Smart Money: Is it worth trying to fix my energy deal as prices keep going up? - Jenny Ross

Question: I am unsure whether to fix my energy deal at the moment as prices look set to rise even further. What should I do?

Installing a smart meter will help ensure your bills are accurate
Installing a smart meter will help ensure your bills are accurate

Answer: The energy regulator Ofgem announced last Friday that the energy price cap – a limit on what people on variable energy tariffs pay for unit rates and standing charges – is jumping from £1,971 a year to £3,549. The increase will come into effect from 1 October. That’s hugely concerning news for millions of households across the country.

Unfortunately, energy prices aren’t coming down any time soon, no matter which supplier you’re with or what tariff you’re on. In fact, energy consultancy Cornwall Insight has predicted that the cap could reach £4,650 a year for the first three months of 2023.

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Energy bills are made up of unit charges for gas and electricity, which mean you pay a set rate for each unit of energy you use, as well as a daily standing charge for gas and electricity.

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If you’re on a fixed tariff, the price won’t charge for the entirety of your deal, whereas if you’re on a standard variable tariff, the rates you pay can fluctuate depending on the wholesale market pricing.

Age-old Which? advice is to consistently be on the lookout for cheaper deals, whether it’s for energy, broadband or insurance.

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However, fixed energy deals are not subject to the price cap, so at the moment you’re very unlikely to see one offering lower rates than your variable tariff.

If you commit to a fixed tariff, you are taking a gamble on it being lower over the next 12 or 24 months compared to your variable rate – bearing in mind that the next two or three predicted energy cap rises are likely to raise variable rates to ever more eye-watering levels.

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Fixed deals usually tie you in for either 12 or 24 months. Some providers will charge hefty exit fees if you want to leave early (unless you switch between 42-49 days before it ends, when they don’t apply).

If you are considering a fix, we’d suggest looking for one with low exit fees, in case circumstances change in the future.

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It’s possible to make small savings by opting for paperless bills and managing your account online, as many providers will have apps that you can download.

Installing a smart meter or sending regular meter readings will also help ensure your bills are accurate.

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If you’re concerned about paying your energy bills, support is available. So far, the government has announced £15 billion worth of support, including a £400 discount on energy bills for all households, £650 for those receiving means-tested benefits, £150 for those receiving non-means-tested disability benefits, and £100-300 for pensioners receiving the Winter Fuel Payment.

Some providers have already started contacting customers about these payments, which will happen automatically.

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These payments have already precipitated a slew of scam attempts, and will continue to do so throughout the winter.

Remember that your energy supplier will never ask you for your bank details.

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Jenny Ross is editor of Which? Money

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