Should you fix your energy bills?
An energy bill comparison service is urging consumers to consider fixed rate tariffs, as ongoing tensions in the Middle East and North Africa are likely to lead to further gas and electricity bill hikes this year. Wholesale prices rose by 10% in February alone.
Mark Todd, director of energyhelpline, says: "Consumers who want to play it safe really need to think urgently about insuring themselves against future price rises by opting for a fixed rate. The cheapest fixed deals are only likely to rise in price as world oil and gas prices seem to be back on an upward cycle."
The UK's top six energy suppliers have already increased prices by an average 5.9% in recent months, adding £63 to bring the average household bill to £1,132.
"Not doing anything is the same as throwing money down the drain as consumers can save themselves money and get a guarantee for up to four years by spending just a few minutes researching the offers available from the different suppliers" he adds.
Check out the Moneywise Energy Switcher to see if you could save money on your utility provider:
However not everyone agrees fixing makes sense. Locking yourself into a fixed deal now could see you paying more in the long run as no one knows exactly what will happen to prices and when, warns Jo Ganly, spokesperson for uSwitch.
"Suggesting an immediate impact between a short term blip in oil prices and household energy bills is a real red herring. Oil prices would have to remain consistently high for a period of time before they would start to have an effect on our energy bills."
Read Rachel Lacey's blog: How I cut my energy bills in half
Energy suppliers tend to buy the energy we use today in advance so there is typically a delay before increases or decreases feed through to household bills.
Ganly adds: "The important thing is for consumers to keep an eye on the situation and if they feel that they would prefer to protect themselves then a fixed price plan could be a good option. The other option is to move to a competitive online plan so that you automatically cut the price of your energy while keeping the option open to move to a fixed price plan at a later date if it looks as though prices are going to go up."
However, if you are going to adopt this strategy it makes sense to watch for catches that tie you into your new deal. Any savings offered by a new supplier would have to exceed any exit penalties for cancelling your current contract early.
How much do fixes cost?
Although fixed rates offer households the security that bills won't rise, you do pay for this peace of mind with higher rates at outset.
For example, three of the cheapest fixed-rate plans around are; a one-year fixed price from Atlantic Electric Gas costing an average of £952, a two-year fixed-price deal from ScottishPower at £1,065 a year or the four-year fixed-price plan from EDF at £1,073.
The best variable deals are substantially cheaper. A typical household would pay £876 with the British Gas Websaver 11, £909 with ScottishPower Online Energy or £910 with SaveOnline 5 from E-on.