Fixed-price energy deals are the way to banish winter discontent

Sunday 9 September 2012

Consumers should switch to a cheap fixed energy deal ahead of potential price rises and bigger bills during the winter months, experts say.

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By Naomi Caine

SSE is the first of the big six energy firms to announce price hikes. The company will put up its prices by an average of 9% from October 15, blaming the higher cost of wholesale gas and an increase in the cost of using the gas and electricity networks. Scott Byrom, energy expert at MoneySupermarket.com, says: "The average annual bill for an SSE customer will now stand at £1354, making it the most expensive standard tariff on the market."

The SSE increase could prompt rivals to push up prices, although E.ON has pledged not to raise bills before the end of the year. Byrom says: "SSE is the first of the big six providers to announce price increases this season, leaving the doors wide open for the rest to follow suit. I expect a domino effect."In its latest monthly inflation report the Bank of England suggests domestic energy prices are likely to rise, probably around the turn of the year. Tom Lyon, energy expert at uSwitch.com, says: "This is very worrying news for consumers, and could set alarm-bells ringing. In the last six years, household energy bills have rocketed by £599 or 91% – from £660 a year in 2006 to £1259 today."The potential price rises could not come at a worse time as winter approaches. However, switching to a better deal could save you money. The difference between the lowest and highest tariff on the market is about £300 a year – and a fixed tariff is often the cheapest option. Byrom says: "Anyone hoping to keep their energy bills low in this volatile energy market should opt for the best-value fixed-price tariff. An SSE customer affected by the price-hikes could save over £300 a year by switching to one of these better-priced deals, as well as protecting themselves from further increases for the duration of the term." Until last week, EDF Energy stood with First Utility and Scottish Power in offering competitive fixed tariffs. However, EDF's Blue + Price Promise – which saw the average household pay just over £1000 a year for gas and electricity until April 2014 and also promised to tell customers if a rival brings out a tariff that could save them £1 or more a week – was withdrawn due to the demand. The move supports Lyon's urgent advice to those looking for a good deal. He says: "Consumers who want to fix their energy prices cannot afford to hang around – these deals are flying off the shelves and could be pulled at any time. "People have quickly grasped that paying a low price today, coupled with a price guarantee and no exit penalties, makes fixing your prices a real no-brainer. It gives absolute peace of mind coupled with flexibility, vital for consumers as we head into what could well be a winter of price hikes."Fixed plans from First Utility and Scottish Power would also cost a Scottish household about £1000 a year, though they do not last as long. There is no exit fee with Scottish Power, but First Utility charges £30 per fuel if you switch early.The looming winter is another reason to switch soon. Byrom says: "Switching your gas and electricity provider takes up to six weeks, so customers languishing on their provider's standard tariff should act now to ensure they switch onto the best deal in time." Consumers could shave even more money off their energy bills by checking out a cashback website, such as Topcashback or Quidco. A number of energy firms including First Utility, npower and Scottish Power offer cashback on their energy tariffs. First Utility, for example, gives £40 cashback for the successful approval of a new customer to the iSave Fixed December 2013 Dual Fuel tariff on Quidco. Andy Oldham, managing director of Quidco, says: "With up to £100 available on certain tariffs, every consumer that shops via Quidco can mitigate the impact of rising wholesale energy costs by getting money back in cashback."However, don't let a cashback offer influence your choice of energy plan. You should always pick a tariff that offers the maximum savings and consider any cashback a bonus.

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Fixed-price energy deals are the way to banish winter discontent

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