With energy companies regularly releasing new tariffs and energy costs seemingly always on the increase you may be tempted to fix your gas and electricity prices for a period of time. But what exactly is a fixed energy tariff and is it worth it fixing your energy bills now?
What is a a fixed energy tariff?
A fixed tariff means that your energy prices are fixed for a period of time, usually one or two years. This means that you will be safe in the knowledge that your energy costs will not increase over the agreed period of time. If, however, the price of gas or electricity falls you will not receive the benefit of this via reduced utility bills. While you could choose to switch your energy provider, usually the catch is that there is an exit penalty if you choose to switch during the fixed price period.
Should you fix your gas and electricity bills now?
Historically it's always been a tough call as you are essentially making a call on whether energy prices are heading up or down. On the one hand is the attraction of fixing your energy bills so protecting your finances from any prices rises, for a fixed period of time. But on the other hand fix deals are often more expensive than the cheapest non-fixed deals available. Plus you run the risk of missing out on falls in the price of gas and electricity as fixed deals usually have a lock-in period. As mentioned, to break a lock-in usually requires you to pay a penalty, often negating any potential savings made from switching deals.
But now there are fixed energy deals on the market that are not only among the cheapest deals available (including non-fixed ones) but which have no lock-ins, such as the EDF tariff below . That's a win-win!
So how do fixed fixed energy tariffs compare with variable energy tariffs?
At the present time fixed rate deals are comparing well against variable deals for the average household usage. Two of the cheapest are:
- fixed until 28/2/2015
- customers informed if any supplier launches a tariff more than £52 a year cheaper
- no termination fee
This tariff is cheaper than many variable tariffs for similar usage and as this is a two year fixed deal it looks an attractive deal.
- fixed until 31/7/2014
- online account management and direct debit only
- £30 per fuel cancellation fee
This tariff is slightly cheaper than the EDF tariff but is only fixed for just over one year and has a cancellation fee.
What to do next
Follow my guide quick '6 ways to reduce your energy bills'. This will walk you through how to quickly compare the energy tariffs out there (including the fixed priced tariffs above) and find the best one for your usage levels, and hopefully save you a small fortune.
(image Image: graur codrin / FreeDigitalPhotos.net)