A cross-party committee of MPs is investigating competition in the energy market and at the opening hearing, Allan Asher, chief executive of Energywatch, the consumer watchdog, accused the six energy giants - British Gas, EDF Energy, Eon, Npower, Scottish & Southern and Scottish Power - of ripping consumers off saying they are not competing hard enough to keep retail gas and electricity prices down. Do you agree with Asher? Let us know your views by voting in our poll.
Consumers have already seen their bills rise by an average of 15% this year and with wholesale oil and gas prices continuing to climb, further increases are expected before the end of the year.
Against this backdrop, an increasing number of consumers are opting for fixed price deals in a bid to protect themselves against further price hikes. But is this the right time to be fixing?
What fixed rate deals are available? British Gas has just announced a new tariff, its Price Guarantee 2009, which is fixed until December 31 2009. It includes a £75 termination fee which you will have to pay to get out of the deal within the fixed period.
Eon and Npower are also offering similar deals at the moment. Eon's product is capped until 2009, which means your bill won't rise within that time but it could fall if standard prices go down, while Npower offers price protection until 2011.
However, this protection comes at a cost. Though it may seem logical to move to a fixed rate tariff given that further price increases are on the horizon, you do pay a premium for that security.
With British Gas' new deal, which officially launches on June 1 but is available now through moneysupermarket.com, the average household would pay £1,072 a year. However, they would pay just £866 with British Gas' Click Energy 5 product - this is the cheapest deal currently available. So fixing is nearly 25% more expensive.
Eon's Price Protection 2009 is a cheaper option if you want price protection - the annual bill for the average household would be £983. However, the capped period only runs until October 1 next year.
If you'd prefer a longer-term product, Npower's Fixed Price 2011 would cost around £1,025 a year.
So what action should you take? It all depends on how much you think the cost of variable rate deals will rise by - if gas and electricity prices go up by more than 20%, a fixed or capped product may work out to be better value than one of the cheapest online products. However, even then it may be a close call as you would obviously have benefited from lower monthly payments in the interim with a variable deal.
If you want the peace of mind of knowing that your energy bills won't rise again, then act quickly as the current fixed rate deals probably won't be around for long. The new British Gas tariff is higher than its old fixed rate product that was pulled a few weeks ago, and Scottish Power has just taken its fixed rate deal, which was the cheapest, off the market.
However, if you would rather keep your payments as low as possible and are happy to move with the market, an online variable tariff remains the cheapest option.
While British Gas' Click Energy 5 is the cheapest on average, you may find that another provider is better value given your own personal circumstances. If you enter your details into our gas and electricity comparison tool you will get an accurate picture of the price you'll be paying and which supplier offers you the cheapest deal.
Energy saving tipsYou should also look to see if there is any way you can reduce your energy consumption and keep your bills to a minimum. Here are a few simple steps that can cut your bills by around 20% a year:
Pay by monthly direct debit
Turn your heating thermostat down by 1°C.
Run your washing machine at 30°C.
Use energy-saving light bulbs.
Buy a lagging jacket for your hot water tank and insulate pipes.
Don't use more water than you need when boiling the kettle.
Turn the light off when you leave a room. Don't leave electrical appliances on stand-by - turn them off completely.
Have your say: Do you think energy firms are ripping consumers off? And how do you feel about the prospect of further price hikes - would you struggle to pay your bills if they climbed any further? Visit our forum and let us know.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.
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