Should you Fix your Energy Rates?
Personally, Yes! If you want to read more about why I think this then please read on.
Firstly, fixing your gas and electricity prices doesn't mean your energy bill can't go up or down. That is dependent on your average energy usage in terms of how much energy you use e.g. if you install a few sunbeds and a heated swimming pool in your garden then your energy usage, and therefore your bills, will go up. When we talk about "fixing" energy prices, we mean you are fixing the unit rate you are charged for the energy you use.
Different types of gas and electricity tariff:
- Fixed – the unit rate you pay per kilowatt hour doesn't change for the duration of the tariff
- Variable – the unit rate you pay can go up or down as market conditions dictate
- Capped – the unit rate you pay can come down but it can't go up
The reason I think "fixing" your energy tariff is a good idea is simply because it gives you peace of mind. Let's face it, many of us don't check energy prices regularly enough to see what is happening in the market and therefore by fixing at the time of switching energy supplier we at least know we're getting a good deal. Perhaps not the best but a better deal than if we didn't switch energy supplier at all. This means you can focus on other things rather than worrying about external global energy market factors that might push energy prices up and hit you hard where it hurts…your bank account.
Is it cheaper to fix energy prices?
The answer to this has flipped between yes and no for as long as I can remember and simply comes down to market conditions. If wholesale energy prices drop, then it may be possible to find a cheaper variable tariff as the energy suppliers are less exposed and if they get hit with a spike in prices they can quickly pass it on to you the customer. You get the benefits of cheaper energy prices when it smooth sailing but the second that changes the increase in cost will be coming your way.
If you therefore want the cheapest energy tariff possible then you would need to do an energy price comparison through an approved and Ofgem accredited price comparison site to see whether it's cheaper to fix your energy prices or go variable at that given moment in time. However, my advice, which I deem to be that I would give to a friend or family member over a cold pint in the local pub, is to "fix" your energy prices and have that security of knowing that your energy unit rates won't change.
How long should you fix for?
Personally, I wouldn't fix for longer than 12-months. I think the market is active enough and competitive enough to mean that come the end of your existing energy tariff there will be plenty of cheap energy deals out there to ensure you continue to save on your home energy bills.
Energy tariffs can offer up fixed unit rates for 1, 2 or 3 years but here you are potentially paying a premium and could miss out on better savings. Equally, it's highly likely that for this you will be locked in through higher early termination fees (also known as exit fees) to stop you switching elsewhere for the term of that deal. These could be as high as £100 per fuel so this should also be considered when making your final decision.
How do you find the best fixed energy tariff?
My quick guide for this would be:
- Ensure you have a copy of your most recent energy bill to hand and identify your projected or estimated annual consumption in kilowatt hours (kwh).
- Visit an Ofgem accredited price comparison site (such as TheEnergyShop.com), to carry out your energy comparison.
- Ensure to check the tariffs are fixed and look at the term of the deal e.g. 1, 2 or 3 years.
- Check the applicable exit fees to see how much you would be charged if you switched energy during the term of the tariff.
- Look at customer reviews for the gas and electricity supplier you have short-listed by visiting websites such as TrustPilot. I also think it's a good idea to check out the energy supplier's Twitter feed to see what customers are messaging them about. You want to see good responses and to look out for any trends e.g. issues with call centre support.
- Once you have picked your new energy tariff, go ahead and switch energy supplier through the selected price comparison website OR by calling the energy supplier directly. Some tariffs are exclusive to price comparison sites though so be careful not to be switched to something else as energy supplier agents are paid commission to switch you over the phone.
Ultimately, it's your call but hopefully in this quick guide I've put my thoughts and opinions across in a way that explains my decision. As always, we're open to any feedback and welcome and readers to reach out to us and help us to improve the advice we provide.
