Last week, in our usual financial audit that includes inspecting investments, pensions, mortgage and household bills, I checked out what was on offer from our energy supplier in terms of a fixed tariff.
That came during the bitter cold snap with the central heating being heavily used, given our small baby is experiencing her first winter.
Like most, we were shunted onto a variable tariff during the energy bill crisis at the end of 2022, when the Ofgem price cap ballooned to an eye-watering high of £4,279 in January 2023 – negated by the Government’s Energy Price Guarantee that capped it at £2,500.
The price cap is the typical gas and electricity bill for all households. As I’ve pointed out before, if you’re someone in a small household, don’t use the price cap as a barometer of how much your bill will be – it’s likely to be far lower.
Time for a fix? Roughly four in five households are now on a variable rate energy tariff – it’s worth checking for better deals if you’ve fallen out of the switching loop
That’s a fact I’ve pointed out to my aunt over the past few years who still insists on never budging the thermostat when we visit, despite us having small children. She lives alone in a one-bed house and is petrified of sky-high energy bills.
Likewise, if you live in a big house you’ll pay more, so watch that thermostat.
The current price cap is £1,738. While that is some distance away from the madness of 2022/23, it is still 66.8 per cent higher than October 2020.
Where the price cap heads next though is what makes a fix look more tempting right now – and what prompted me to fix in the summer of 2023, when my supplier sent over a fixed-rate offer.
The difference this time around is that the fix is lower than the current price cap, whereas before the fix on offer was slightly higher, making it more of a gamble.
According to expert forecaster Cornwall Insight, which has a history of being pretty accurate on where the cap goes next, it will hit £1,785 in April 2025, a near 3 per cent rise.
Of this, £904.61 would go on electricity and £880.29 on gas, for typical use. Cornwall initially thought bills would rise by a smaller margin than this from April.
It means that right now, it is worth contacting your energy supplier to see what it can offer in the way of a fix – and using our partner service with uSwitch to hunt down a better deal.
You simply enter your address and energy usage, and then search for energy offers that can cut your costs and suit how you live.
Many big and smaller suppliers are offering fixes that undercut both the current price cap and the forecast for April 2025.
They will also protect you from any potential bumps later in the year (although, of course, the price cap could head the other way – it’s hard to predict).
If you are tempted, the best option depends on your circumstances, and it is crucial to compare what monthly payments on a fixed tariff would be versus the price-capped variable tariff.
Millions of households are at the mercy of a variable tariff now, with four in five currently sat on one, and if you like stability, a fix could be the right choice.
For a fix, you should compare the unit costs of electricity and gas versus your current deal, plus standing charges (a portion of the bill which has ballooned in recent years).
Most suppliers make it fairly easy to log-in online and check out the rates you’re currently paying.
Any fix you’re tempted by should beat the price cap, come without significant exit fees – and it’s probably unwise to fix for longer than 12-18 months.
You also need to read the small print, as some tariffs require you to have a smart meter. If you’re not interested in getting one, it’s vital you check this before taking the plunge.
If you are heading to a new supplier because it’s offering a better deal, check out its customer service record and how quick it is at resolving any potential problems.
To save even more money, read our essential guide on energy-saving tips that work.
The one that has saved us the most in the past five years is fitting thermostatic radiator valves – the modern valves are so much better than those old ones, making it easier to control the temperature, room-by-room.
Boring? Yes. Worth sorting out? Definitely!