It may be time for a fixed rate energy contract – but should you switch?
Fixed-rate energy deals are becoming tempting again as the energy crisis hits households hard – but is it time to change or weather the storm a bit longer?
Ofgem warned last week that the energy price cap could rise by 42% in October, to £2,800 for an average household, the Time reports. But expert advice has remained consistent since the onset of the crisis – don’t fix your bills, stick to a cap-protected standard rate.
However, Switch says there are currently 13 fixed rates available which charge less than £2,800 for the average household – the cheapest coming from Eon at £2,600 per year. Meanwhile, Ovo is offering fixed two-year deals that come in at around £2,700 and £2,500 for the average dual-fuel customer.
But experts are hesitant to recommend a flat-rate switch just yet. The current price cap stands at £1,971 for an average family – so an immediate change would cost savings over the next four months.
Consultancy Cornwall Insight expects the price cap to be £2,790 from October to December, then rise to £2,818 between January and March. If it stayed at £2,818 between April and June 2023, a price cap-protected tariff would average £2,529 over the next 12 months. That would mean you would pay around £66 more per year with Eon.
Justina Miltienyte of Uswitch explains: “The price cap can change up to eight times on a fixed two-year contract, so it is very difficult to predict whether it is better to stay on a standard variable price or on a fixing. It’s about how much you value certainty and what you can afford to pay. Some households may prefer to pay more for the stability of a fixed plan that will cover the next winter when their energy consumption is higher.
“For the most part, the premium will be too high for household budgets, so it is probably even more realistic to stick to the capped standard variable rate for now. It’s crucial that you don’t feel like you have to subscribe to an expensive flat rate if you’re struggling to manage the costs. »
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