Customers would be protected against price hikes for two winters under EDF Energy’s newest fixed price energy plan, Blue + Price Promise February 2015.
The plan’s average annual cost is £1,192, which is just £10 more than the big six energy supplier’s current Blue + Price Promise plan, but fixes prices for eight months longer. The plan also comes without a cancellation fee, so households on the plan can still switch if energy prices go down.
This new plan is the second-cheapest fixed price plan currently on the market, with Ovo Energy’s New Energy Fixed plan clocking in at £1,172 a year — but Ovo customers only enjoy fixed prices for 12 months from signing up. Ovo’s plan also includes a £60 cancellation fee if customers later find a cheaper plan on the market.
To fix, or not to fix?
For those consumers still on their supplier’s ‘old-fashioned’ standard tariff, fixed price plans like EDF’s present almost guaranteed savings. With the average household energy bill now standing at £1,353 a year, customers who switch to a fixed price plan and to a direct debit payment method could save as much as £181 a year, simply by switching.
“Consumers have struggled through a long, hard winter while enduring the impact of energy price hikes,” said Tom Lyon, Energy Expert at uSwitch. “With mounting uncertainty over where energy prices are heading, this new offer from EDF Energy could help many households to stave off future winter blues. It offers consumers a decent saving on current bills, but with the added peace of mind of knowing they are protected from price hikes until the end of February 2015. This means being sheltered for the best part of two winters, which could be a lifeline for those on a tight budget.
“Importantly though, if you’ve never switched before and are sitting on one of the most expensive standard tariffs on the market then you could save £161 a year on average by signing up to this deal. Not only is this a solid saving, but it comes with the added bonus of a price freeze for the best part of two winters. With such competitive fixed price options around, it makes sense for households to start shopping around now.”
How does fixed price energy work?
With fixed price energy tariffs, the rate customers pay per unit stays at one price for the length of the plan, which can be anywhere between one and three years. (Right now, the longest fixed price energy plan on the market is npower’s Fixed Price December 2015.)
However, because usage changes seasonally or could do for several other reasons, fixed price does not mean that customers pay the same price however much energy they use.
What are the benefits of fixed price energy?
The pros of fixing energy prices are two-fold: guaranteed rates and long-term savings.
Particularly now, with many predicting that energy prices will go up after the especially long winter and the coldest March on record, a guarantee on rates would be beneficial for many.
The cons of fixed price can be the immediate expense, as these plans can be more costly than cheap online tariffs. Also, fixing prices works only if energy prices go up; if prices tumble and your plan has a cancellation fee, you could be locked into your rate.