A fixed energy rate is exactly what it says on the tin: it fixes the price you pay for gas and electricity for a set amount of time.
Energy suppliers typically offer fixed deals that last anywhere from 12 to 24 months. Fixed rates are based on the price of energy per unit, plus the standing charge. The standing charge is the supplier’s fee for providing you with energy.
A fixed-rate tariff protects you against potential increases in energy costs. But you won’t benefit if prices fall.
Also, fixed rates might only apply to the price of energy per unit. If the supplier’s standing charge goes up, your bill will too.
Shopping around and comparing fixed-rate tariffs from different suppliers is the best way to find a great deal on energy.
When your fixed energy deal is up, chances are you’ll be automatically moved to the supplier’s standard variable tariff (SVT).
SVTs are usually more expensive than fixed-rate tariffs. Make a note of when your fixed energy deal comes to an end and switch before this happens. Do your research and shop around for the best deal.
A supplier could charge an exit fee if you decide to leave a deal early. But you don’t pay if you leave within 49 days of the deal ending – this is known as the ‘switching window’.
Energy rates might have risen during your fixed energy deal. In this case, the jump in price may seem high.
But remind yourself that energy prices would have risen anyway. So, you would have saved money during your fixed energy deal.
As we mentioned, you might need to pay an exit fee if you want to leave your fixed energy deal early. The exit fee is sometimes known as a cancellation or termination fee.
Not all suppliers charge this, so it’s worth finding out before you sign up. And you could switch within 49 days of your contract ending without paying a fee.
Also, if you happen to find a better deal shortly after taking out a fixed energy deal, you could still switch without paying. Suppliers have to offer a 14-day cooling-off period, giving energy customers the right to change their mind without being penalised.
Fixing can be a gamble. You could end up locked in a deal charging a premium for energy (though you could pay a fee to exit and switch). But fixed-rate tariffs tend to be more affordable than SVTs. They can also be a great idea when the market is volatile and prices are going up and down.
A good sign of when to fix is when good deals start disappearing from the market. This is usually around wintertime, when the wholesale price of energy rises with demand.
When searching for fixed deals, don’t just compare energy tariffs from the ‘big six’ suppliers. You might find a better tariff with a smaller supplier. Smaller providers are often praised for their excellent customer service, too.
The price you end up paying for energy depends on a whole host of factors. These include where you live, how much energy you use, and how you choose to pay your bills. All this means there’s no ‘one size fits all’ tariff – you need to look for the deal most suited to you.
Getting a fixed-rate deal is pretty straightforward. Here’s what to do:
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