Fixing your energy costs is a pretty tempting thing to do at the moment.
With two big price rises in less than a year, the amount we pay for our domestic fuel has jumped considerably. And, in the long term, the expectation is for energy prices to rise further still – it's predicted we'll be paying an extra 50% at least by 2020.
But with Colonel Gaddafi on the run, the Arab spring trying to turn into glorious summer and other factors – such as probes into the big profits of the big electricity and gas suppliers – a price drop in the near term isn't entirely out of the question either.
Because you benefit from a fixed cost for your energy, the supplier will charge you a penalty fee if you decide to switch gas and electric provider before the end of the fixed period. So you have to be sure that you can commit to the tariff before signing up.
If you get a fixed tariff with a gas and/or electricity supplier you're either saying:
The major downside with fixed energy costs is if gas/electric prices go down. In this case, other customers will be getting cheaper energy than you are – and if you want to come out of your deal, you'll face a penalty.
So, in summary, you need to be reasonably convinced that energy prices will go up during the term of the fixed period.
Prices fixed for 12 months
Source: EnergyHelpline 31.08.11
*Cost for a yearly bill based on average usage figures from Ofgem across the UK.
Fixed energy costs will stay the same throughout the fixed period. Because of this they are usually priced a little higher than the very cheapest energy tariffs on the market.
It can be tempting to change your mind and go for the best energy price, rather than for a fixed. Remember that the cheapest energy tariffs are variable – so they will go up if a supplier raises its gas or electricity prices. While you can probably save a bundle with an energy switch to one of these attractive offers, you may be stung later if costs go up.
That said, Scottish Power's Online Fixed Saver Dec 2012 is one of the cheapest tariffs in the whole market – including low cost online variable prices, although your prices are only fixed for one year. Some tariffs are fixed for over 3 years!
£15 cashback per fuel taken
Compare the best energy prices in our Utilities section
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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