‘Fixed price’ or ‘price freeze’ tariffs are becoming increasingly more common in the energy marketplace, but customers can often be misled by them. Sometimes, providers do not state when the price will ‘unfreeze’ or there are hidden terms and conditions. This guide aims to help you understand price freeze tariffs and whether they are right for your energy needs.
What are ‘fixed price tariffs’?
Fixed price gas and electricity tariffs ensure that the cost of your energy will not increase for a set amount of time. Depending on the individual tariff, this could mean that the price is frozen for anywhere between one to four years. One mistake that is often made is the realisation that choosing a fixed energy plan does not mean that you will pay the exact same amount for your bill each month. What the fixed price tariff actually means is that your energy unit rates are frozen- therefore, if you are on a fixed plan and you use more energy one month than another, then your bill will vary according to your usage.
Fixed price tariffs first became popular back in 2013 with a flurry of new deals which promised the protection of fixed prices whilst offering competitive rates. They offered an enticing alternative to the ever-changing price of energy. However, fixed price tariffs can often be more expensive, particularly if you are considering opting for a long term deal. They can often include hidden cancellation fees which you will have to pay if you wish to swap tariffs before the end of your contract.
If you are considering choosing a long term deal i.e. one that stays fixed for over two years, selecting this could be risky. If the price of energy rises whilst you have the tariff, you could make some big savings but equally if they don’t, you could be paying more than necessary and face hefty cancellation fees should you wish to cancel.
What happens when it ends?
When your fixed price tariff is due to end, the first thing that you should do is find out which plan your supplier will move you to next. In some cases, it could be their ‘standard’ plan, although some suppliers may offer you another fixed term plan.
Standard energy plans are generally the most expensive in the marketplace and there are often cheaper plans available. Once you know which plan your supplier is planning to move you to, you can then shop around for the best deal and potentially switch supplier if you feel that there is a better deal elsewhere.
Things to consider
As previously mentioned, optioning for a fixed price gas and electricity tariff is often seen as gamble. The chances are that a fixed price plan will be more expensive than a variable tariff but will pay for itself if your supplier decides to up its prices- it will only lose value if prices remain unchanged or decrease. The last drop in prices was 2012 and since then, gas and electricity suppliers have been increasing their prices year-on-year.
Other ways to control energy prices
There is no quick fix for keeping your energy bills low. First and foremost, to keep your bills low you must control your usage by making simple changes around your home. Decrease the temperature of your thermostat by one degree, check windows and doors for draughts and use loft and cavity wall insulation.
Making these small changes ensures that no matter whether the energy market decides to increase or decrease its prices, you will always be in control of your energy bill. For more information on cutting your energy usage, have a look at our guide.
Current Fixed Price tariffs
Many suppliers are now offering fixed price tariffs. At the time of writing in June 2015, these suppliers were:
First Utility: iSave Fix May 2016 (prices fixed until May 2016)
NPower: Feel Good Fix 2017 (prices fixed until 2017)
British Gas: Fix & Fall November 2016 (prices fixed until November 2016, no exit fees)
E.ON: Fixed 2 year (prices are fixed for two years)
EDF Energy: Blue + Fixed Price (prices fixed until September 2016, no exit fees)
The above are just some of the current deals. Always shop around to ensure that you choose the best tariff for your needs.