You can turn off gas hikes like a tap. But will you get burnt?

Fixed bills can bring a warm glow, but not if prices fall

They were giving it away last week. Gas, that is, as a glut hit the UK thanks to a test run of the new Langeled pipeline linking the Yorkshire coast to North Sea fields owned by Norway.

Coupled with warm weather that depressed household heating needs, there was simply too much gas going round. And so, with the basic economics of oversupply and low demand at play, the cost hit the floor and the National Grid paid traders to take excess gas off their hands.

But if that sounds like welcome relief for millions of UK consumers - the average annual gas bill has risen by 81 per cent since January 2004 to £585.50, says the price-comparison website SimplySwitch - look below the surface. Because of the way the gas market works, last week's developments won't immediately translate into lower bills.

The suppliers that heat our homes buy gas on the wholesale market on what's called a "forward contract" basis. In other words, they guarantee future supply - several months ahead - at a set price to bring an element of stability to consumer bills.

The free gas last week was taken for immediate use by industrial users and traders and had nothing to do with residential prices, which have been at record highs due to supply difficulties earlier this year and Britain's new status as a net importer of gas as its North Sea fields run down.

Forward contract prices remain high compared to this time last year but have fallen by around a quarter since June because of developments such as Langeled and confidence that supply will be much more plentiful this winter.

This should mean consumers can expect lower prices in the not-too-distant future. Ofgem, the energy regulator, made it clear recently that the gas market will be monitored to make sure providers do pass on these savings.

For now, though, the pain continues. Npower customers began to feel the pinch last Monday from its latest rise - 17 per cent for gas, and 10 per cent for electricity.

Families now pay an average of around £1,000 a year for gas and electricity so it's no wonder many have looked at ways of keeping a lid on prices.

In the past 12 months, more than three million consumers have signed up for fixed or capped-price energy tariffs, so insuring themselves against any increases in the near future.

And despite the signs that prices are set to fall, plenty more may still be keen to sign up to these deals to keep their bills stable.

There are three "dual fuel" deals - available from British Gas, Powergen and EDF Energy - and all offer the opportunity to fix or cap your tariff. If prices rise, your bills don't; if they fall, you still pay the higher sum.

British Gas's current deal, Fix and Fall, charges a premium for gas but a discount for electricity. From the date you sign until 30 December 2007, you pay 2.84 per cent below the current standard rate for electricity and 1.6 per cent above the current price for gas.

Then, on New Year's Eve, you switch to 13.8 per cent below the electricity price and 1.6 per cent is knocked off your gas costs. The whole deal ends on 31 December 2008.

EDF's deal is a straightforward fix, at 3.5 per cent above current prices, until 31 July 2010 and is available to anyone under the EDF Energy, London Energy, Seeboard or SWEB Energy brands.

Powergen has a deal capped at 5 per cent above current prices until 31 March 2010.

None of these deals impose redemption penalties on customers who want to get out of their contracts early to take advantage of plummeting prices. People who have signed up to other fixed offers don't have the same luxury. Those who bought into the first fix - Price Protection 2007, launched by British Gas in 2004 - face a £30 penalty for bailing out now, though they will have saved £357 a year thanks to the scheme.

It's not easy to compare fixed deals against normal variable bills as we don't know how energy costs will move over the periods covered by these offers.

But the comparison websites that help people find cheaper energy deals are not fans of long-term fixes.

While cynics might say this is because they get around £40 a time for finding a new client for an energy firm, Karen Darby of SimplySwitch says fixed deals just aren't in the best interests of consumers.

"We expect one of the big six energy companies to drop their prices in the not too distant future. This could start a price war and would end over two years of consumer misery."

Anybody who has never changed supplier could still make big savings - up to £240 a year, according to switching websites - by moving their business instead of opting for a fixed deal. Independent watchdog Energywatch ( is a good first stop and has a list of accredited switching companies on its website.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Is this how Mario Balotelli will cruise into Liverpool?
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Life and Style
Pick of the bunch: Sudi Pigott puts together roasted tomatoes with peppers, aubergines and Labneh cheese for a tomato-inspired vegetarian main dish
food + drink
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Junior Quant Analyst - C++, Boost, Data Mining

    £25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

    Service Desk Analyst- (Desktop Support, Help desk)

    £25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

    Junior Quant Analyst (Machine Learning, SQL, Brokerage)

    £30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

    UNIX Application Support Analyst- Support, UNIX, London

    £45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

    Day In a Page

    Air strikes? Talk of God? Obama is following the jihadists’ script

    Air strikes? Talk of God? Obama is following the jihadists’ script

    The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
    Ebola outbreak: Billy Graham’s son declares righteous war on the virus

    Billy Graham’s son declares righteous war on Ebola

    A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
    Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

    Not even Jeremy Clarkson is bigger than the BBC, says TV boss

    Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
    Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

    Nick Clegg the movie

    Channel 4 to air Coalition drama showing Lib Dem leader's rise
    Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

    Philip Larkin: What will survive of him?

    Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
    Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

    Waxing lyrical

    Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
    Texas forensic astronomer finally pinpoints the exact birth of impressionism

    Revealed (to the minute)

    The precise time when impressionism was born
    From slow-roasted to sugar-cured: how to make the most of the British tomato season

    Make the most of British tomatoes

    The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
    10 best men's skincare products

    Face it: 10 best men's skincare products

    Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
    Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

    Mackay, Moody and another grim day for English football

    The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
    La Liga analysis: Will Barcelona's hopes go out of the window?

    Will Barcelona's hopes go out of the window?

    Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
    Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

    We know all too much about the cruelty of Isis – but all too little about who they are

    Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
    Neanderthals lived alongside humans for centuries, latest study shows

    Final resting place of our Neanderthal neighbours revealed

    Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
    Scottish independence: The new Scots who hold fate of the UK in their hands

    The new Scots who hold fate of the UK in their hands

    Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
    Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

    Blight club: Britain's ugliest buildings

    Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape