With gas and electricity price rises a hot topic, many people are wondering: 'Should I switch to a fixed price energy tariff?'
A “fixed price” energy tariff means that your unit rates stay at one price for the duration of the plan, which can range from one to three years.
Fixed price does not mean that you pay the same regardless of your energy usage.
The biggest draw of fixed price plans is that you’re protected if your energy supplier raises its prices — but fixed price energy can also be more expensive than the cheapest energy tariffs, and sometimes includes a cancellation fee.
In other words, switching to a fixed rate plan can be hit and miss: if energy prices rise you stand to make some big savings on energy. But if they don't, you could end up paying over the odds. For this reason it's always worth checking if a plan includes a cancellation fee.
It is worth noting that since late 2013, a number of suppliers have entered the energy ‘best buy’ tables with fixed price offerings. The latter aim to offer a compromise between protection from energy price rises and the need to secure a competitive rate for today. They proved particularly popular following rumours of an energy price hike.
The pros and cons of fixed price energy plans
If you’re still unsure about switching to a fixed price plan, check out our quick list of pros and cons of fixed rate energy:
- Potentially saving money in the long term, and peace of mind that price rises won’t affect your household
- Having options — fixed rate energy plans have become so popular that you have your choice for cheapest, longest fix, and with or without cancellation fees
- Choice of supplier — nearly all energy suppliers offer a fixed rate plan now, and you can quickly compare fixed rate plans from one supplier to the next
- Still getting a competitively priced energy plan — some fixed price plans on the market are highly competitive compared to variable standard plans
- Up-front cost. Fixed price plans can be more expensive than the cheapest variable tariff now (but may not be in six months time)
- A price decrease announcement, meaning your paying over the odds. (However, you can find fixed plans that do not have a cancellation fee, so you’re free to switch plans if prices drop)
- Exit and cancellations fees. These can range between £25 - £50 for switching away before your contract is up
OK, but is a fixed price energy tariff right for ME?
Still not sure if you want to take the gamble? It might boil down to how you feel about your current financial situation, and how often you anticipate being able to compare the energy market for better deals.
If you are comfortable in paying a slight premium on your energy now for protection in the future, then you should compare fixed rate plans.
You can always run an energy plan comparison to see all the plans out there that offer savings on your current plan. Then check which of those plans are fixed rate plans.
Fixed plans currently available
So you know the pros and cons of fixed price energy, but kind of plans are currently on the market? Below is a table of fixed plans currently available, with the date the plan is fixed to and any cancellation fees.
|Fresh Fixed Price Dec 2016||£838||Compare now|
|iSave Fixed December 2016||£840||Compare now||September 2015||£845||Compare now||Connect 2||£848||Compare now|
This table's average bill sizes are based on a medium energy user paying monthly by direct debit, with bill sizes averaged across all regions. Does not include energy tariffs available solely through private initiatives such as collective switching schemes.
What should I do when my fixed price plan ends?
When your fixed plan is about to end, the first thing to do is find out which plan your supplier will be moving you to. This may be your supplier's 'Standard' plan, although some suppliers may offer you the chance to fix your prices again.
Standard energy plans are among the most expensive in the market and there are usually cheaper plans available. If you're offered the chance to fix your prices again, you may wish to take it, if you are willing to pay above-average prices in return for security against potential price rises in the future.
Once you know what energy plan you're being moved to compare all available energy plans online and find out how your new plan compares to other deals.
If you find that you could be saving money with another energy supplier, you may want to consider switching your gas and electricity supplier.
Fixed rate plans ending in the next few months
Some popular fixed rate plans are ending in the next few months. To find out if your current fixed plan is ending soon view our Fixed Rate Plans Ending Soon table.
If you're on a fixed price plan it's important to know when it ends so you can be prepared to avoid a sudden increase to your gas and electricity bills.
But be careful - if you switch before your contract is up you could incur a penalty fee. Check your terms and conditions or speak to your supplier to find out when you can switch without the risk of a penalty charge.