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Should I fix my energy prices until 2023?

Fixed Price Tariffs Guide

You should fix your energy prices until 2023 if you can get a cheaper fixed than the October 2022 price cap increase. However, it is difficult to find an energy tariff worth switching to - and when a tariff becomes available, they are only up for a short amount of time. 

Cornwall Insights predicted a 65% increase in energy bills. This would leave the average UK household paying around £3,244 annually with the October 2022 price cap.

However, the government have now announced the energy price guarantee, capping average household bill at £2,500 until 2024. 

This price guarantee is expected to apply to both fixed rate tariffs and variable tariffs. The £400 energy grant will bring this down to £2,100 in 2022.

We’ve explained below why energy prices soaring, what this means for you and what you can do. 

Compare the latest 1-year and 2-year fixed deals.

Why Are UK Energy Prices So High? 

Energy prices have sky-rocketed in recent times and the energy market has changed as a result of this.

A worldwide squeeze on gas prices and energy suppliers has seen consumers facing significant increases when they come to renew their energy tariffs.

Wholesale gas prices have hit an unprecedented high of 450 pence per therm. This has placed real pressure on energy suppliers as fixed prices agreed previously have seen them losing money on the gas and electricity provided.

A number of factors have combined to see the wholesale prices increase so dramatically. A cold winter in Europe and increased demand from Asia put real pressure on supplies. Combined with other geopolitical factors, supply and prices have been severely affected.

The UK has been hit particularly hard due to our high gas and electricity usage and a lower storage capacity than many other nations. 

These reasons, combined with other geographical factors and supply chain issues, have resulted in our current energy situation. 

How Has This Affected The Energy Price Cap?

The Energy Price Cap places a limit on the amount suppliers can charge domestic customers for gas and electricity. The price cap aims to reflect wholesale prices and protect customers on default standard variable tariffs from sudden price hikes.

In April 2022, the Energy Price Cap was increased by £693 to £1,971 for the average household. However, it’s important to bear in mind that this is not the maximum your household can be charged. If you use a high amount of energy, you may pay more than the set price cap.

The price cap is reviewed every 6 months and was expected to increase again in October 2022 before the announcement of the energy price guarantee. 

Why Fixing Your Energy Prices Could Be A Good Idea? 

As prices increase, customers may be tempted to move to a fixed price tariff to avoid any upcoming hikes. This is only a good strategy in certain situations. 

For example, if you find a tariff around 45-50% more expensive than the current price cap, you will almost certainly be paying a cheaper energy rate than those still on the price cap this winter. 

However, it’s important to remember that we don't know what will happen post-2024 when the energy price guarantee is set to end. In normal circumstances, the price cap does not affect fixed rate deals. As a result, may suppliers had set fixed price deals well above the price cap to make up for a shortfall from standard variable deals.

What Will Happen To UK Energy Prices In 2023? 

It is difficult to predict what will happen in beyond 2023. However, the energy price guarantee is set to stay in place until 2024. This would mean prices remain capped at £2,500 for both fixed and variable deals. It is not yet known whether the energy grants will be repeated in 2023.

Why You Shouldn’t Fix Your Energy Until 2023 

Anytime a UK energy supplier offers an energy tariff cheaper than the future 2022 winter price cap, it is snapped up pretty quickly. The energy supplier will usually only allow a certain number of customers to sign-up. These releases are not well advertised. So it’s worth regularly checking comparison sites. 

Historically, standard variable tariffs have been some of the most expensive home energy tariffs on the market. Yet as the price cap doesn’t affect fixed price deals in normal circumstances, energy suppliers are increasing these tariff prices significantly.

This is a decision that must be made with an understanding that prices are increasing and switching suppliers is now about reducing the increases rather than saving money in comparison to your old tariff. 

With the cost of energy continuing to increase, energy suppliers are aiming to protect themselves by setting high rates on new fixed price tariffs. Agreeing to a new fixed energy tariff now could leave you paying more than you need to for your home energy.

Reasons to keep your prices fixed

Many people simply prefer the stability and peace of mind provided by a fixed-rate tariff. Even though it may leave you paying over the odds currently, knowing your unit rate for gas and electricity will remain steady can be important.

How to find the best energy deals

It’s important to remember that the energy market has changed significantly in recent months. When switching to a new deal, you have little to no chance of finding a tariff that is cheaper than your previous contract.

Comparing prices from as many suppliers as possible is still important for domestic customers. With Love Energy Savings, you can quickly compare the latest energy prices and view your estimated yearly costs online.

We’d always recommend having as much information as possible when comparing energy tariffs. This includes your renewal quote, the energy price cap tariff costs, and the cost of your supplier’s standard variable tariff.

To start your switch, compare the latest energy prices with Love Energy Savings.

How To Reduce Energy Bills 

Of course, there are other ways of reducing your energy bills this winter. Reducing consumption is currently the best way to save money. 

Heating

Your home heating accounts for around 62% of your annual energy bill; this includes water heating. Heating your home more efficiently is likely to have a positive impact on your energy bills. Whilst large purchases may be out of the question at the moment due to cost, it may be worth going around your home draught-proofing. Pay particular attention to doorways and windows. 

Lights 

Switching to LED lightbulbs could save you around £40 per year. It doesn’t seem like much but adds this up with other energy-saving efforts and it soon makes a difference. You may also want to keep this in mind at Christmas when you’re hanging your lights. 

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