Fixed rate energy tariffs
Could fixing your energy prices for a year or more save you money in the long term? Business energy is dominated by fixed term deals with fixes lasting up to 5 years. By comparison the domestic energy market has fixed term tariffs ranging from 1 to 3 year with a majority of tariffs now being fixed rather than variable.
Comparing the top 10 cheapest energy plans, 7 of them are fixed and 3 are variable with 3 of the 7 fixed plans having no early exit fees. A fixed deal without exit fees means that you can take advantage of the security of the fixed price and switch to another without any consequences should energy prices suddenly fall.
Don't get caught out by choosing what looks like a good deal just because you are only comparing it to what you are paying now. It may be cheaper than your current tariff but there are likely to be far cheaper and far superior fixed energy tariffs you could switch to.
People will often switch to brands they have heard of. A Shell Energy fix currently costs £839.67 a year and an Eon energy fixed 1 year tariff comes to £842.35 a year. You may think they are both good deals compared to what you are currently paying but a similar fix from Avro costs £779.28 or a Tonik energy 1 year fix is £792.74 or £793.01 for a 12 month fix from Yorkshire Energy.
Spending 5 minutes on a comparison could save you up to £100 more than the current cheap fixed energy deal you were going to switch to. It's worth spending a few minutes of your time to make sure you are getting the best energy fix.
What is a fixed term energy plan?
There are two types of energy tariff in the UK, fixed and variable. The term fixed and variable refers to the cost of the energy you use measured in kWh and the daily standing charge.
With a variable tariff the amount your energy supplier charges you for each unit of gas or electricity that you use could change at any time, it could go up or go down. With a fixed price energy plan the amount you are charged by your energy supplier for each unit of gas and electricity stays the same for a fixed period.
Should you fix?
It depends on how price sensitive you are and if you can afford to pay more on your bills or if you really need to get the best energy deal and are prepared to switch energy suppliers every year.
The domestic UK energy market is competitive and suppliers are offering great deals if you are prepared to hunt them out. Don't trust what suppliers say as it's not always true and information can be hard to find on energy suppliers websites, do your own research and compare using a price comparison site.
If you look at the image above it shows that Together Energy claims to have the cheapest 2 and 3 year fixes but doing a quick energy comparison you can see that Sainsbury's Energy has a cheaper 2 year fixed. I have nothing against Together Energy and am not advocating a switch to Sainsbury's, I am just using this to illustrate the point that you need to compare for yourself rather than take an energy companies word for it.
Fixed or variable energy tariff?
Short term fixes for 12 months are now as cheap or cheaper in some cases than variable rate tariffs. Some energy tariffs from the smaller providers now also offer 1 year fixes with no exit fees so you are not trapped into that deal should you wish to switch before the tariff term ends.
Best 1 year fixed energy
Currently the cheapest 1 year fixed energy deal is from PFP Energy if you switch directly on their website the 'Fixed December 2021 Green v1 Paperless' tariff costs £68.77 a month. However there is a £30 per fuel early exit fee if you leave before the 12 month term ends.
If you prefer a fixed deal without exit fees then Outfox the Market has a tariff costing a fraction more at £69.09 a month. Outfox's 'Fix'd 20 19.0' is only available direct from them as it's not available on energy comparison sites.
Energy prices change regularly so make sure you check which deals are available for your region and for your circumstances. Whilst we always compare based on the average household energy usage prices do vary between regions of the UK so always make sure you do a comparison to find the best deals available right now.
Best 2 year fixed energy
If you are looking to fix your energy prices for longer then the best 2 year fix is from EDF. EDF energy are not known for their cheap energy offers but they currently have a great fixed price tariff (Simply Online 2 Year Fix Dec22v2) that's fixed till December 2022.
The monthly cost for the average household is £77.80 a month but this deal is only available by switching through an energy comparison site so you can't get this by visiting EDF's website directly. The 2 year deal does include renewable electricity in the price and as with most fixed deals there's a £35 per fuel early exit fee so make sure you want to fix your energy costs but great for those who don't want to worry about switching again for 24 months.
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Fixed price energy or not?
Whilst 1 year (12 month) fixed energy deals are popular longer term fixes to 2 or 3 year durations can be risky. The reason you choose a fixed rate energy tariff is for peace of mind, locking in a fixed price for 12 months or longer means that you are not going to experience any sudden price hikes.
Longer term fixes are also good if you are concerned that UK or world events are going to cause problems with energy prices. Fixing protects you from this worry but there is a cost. The longer you fix a deal for the more expensive it will be.
So a fixed deal means you pay a higher price per kWh for electricity and gas compared to a variable rate in return for price stability over the long term.