The weather is already starting to turn that bit colder and soon it will be time to start turning your heating up to cope. It can often feel that as soon as winter hits, your energy bills start to climb straight away. If you’re paying too much for your gas and electricity, you could switch your utility bills to another provider.
But energy costs have come down in recent months and with wholesale prices for oil and gas remaining low there may be the prospect of further falls. So should you fix your energy tariff at their current rate, so you know you’ll be covered even if prices go up? Or if you do this, will you risk missing out if cheaper tariffs are announced? Let’s take a look at your options.
If the costs increase
With a fixed rate tariff, you’d get peace of mind – you can be sure how much your energy will cost every month, without the worry that your provider will announce a price rise. For the length of the tariff – however long you’d fixed the bills for – you’d always pay the same, based on how much energy you were using. This is something you might want to consider if you’re currently on a good deal for your gas and electricity, so you can lock in the low price.
It doesn’t mean your bills would always cost exactly the same every month, as the amount you’d actually have to pay would depend on how much gas or electricity you’d used. Fixing your tariff means you’d pay the same amount per energy unit – so the more you switched the lights on or turned the heating up, the more you’d pay. However, fixing at a low rate means you’ll at least know that you’ve got a good deal on the energy you’re using and your bills aren’t going to jump up – which will make budgeting that bit easier.
What if they go down?
There is a chance that energy prices could fall further meaning that your fixed price energy tariff isn’t the cheapest option - and you might feel that you’re missing out. If there is a cheaper deal available you might be able to leave your fixed rate early so you could switch to this. However, there could be an exit fee to end your tariff early, so make sure you check the details of your contract to see if it would be worth it.
Even if you’re not always paying the lowest price possible, if you’re the kind of person who likes to know your bills won’t change a lot, you might still be better off on a fixed rate. Just make sure you know how long you’re fixed for – when your current rate ends, you’ll probably be moved onto your energy supplier’s standard rate, and this is generally not the best value option.