Should I fix my energy prices until 2023?
The question of whether you should fix your energy prices usually has a very simple answer.
With the rising cost of living, it’s more important than ever that you make the right choices when it comes to your household running costs.
One of the main utilities you’ll need to make a decision on is your energy supply and the type of tariff best suited to your home.
There are a few different energy tariffs available in the UK, but amongst the most popular are fixed rate and variable rate tariffs. In this guide, we’ll provide you with a detailed comparison of fixed and variable rate contracts, highlighting how they work, their benefits and the types of properties they’re best suited to.
Fixed rate energy tariffs are a common type of energy contract which features unit rates which do not change throughout the length of your contract. Fixed rate contract lengths are usually anyway between 1-2 years for domestic properties. For commercial buildings, fixed rate tariffs are required to last a longer period, usually up to 4 years in total.
Although fixed rate tariffs allow you to secure your energy rates for an agreed period, you should bear in mind that your monthly payments can still change as your bill is calculated by multiplying your unit rate by your energy usage. So, if like most people do, you use more energy during the winter period, you will be charged extra for the additional gas and electricity consumption.
If you don’t set up an energy tariff directly with your energy supplier, you’re likely to be placed on your supplier’s default standard variable rate energy tariff. With this type of energy tariff, the cost of your energy unit rates and standing charge fees will fluctuate in line with wholesale energy prices.
So, you may benefit from cheaper energy rates in one month, but then the rates could increase in another. As well as being affected by the price of wholesale energy, energy unit rates can also be affected by price caps implemented by the energy market regulator, Ofgem.
An energy price cap is a limit set by Ofgem restricting the amount that your supplier can charge you for the rate of gas and electricity that you use. These limits apply specifically to households on a variable rate tariff.
When comparing fixed rate tariffs, it’s worth checking how your estimated bills compare to the current price cap. As prices have increased, some fixed rate tariffs have been set above the current price cap rate.
As a result of rising energy wholesale prices, Ofgem recently increased the energy price caps by 54%, causing many homeowners to see a significant increase in their energy prices.
To help you choose between a fixed and variable rate energy tariff, here’s a breakdown of some of their main advantages and disadvantages:
To choose the right energy tariff for your home, you need to think about what you want from your energy tariff.
Are you looking for stability and the ability to budget with predictable bills? If so, a fixed rate tariff may be most suitable for you. Alternatively, do you want an energy tariff that doesn’t require you to commit to an agreed timeframe? In that case, you may be better suited to a variable rate tariff.
Regardless of which option you choose, the most effective way to find the best energy deal for your home is to compare energy prices online. Here at Love Energy Savings, we offer a free online comparison tool to help you find the best fixed-price or variable-rate tariff for your home. We can provide you with a quote for the best energy deals on the market in just a few seconds.
Try our free online comparison tool today to find the latest deals from our trusted suppliers.
An energy tariff with a low unit rate or standing charge can seem like a great deal. Usually, energy suppliers will offer one or the other and these are actually aimed at two different types of users.