Should you fix your energy bills to save money? This is an essential question that many across the country will be asking.
Energy bills have just increased in line with the energy price cap announcement and are predicted to continue to increase further over the next 12 months.
Like fixing other types of bills, prior to the energy crisis fixing your energy tariff was often recommended, but does that advice still stand?
What Does Fixing Your Energy Bills Mean?
Fixing your bill or energy tariff means that you can potentially protect yourself from further price hikes by agreeing to pay a certain amount for the duration of time.
When gas prices and energy bills began to surge many energy suppliers went into administration and fixed price tariffs became much rarer, toady they are still available by a few providers, but they aren’t as appealing as they used to be.
Today, many fixed price energy tariffs are priced higher than current energy prices, meaning that it will only pay off if energy prices continue to rise.
Should You Fix Your Energy Bills?
Unfortunately, there is no easy way to answer this question, since the energy market is extremely erratic and could continue to change.
For example, if you decided to move to a fixed tariff now, it could potentially protect you from the next energy price cap increase (set to come into force in January 2023).
However, for others it may end up making more financial sense to stay to the normal standard tariff and remain protected by the energy price cap.
According to a recent estimate from analysts at Cornwall Insight, average prices could increase to £4,649 come January, when another price cap is set. But this is just an estimate, there is no way to be 100% certain this will be the actual increase.
Should You Go On a Fixed Energy Tariff Now To Beat The January Price Cap?
Should you go and switch to a fixed energy tariff now?
If you are currently on your energy providers standard variable tariff and get offered a fixed-rate deal it could potentially be worth switching to protect yourself from the January energy price cap increase.
But here’s the thing: it really depends how much higher the fixed-rate deal is than the current energy price cap.
However, based on the predicted price increases, we think that if you can get a fixed rate no more than 120% higher than what you pay at present, then its worth thinking about.
Why have we come to this conclusion?
Bear in mind that this calculation is based on estimates only and it also depends on the amount of energy you use.
However, if you were to stay on the same standard tariff and not switch to a fixed tariff, you will pay around £295.65 each month until the end of 2022.
However, come January, it’s estimated that the price cap increase will mean the average bill on a standard rate will jump to £384 per month.
It’s predicted that the energy price cap will further increase by 14% in April 2023, meaning you will likely end up paying around £438 a month, making the bill a whopping £4395 for the period of September 2022 to August 2023.
But what if you switched to a fixed tariff?
If your energy supplier was to allow you a fixed deal that was around 120% above the current energy price cap, then your annual energy bill could end up at £4,336, which is £58 less compared to staying on the current standard tariff.
Should You Switch to a Fixed Energy Tariff? Conclusion
For many people, switching from a standard energy tariff to a fixed energy tariff seems like a gamble and since nobody can see into the future it very well may end up saving you nothing.
However, based on predictions from many reputable organisations and industry commentators, it’s clear that the dominant opinion is that energy prices will continue to rise, with some estimates pointing to energy prices remaining high in 2023 and 2024.
Ultimately, it’s a personal choice, but if you believe that energy prices will continue to surge and you prefer peace of mind a fixed energy tariff may be for you. But bear in mind based on current estimates, it’s only worth doing if the fixed rate is up to 120% higher than the current price cap.
Searches Associated With Switching to a Fixed Energy Tariff
Here are the most common searches related to switching to a fixed energy tariff.
- Should I fix my energy tariff?
- EON fixed tariff
- Next flex tariff
- EON V14 tariff
- I’m on a fixed tariff what happens in April?