Run an energy comparison and save an average of £216*
*You could save an average of £216: Between 1 July and 31 December 2020, people who have switched energy supplier for both gas and electricity with Uswitch saved an average of £216.
A fixed price energy tariff is a plan offered by most energy suppliers that locks in the price you pay for each unit of energy you consume for a specified period. The tariff usually runs between one year and 18 months, during which time the unit rate you’re charged remains the same, so you never have to worry about unexpected price increases. In some cases, a fixed price energy tariff can last up to three years.
Committing to a fixed price energy plan doesn’t mean your energy bill will be the same each month. What you’ll pay depends – of course – on your actual energy usage, which varies from month to month, but you can relax knowing the cost per kWh (unit rate) of your energy will remain frozen. In most cases, the daily standing charge (the amount you pay your provider for supplying the energy) will also be frozen during this period. By locking in these costs, however, you can effectively ‘freeze’ your bill by committing to a sensible monthly direct debit payment that should cover your annual cost.
According to Andrew Judge on TrustPilot, this was a key consideration:
"Found a good deal switching energy supplier and opted for a fixed tariff that will be saving me £23 a month on my combined gas and electric bills. That is a saving of £276 for the coming year, with the peace of mind of no more nasty surprising price hikes."
Andrew Judge, TrustPilot
The key risk with a fixed price energy tariff is that standard variable rates might drop during the term of your plan. Even if these rates drop, your unit price will stay the same. On the upside, of course, is the fact if rates rise then you’ll be making savings.
You should compare the unit rates of any fixed rate energy plans with the current standard variable tariff. If the standard variable rate doesn’t increase – or drops – during the duration of your fixed tariff you’ll end up paying more than if you’d remained on the standard variable tariff.
To deter people switching from one fixed rate tariff to the next in the chase for the most competitive rates, most – but not all – fixed rate plans come with built-in penalties in the form of early exit fees. These enforce extra charges (typically between £25 and £50 per fuel) should you want - or need, in the case of moving home - to switch tariffs before the fixed period terminates. Fixed plans that offer 18 months at a minimum should be very carefully considered because of this. Variable rate plans, on the other hand, are often open-ended, so you can exit your contract at any time without facing fees.
Although they’re an attractive option for many, fixed price tariffs won’t appeal to everyone. You need to consider your individual circumstances and factor in the risks mentioned above when deciding between fixed or variable energy plans.
If you can see yourself moving home within the next couple of years, it may be best to stick with a variable energy plan or seek out a fixed rate plan that doesn’t come with exit fees attached. Many suppliers will allow you to transfer your current fixed plan to a new home, but you should check before your commit, and remember that the fixed rate may change if you move to a new area of the country.
Ofgem’s energy price cap prevents suppliers from overcharging customers, but this cap only applies to variable rates. On the other hand, most fixed energy tariffs will offer prices below the cap but be sure to check.
For many, the benefits of a fixed plan far outweigh the limitations – the peace of mind knowing your bills won’t jump because of surges in the wholesale price of energy is a key factor, but it does always depend on your specific circumstances.
Fixed rate energy is available as a dual fuel plan from many providers, meaning both your gas and electricity will be covered by one contract, with individual fixed rates for each fuel. When you compare different fixed rate plans with Money.co.uk, you’ll be able to filter your search to display only fixed rate contracts offering dual fuel plans.
With almost every major UK energy supplier now offering fixed plans, the rates are extremely competitive. Deciding the best fixed rate plan for you depends not only on the price you’re willing to pay, but also on the length of the contracts on offer and any additional terms or fees that may be included. Here are a few important things to consider:
The unit rates for the fixed price plan
The length of the contract
Additional services such as green plans, paper billing, and rewards
What the early exit fees are
If you can transfer your plan to a new home within the fixed period without penalty
The best fixed price energy deals for you will obviously depend on which of these features are most important to you. There are so many different plans available from many different suppliers, you’re sure to find one that best suits your requirements.
Applying for a fixed price gas and electric plan is no different than applying for a variable plan. The Energy Switch Guarantee, which applies to 90% of UK suppliers, means that your new supplier will handle the entire transition without you having to worry about the admin. The switch takes 21 days to complete – you can change your mind and cancel it during the first 14 days if you wish – and you’ll remain on your former tariff until the process is complete.
Comparing plans with the Money.co.uk price comparison tool is the best way to enter a fixed rate energy plan; Money.co.uk offers detailed information on every fixed rate energy supplier in the UK and offers exclusive deals from many top providers. Before using the price comparison tool, make sure you have the following information to hand [https://www.money.co.uk/energy/guides/what-do-i-need-to-know-about-utility-bills]:
Annual consumption in kWh, or your annual, quarterly, or monthly spend.
Current energy supplier and tariff name.
You’ll then be able to compare energy suppliers offering fixed rate tariffs and see how much you could be saving compared to your current plan.
Your supplier is required to remind you that your plan is set to end between 42 and 49 days before the end of the contract. During this period – either from the moment your supplier notifies you of your plan ending, or 42 days before the tariff ends (whichever comes first) – you’re free to switch plan or provider without incurring any exit fees. Fixed price tariffs aren’t renewed automatically at the end of their term, so it’s important to keep a note of the end date and contact your supplier during the notice period if you wish to continue with another fixed rate plan with that supplier.
If you don’t choose any plan, you’ll automatically be switched to your supplier’s standard variable tariff when your fixed period ends – and this is usually the most expensive plan to be on. Even if your supplier offers you another fixed-energy tariff, now is the time to compare your current supplier’s offerings with the rest of the market, as there may now be a better deal for you with a new provider. Using an energy comparison site like Money.co.uk makes this as quick, simple, and painless as possible.
Aside from fixed price electricity and gas plans, there are several ways you can control your energy bills to make sure you’re never paying more than you should be.
Using a smart meter could save you money as it can help you track and subsequently control your usage. This also saves you the effort of meter readings, and, with some providers, unlocks cheaper tariffs. Note, however, the presence of a smart meter in your home won’t save you money if you aren’t actively using it to monitor and reduce your usage.
You can make a few small changes to your home to make it more energy efficient. For example, draught-proofing is an important step, as better insulation means using less heating and therefore saving on energy costs. You can also save on heating costs by setting a timer on your heating and turning down your thermostat by even just a single degree. You should limit your tumble dryer usage – as tumble dryers use a great deal of energy. Switch to energy-saving lightbulbs and make sure you keep any appliances and lights switched off when not in use.
There are plenty of ways to reduce your energy consumption, and in turn reduce your bills, by making small changes around the house. Have a look at our top ten tips to cutting energy costs for advice on keeping your bills manageable.