.

There are also a range of broadband deals available for less than £19.99/mth depending upon location, despite Utility Warehouse claiming this is the "cheapest on the market".

Credit: Shutterstock.com / T. Schneider

'Cheapest superfast broadband'

Utility Warehouse are currently offering new customers superfast broadband for just £19.99 per month for 18 months, with no mid-contract price rises.

They claim it's the "UK's cheapest superfast broadband deal" - but is it?

Superfast broadband is any connection that delivers a download speed from 24Mb or 30Mb, up to 100Mb or 300Mb, depending upon who you ask. However, it's not restricted to a specific technology.

It's easily possible then to find cheaper broadband than this deal from Utility Warehouse, and with providers who don't also require customers to move their energy plan.

While generally area specific, there are a range of new full fibre providers offering superfast broadband deals for less than £19.99 per month.

Gigaclear offers a Superfast 200 plan for just £17 per month with free setup for customers in rural areas. Hyperoptic offers their Fast 30Mb plan for £17.99 with a £10 setup and also promise no mid-contract price hikes. While those living in London may be able to get Community Fibre's 150Mb Fibre Broadband plan also priced at just £17.99 with free setup.

It can be said that these deals aren't available nationwide like Utility Warehouse is, as they use the Openreach network, but it's still possible some customers may have cheaper deals available to them.

Energy deals

The current high price of energy however, means potential savings on broadband could easily be outweighed by signing up to the wrong energy deal.

Unlike any other broadband provider, Utility Warehouse require customers to also sign up to one of their energy deals to get the reduced price of £19.99, otherwise the superfast broadband deal costs from £24.99.

There are two choices for customers, either take a 12-month fixed energy deal or opt for Utility Warehouse's variable rate tariff, which they say is up to £50 less than the "Government's price cap".

Again, wording here is rather questionable, because their terms actually say they're referring to the Government's Energy Price Guarantee, which is very different to Ofcom's Energy Price Cap.

The Energy Price Guarantee ended for non pre-payment meter customers in July 2023 because Ofcom's Energy Price Cap is now lower, and so it now only applies to standing charges for pre-payment meter customers. This makes the offer from Utility Warehouse rather confusing.

And, while Utility Warehouse terms also say they'll keep prices "lower than the price cap for as long as you remain a customer", getting an actual quote and comparing unit rates with the price cap suggests otherwise.

We looked at the prices for gas and electric with Utility Warehouse for a medium user on their Evergreen Variable tariff in the South East, and received a quote of 29.381 pence per kWh for electric and 7.448 pence per kWh for gas.

However, the current energy price cap in this region is 29.38 pence for electric and 7.45 pence for gas, so there aren't any savings on unit rates or actual usage.

It is true that the standing daily charge is lower than the price cap by 6.854 pence per day for gas and 6.861 pence less per day for electric. This is where the £50 saving comes from that Utility Warehouse advertise, however, this only works out at a saving of £4.12 per month.

The lack of much saving here is compounded by the requirement that customers need to take three services from Utility Warehouse to get the cheapest energy rates, and so would also need to pay for a £12 monthly mobile SIM as well.

Further, switching to Utility Warehouse on a fixed rate energy deal instead could actually end up costing customers more than staying on their current variable rate tariff, with the price cap predicted to drop by 14% in April 2024 and remain lower than 2023 into winter 2024.

Utility Warehouse's current fixed rate deal quoted us with unit rates of 30.038 pence per kWh for electric, with a 35.618 pence per day standing charge, and 7.308 pence per kWh for gas, with a 17.656 pence per day standing charge.

However, Cornwall Insight are already predicting the price cap to drop to 24.09 pence per kWh for electric and 5.96 pence per kWh for gas, meaning most customers will be better off staying on their existing variable rate tariff and benefiting from these price reductions likely to be implemented from April 2024.

Overall, customers are urged to compare energy quotes by unit rates and actual usage, and not rely on estimated costs or average figures. It's also arguably better to keep important utilities like heating and electric separate from contracts for telecoms and broadband, because if issues ever occur it could be much more complicated and costlier trying to end a multi-service contract early.