With energy bills taking another jump following a new price cap rise on January 1, many may be considering opting into a fixed deal to save some money.
Fixed energy tariffs enable customers to lock in a rate for a certain period of time, and providers are gradually offering more of these types of deals as market stability somewhat resumes. However, some may not work out to be the cheapest option, an expert has warned.
Les Roberts, business comparison expert at Bionic, said: “The energy price cap increase on January 1 will see rates increase just as households need to use more gas and electricity to heat and light their homes to get through the winter months.
“Although Ofgem has suggested that we’re seeing ‘The return of choice to the market’, there are still very few fixed tariffs available that are below the level of the cap and many have multiple conditions or are just for existing customers.”
Those who find a deal with rates below the new price cap rate, which is currently set at £1,928 per year for a typical household paying by direct debit, Mr Roberts said: “It could be worth considering making the switch as we don’t know what will happen to energy prices as we move into 2024.”
However, he noted that price-capped tariffs change every three months in line with Ofgem’s price cap review, so a deal that looks good now “could end up being more expensive” if energy prices drop later in the year.
Mr Roberts said: “It’s currently predicted that the cap will fall by 14 percent from April, so it could be worth sitting tight and waiting for more fixed-rate deals to become available.”
Mr Roberts said it’s also worth remembering that the notice period for people looking to end their current contract differs between suppliers, meaning people should check their supplier’s requirements before switching.
He added: “If you’re a business owner, remember that there’s no price cap on non-domestic energy contracts.
“If your current contract is coming up for renewal then it’s worth comparing quotes and fixing your rates to give yourself bill stability and protect against future price rises.”
How to lower energy bills this winter
The price cap isn’t a cap on the amount a household pays but is a cap on the maximum standing charge and unit rates energy providers can charge.
Mr Roberts said: “The more energy you use, the more you’ll be charged. This means that it’s worth getting into energy-efficient patterns of behaviour around your home to reduce your bills.”
Generally, older electrical appliances tend to be less energy efficient, so Mr Roberts said upgrading large appliances, such as washing machines and dishwashers, might be “worth it” if they are more than 10 years old.
He added: “More efficient models cut the kWh used significantly, so running costs will be much lower and over time, the money spent on the appliance will be made back in savings.
“The energy rating of large electrical devices will be printed on the energy label and ranks efficiency from G to A, with A being the most efficient model. Make sure to take note of the energy label when you are next in the market for an appliance.”
What to do if you can’t afford your bill
According to Mr Roberts, the “most important step” people should take if they feel they cannot afford their energy bill is to contact their supplier. He said: “They are obliged to outline your options, such as organising a payment plan.
“Under official Ofgem rules, your provider must organise an affordable payment plan and as part of this, consumers have the right to ask for a bills review to see if the amount is correct, a break from payments until you can afford to pay, a reduction to an affordable rate, access to advice on how to reduce energy usage, or more time between payments.
“Your provider must also give you access to any available hardship funds, charitable grants, or help you apply for any available Government grants if they have not been automatically applied.”
Some energy suppliers are offering grants – some worth up to £1,500 – to their most vulnerable customers. For a list of those available, click here.
