Fix now as energy prices start to climb

SSE has become the first of the Big Six energy companies to announce an autumn price hike, and where one energy company leads, the rest have a tendency to follow.

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So, if you were in any doubt that now is a good time to fix your energy prices, SSE’s decision to raise prices by an average of 9% from October 15 could help to change your mind.

Here we take a look at what the SSE price rise will mean for customers and explain why switching energy supplier to find the best fixed rate deal could save you money this winter and beyond.

What the SSE price increase means

Scottish and Southern Energy (SSE) is the UK’s second largest energy provider, supplying gas, electricity and other services to almost 10million domestic customers throughout the UK via its Southern Electric, SSE, SWALEC, Scottish Hydro, Airtricity and Atlantic brands.

The price rise means that customers on SSE’s standard tariff will be paying an average of £1,354 per year, which represents an increase of £116 and makes it the most expensive standard tariff on the market.

And it might not stop there as other companies could soon follow suit. British Gas suggested as far back as May there would be winter price hikes to reflect a 15% increase in wholesale gas costs.

Scott Byrom, energy expert at MoneySupermarket, explains: “As a result of today’s increase by SSE, I expect a ‘domino effect’ in the market as the other members of the Big Six providers follow suit to hike prices, although E.ON has announced that it will not increase bills for customers before the end of 2012."

However, energy companies do have a tendency to raise their charges as soon as a price promise period ends – unsurprisingly, SSE’s current period ends in October – and so this may just be delaying the inevitable for E.ON customers who could find themselves subject to price hikes at the start of 2013.

 

Fix prices now to avoid paying more

The best way to safeguard yourself against any price increases is to lock into a good value fixed rate tariff. While it may not be the cheapest on the market right now, you could soon find yourself better off if prices do rise this winter.

The best value fixed price tariff currently on the market is First Utility’s ‘iSave Fixed v3’ that costs an average of £1,039 per year, with prices fixed until December 2013.

On the downside it comes with a cancellation fee of £60 (£30 for gas and the same for electricity), so you could find yourself out of pocket if you wanted to switch to a better deal mid-term.

Another good option is EDF Energy’s Blue + Price Promise tariff that not only locks prices in until December 2014 – that’s almost three winters without any price hikes – but also has no exit fees and will alert you if a tariff from any supplier comes onto the market that is £52 per year cheaper.

Then there is Scottish Power’s Online Fixed Price Energy (November 2013) tariff. It has a shorter fixed price period – until October 31 2013 – but it comes with no early cancellation charge and will work out marginally cheaper for most people.

And to put into perspective the importance of switching to a better deal, an SSE customer affected by the price hikes will not only protect themselves from the higher charges by switching to one of the better priced deals but could also save over £300 per year.

How to switch supplier

Switching supplier is a very easy process and the whole thing can be done on MoneySupermarket’s energy channel  where you can compare tariffs from every UK energy supplier to find the best deal for you.

Simply enter your address, details of your current supplier and energy usage and the comparison tool will find the best-priced tariffs to suit your circumstances. Customers who switch through MoneySupermarket save on average around £200 per year.

There will be no loss of service and your energy will be supplied in the same way, just by a different provider.

Although Ofgem is trying to cut switching time down to three weeks, it can still take up to six weeks to change provider, so if you are stuck on your provider’s standard tariff you need to act now to ensure you switch to the best deal on time, remembering to factor in any early cancellation charges that may be applied to you current deal.

It’s also worth noting that you may only have a short window of opportunity in which to switch as, historically, the cheapest fixed price tariffs have been withdrawn shortly after standard prices have been raised.

Follow Les on Twitter at @LesRobertsMSM

Please note: Any rates or deals mentioned in this article were available at the time of writing.

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