The cost of “fixed price” energy contracts reaches an all-time high
Households that lock themselves into fixed-price energy tariffs to protect themselves from soaring bills will end up losing hundreds of pounds, despite forecasts that the price cap will rise twice this year.
The average contract will cost consumers £2,340 over 12 months, a record high. Even the cheapest 10 cost an average of £1,949 per year, according to price comparison site Uswitch.
All are above the energy price cap, which limits what suppliers can charge customers on the default variable tariff. This is expected to rise by £588 in April and a further £375 from October to £2,240, according to energy analysts Cornwall Insight. This follows months of soaring wholesale prices, which are expected to remain at elevated levels for some time.
Those already on 12-month fixed tariffs that expire this year – who have so far been shielded from the energy crisis – will see their bills soar. Last August, the cheapest flat rates cost £1,116, according to Uswitch. If the price cap increases as expected, these customers will see their bills soar by £749, or £62 per month, after their offers end.
Households that subscribed to a fixed tariff when the energy crisis began to unfold in late 2021 will be isolated for most of this year. However, they will see a big increase in bills towards the end of 2022.
The 10 cheapest deals averaged £1,266 in October. If the price cap increases as planned, these customers will have to pay an additional £974 per year after their contract ends.