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Fixed-price energy tariffs are the best way to lock your energy bills down for one or two years. You can use a fixed-rate energy deal to make sure you’re not at the mercy of a fluctuating market if the price per unit looks like it'll go up.
Fixed-rate deals usually last between 12 and 24 months, but they don’t mean your bill will be the same each month. You lock down the price you pay per unit, but not how many units you consume. The more energy you use in a month, the more you’ll pay – the same as ever.
The other main type of energy deal is the standard variable-rate tariff. These allow for market changes, so a surge in global energy prices can mean higher bills than expected – but if the prices fall, you’ll be paying less.
Fixed-rate tariffs are often cheaper than variable-rate deals, though you may pay a premium for the security of signing a longer deal at a set rate
Oil and gas prices can spin on a dime, but they can be very attractive indeed when they’re low. Fixed tariffs let you take advantage of favourable market conditions
Because you know how much each unit will cost, you can take control of your bills. If you end up with an expensive month, you’ll know you need to cut back on usage
The flipside to being protected from price hikes is that you won’t benefit if energy costs come down on global markets, as your unit price won’t change
You might face exit fees if you decide to switch before the end of your contract. Not all fixed tariffs have them, but those that do will charge between around £10 to £30 per fuel
If you do nothing when your fixed term comes to an end, you’ll more than likely be switched to your supplier’s standard variable-rate tariff – which will probably be quite expensive
Previously, fixed-rate energy tariffs were usually cheaper than standard variable ones.
However, in current market conditions, it's difficult to say whether switching to a fixed energy deal will save you money. This is because prices are still fluctuating, and being locked in a fixed rate might cause you to miss out on savings, should prices fall.
On the flip side, a fixed energy deal could protect you from any future price rises.
If you're currently on a fixed-rate tariff, it's likely to be cheaper than other fixed deals available right now. If you do happen to find a better deal, you may face exit fees if you switch before the end of your contract.
However, with wholesale prices dropping and the new Energy Price Cap in place, it's possible that suppliers will begin offering competitive fixed-rate tariffs once again.
The price per energy unit is fixed for a set period of time, usually 12 to 24 months
You're protected from price hikes, but at the same time you could miss out on potential savings if prices fall
If you want to leave your contract early, you may need to pay exit fees
The price per unit of energy will change every month, depending on the wholesale price of energy
You're vulnerable to price rises, but you can also make savings should energy prices fall
More flexible, as you're not tied to a contract and you're free to change without paying any exit charges
A fixed-price energy tariff can give you more certainty over what you might pay in energy costs, allowing you to get a better grasp of your household finances. It might also save you money when compared to standard variable tariffs, but do your research first. Fixing for two years could see you pay more than you have to if energy prices stabilise."
Fixed-rate tariffs ultimately depend on the conditions of the energy market – if wholesale prices are high, fixed deals will be less attractive. Generally speaking though, if market conditions are good and you shop around, a fixed-rate tariff will be better value than a variable-rate one.
When your fixed-rate agreement comes to an end, your supplier will probably switch you over to a standard variable-rate tariff, meaning your prices will no longer be fixed. And while variable tariffs can be good value, they’re often less economical than the fixed tariffs they replace. It’s always worth shopping around a month or two before your fixed tariff comes to an end.
The amount you pay for your energy will depend how much you use. The prices you see quoted are based on average consumption as defined by Ofgem, the market regulator.
In normal circumstances, the cheapest tariff on the market will usually be a fixed-rate, fixed-term dual fuel (gas and electricity) deal, paid monthly by direct debit.
Note that it is the price per unit of energy that is fixed – the amount you pay will vary in line with your usage.
With a variable rate tariff, the rate per unit can go up or down, leaving you vulnerable to price hikes.
Variable rate deals are also known as ‘default’ tariffs. If you are on a fixed-term deal and do not switch at the end of the term, you will move to your supplier’s default tariff. If you haven’t switched for a few years, or ever, you’re likely to be on a default tariff.
Fixed-rate tariffs tend to be cheaper than variable rate alternatives, sometimes by a significant margin.
The Energy Price Cap is calculated and set by Ofgem, and is reviewed quarterly.
From 1st April 2024, the price cap brings average energy bills for households on a dual-fuel standard variable tariff, and who pay by direct debit, to £1,690. This is a decrease from £1,928, which was the price cap in force from 1st January 2024 to 31st March 2024.
For those using pre-payment meters, the cap for average annual energy use stands at £1,643 as of 1st April.
It is possible to switch from a prepayment meter to a credit meter if you are not in debt to your current provider. You might have to go through a credit check.
Some suppliers charge a fee to change your meter, but there are plenty who don’t, so it’s worth shopping around for the best deal.
If you are unable to switch from your prepayment meter, you may be able to switch to a cheaper prepayment tariff.
A quick price comparison will show you the suppliers that could save you money.
If you're on a fixed tariff, your energy prices shouldn't go up while you're in contract. The unit price should stay the same – though the bill you receive will depend on how much energy you use.
That depends on the state of the energy market. If wholesale energy prices are high, getting a new fixed-rate deal won't offer anything in terms of savings. Due to recent market conditions, suppliers have largely withdrawn their fixed deals.
However, with wholesale prices falling and the new Energy Price Cap in place, suppliers may start offering competitive fixed-rate deals again.
In the meantime, the best thing to do is leave your email with us. We'll let you know when there are fixed deals to compare.
Due to unprecedented market conditions, switching hasn't been available for a while now. But switchable deals are likely to return soon. And when they do, we'll be here to help.
We help you compare prices from all the energy suppliers in the UK, so you can find the right deal for your needs.
It only takes a few minutes to compare. All you have to do is answer some simple questions, and we'll show you tariffs and offers from all the energy companies.
In normal circumstances, we can help you switch to tariffs from most companies directly through MoneySuperMarket. Just click the green button, answer a few more questions, and you’re done.
If you’d prefer to talk to someone, you can call us on 0800 177 7087. We can answer any questions you might have, and even help you switch to a new deal over the phone.
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