Five questions about ... fixed energy tariffs

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The Independent Online

What is a fixed energy tariff?

Even with a fixed energy tariff, your monthly bill can vary as the amount you owe depends on the power you use. However, it means that you pay a fixed amount for each unit of energy consumed, protecting you from price hikes for the duration of the deal. Most of these tariffs fix your bill for 12 months but some offer fixes as long as five years.

What are the alternatives?

Most UK customers are on their provider's standard tariff. These standard deals are variable, meaning the price can rise and fall. Fixed energy tariffs are often cheaper than a company's standard offering. If you want the very cheapest deals, you will need to move to one of the market-leading web-based tariffs. The price you pay can change but your bills could fall by hundreds of pounds a year.

Will energy prices rise?

In the last few weeks, three energy companies upped their prices and two of the cheapest fixed rate tariffs were withdrawn. It seems likely that other providers will follow suit and raise prices, and that more leading deals could be cut.

Should I fix my bills?

Fixing your energy bills is a bit of a gamble as it means you will not benefit from any cuts in price your provider might implement in the future. On top of that, while the best fixes cost less than the average standard tariff, they are still more expensive than the very cheapest online deals. However, they do provide some security for anyone worried about rising bills and future power costs.

Who has the cheapest fixed rate tariff?

The best price for your household depends on your region and the amount of energy you use. However, the cheapest average fixed rate tariff just now is Scottish & Southern's Atlantic Fixed Price 3, with an average annual bill of £1,020. That's £181 cheaper than the average standard tariff. The cheapest overall dual fuel deal is with npower's Sign Online 20 tariff, with an average yearly bill of just £952.

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