In the wake of this week’s gas and electricity price rise from Scottish Power – and the possibility of more energy companies following suit sooner rather than later – is it worth switching to a fixed tariff?
Since Scottish Power announced an increase in its gas prices by 19% and electricity charges by 10% from 1 August this week, speculation is mounting that other energy companies will make similar price hikes.
Switching to a ‘fixed’ energy tariff – which guarantees prices for a set amount of time in advance, protecting you from sudden increases in your energy bills – is one way to safeguard how much you pay for gas and electricity.
Which? Switch, the independent, not-for-profit energy comparison service from Which?, is seeing a noticeable rise in the number of customers switching to this type of tariff since Scottish Power’s announcement. So is it the right option for everyone?
Fixed-term energy tariffs
Which? Switch’s Charlotte Berry says: ‘Fixed tariffs can be a good way to avoid price increases, and will give you peace of mind that the cost of your energy bills will remain the same for some time. However the key question to ask yourself is how important or essential paying a guaranteed price is to you.
‘Fixed price tariffs are generally set at a premium – particularly if the fixed period is over a number of years – so you might not always be on the cheapest possible deal. You should also check what cancellation charges you will have to pay for leaving the tariff before the end date.’
A couple of the more competitive fixed energy tariffs currently on the market include:
- EDF Energy’s Fixed Saver 2: fixes prices until 30 September 2012 (£25 exit fee each for gas and electricity; £50 for dual fuel).
- Npower’s Go Fix 6: fixes prices until 31 July 2012 (£20 exit fee per fuel type).
You can get more personalised tariff recommendations by running a comparison on Which? Switch, which lists current gas and electricity deals on the market.
To fix or not to fix?
If you’re thinking of moving to a different energy tariff, you should firstly check the smallprint to see if you’d incur any penalty fees by leaving your current deal – these don’t usually apply if you’re on a ‘standard’ tariff – and weigh that up against the potential savings you would make by switching to a more competitive deal.
And if you’re considering a fixed tariff, bear in mind the following:
- Check the duration of the tariff – some tariffs will fix your energy prices up to 2015.
- A fixed term tariff won’t be affected by price rises – or price decreases.
- Most fixed energy tariffs carry a penalty exit fee – if you wanted cancel your contract early.
- There may be more competitive tariffs around – price security usually has a premium attached.
- A ‘capped’ tariff could be an alternative option – rather than a fixed rate, these guarantee prices won’t rise beyond a certain amount.
Lower your gas and electricity bills
You can compare energy prices and switch to a new gas and electricity supplier on Which? Switch. People who switched with us between 1 October and 31 December 2013 are predicted to save an average of £234 a year on their bills.
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