As the big six battle it out to offer the longest and cheapest fixed price energy plans, and as warnings about the rising cost of energy bills continue to come in, consumer interest in protecting their gas and electricity bills has been reignited.
Recent uSwitch data shows that the number opting for a fixed price energy plan is now nearly 30% (or three in 10); last month, that number was only one in 10.
A season of price rises
Fixed price plans last saw a boost in popularity in autumn 2012, when several of the big six were announcing prices rises: In October, SSE’s announced rises went into effect ; that same month, npower and British Gas announced price rises on the same day; and before October was over, EDF had announced its price rise.
At its peak, fixed rate energy plans were attracting 75% of household switches.
A safeguard for energy prices …
Just like fixed-rate mortgages, fixed price energy plans lock in a household’s energy rate for a set amount of time. In the past, this has been for one or two years, but recently, a few of the big six have been battling to offer the longest fixed price plan, with the longest plan on the market coming from npower and fixing prices until September 2016.
…at a competitive price
In the past, these plans were typically higher in price initially when compared to variable plans, but came with the peace of mind that if a price hike occurred the customer was protected. Tom Lyon, energy expert at uSwitch, points out that now the up-front cost of an energy price fix is coming down, making some fixed rate plans very competitive:
“Historically, fixed price plans used to carry a premium. However, we’re now seeing tariffs that are fixed, but also qualify as a ‘best buy’. This is great for consumers as it means they get to enjoy a competitive price today, along with price protection for the future. With so much uncertainty about future prices and with bills already having hit an all-time high, this is doubly important and gives consumers even more reassurance that they are making the right move.”
A big six ‘battle for the best’ fixed price plan
With some of the biggest suppliers seeming to be locked in a battle to ‘one up’ each other when it comes to offering the best fixed price plans, consumers are in a very advantageous position. Whether households are looking to fix price for less or fix price for the longest, they have no shortage of options after these recent plans hit the market:
Shortly following npower’s announcement ScottishPower announced it has launched Fixed Price Energy February 2016, beating npower out for longest fixed price plan.
By the next month, npower had hit back, with an energy plan that fixes rates until 30 September, 2016, and carries no cancellation fees, the Price Fix September 2016.
Consumers in the driving seat
Lyon adds, that even the one drawback to fixed price plans — being locked into a rate when there is a chance that prices will fall — has been removed:
“Some [fixed rate plans] also don’t carry any early exit fees, which removes any risk from fixing as, if prices do fall in the future, you can simply ditch your tariff and move to a better deal without incurring any penalties. This puts consumers firmly in the driving seat. It’s also important to stress that the ‘fixed’ element of a fixed price tariff is in the amount charged per unit of energy used. So if you are on a fixed price plan, but make your home more energy efficient, you will still save money.”