Shopping online for electricity providers not what it once was

DESPITE the round of energy price cuts announced by the major providers, bills are still far higher than they were last summer – leaving those on fixed deals in a far better position.

Research from uSwitch.com showed that suppliers would have to cut their prices by a further £170, or 13.5 per cent, before consumers who fixed their prices last summer would be losing out against standard plan customers.

The number of households flocking to fixed-price plans peaked six months ago, as suppliers moved to complete a second round of price increases.

While the average cost of a standard plan soared to £1,293 a year amid a flurry of price rises which came into effect at the end of the year, the average cost of a fixed-price plan taken out in June 2011 was £1,089 – £204 a year cheaper.

Although suppliers have subsequently cut their prices by £34, or 2.6 per cent, taking the average bill down to £1,259 a year, householders who fixed last summer are still paying £170, or 13.5 per cent, less than that.

Even new fixed plans are still £110, or 8.7 per cent, cheaper than the average standard plan even after the price cuts come into effect, with the average cost of a fixed-price plan today coming in at £1,149 a year.

Fixed-price plans are now so competitive that they account for four out of the eight current energy best buys, uSwitch.com said – which would have been unheard of a few years ago when fixed-price plans typically carried a chunky premium.

Whereas suppliers previously offered their most competitive prices online, today many have created a hybrid between fixed and online plans, allowing consumers to benefit from the competitive price of an online plan and the security and price guarantee of a fixed plan.

However, experts have warned that security can still come at a cost.

The cheapest fixed-price plan available today is £1,059 and is fixed until March 2013 – while the cheapest variable rate online plan is £1,030 a year – £29 a year cheaper. Consumers need to bear in mind that, should energy prices fall, those on fixed-price plans will not see the benefit – their prices will remain the same whereas those on an online plan could see some benefit, although this is not guaranteed.

“As a result of the £224, or 21 per cent, hike in prices that started at the end of 2010, consumers flocked to fixed-price plans. Now with energy prices falling, some will be wondering whether they did the right thing,” said Tom Lyon, energy expert at uSwitch.com.

“The trickiest decision, though, is for those who are weighing up between an online energy plan and a fixed-price plan. There is currently only £29 between the most competitive online plan and the cheapest fixed-price plan.

“But the fixed-price plan will not benefit from price cuts, while the online plan potentially could, although there are no guarantees. What the fixed-price plan will do, though, is to protect you against price rises in the medium to long term, so consumers need to consider how important this price security is to them before signing on the dotted line.”

1 June 2011: Cheapest fixed – £1,009

2 Current cheapest fixed – £1,061

3 Current cheapest standard plan – £1,203

4 Current cheapest online plan – £1,030