As a result of various factors, wholesale energy prices rocketed in September 2021 but have lowered significantly in the past few months.
The level of the energy price cap is £1,717 from 1 October until the end of December (though it will rise to £1,738 from 1 January until 31 March 2025). A significant number of fixed deals from big-name suppliers have also returned to the market.
Those who are eligible for one of these fixed deals may now be wondering if it's worth locking in a fix if you want to be sure about the amount you could pay.
What are the figures I need to know?
The level of the price cap is set at £1,717. The rates of fixed deals at this point are likely to be competitively priced around the price cap level.
The complication is that wholesale energy prices could still go up or down and, with the price cap now being recalculated every three months, there is the possibility that a fixed deal which starts as the cheapest option could become a more expensive option as time wears on.
What should I consider when switching energy?
Do consider exit fees. You may change your mind about your fixed deal and want to switch again. But if this happens after your cooling-off period, you might have to pay an exit fee. Not all tariffs have exit fees but most do, so make sure to check the terms of your current tariff.
Do consider the length of the deal. Most tariffs last for 12 or 24 months. During this time the price cap could rise or fall based on market conditions, so consider how long you would like to stay locked in for.
Do stay informed. Keep a close eye on the market and run regular comparisons to see what deals are on offer. If you sign up for alerts, you can stay close to what’s happening in the energy market and find out when a good deal comes along.
Don’t get a deal you can't afford. Make sure you can afford the deal you choose and don’t rush into one that you'll struggle to pay for.
Don’t just look at the direct debit amount. The price you pay through Direct Debit each month is usually based on your estimated energy usage over a year. This may not be the actual cost. Make sure you look at the unit rate and standing charge to work out how much you will be charged for your energy usage. You can also see how it differs from what you’re paying now. Find out more about fixing your energy deal here.
Customers will have to consider their finances and how important price certainty is to them before signing up to a fixed deal. The right decision for someone else might not be the right decision for you, so make sure you consider all your options carefully.
You can compare energy prices and deals that are currently available by entering your postcode below.
