Is it time to fix your energy deal?
What's happening with energy prices?
Energy prices are currently unstable due to the war in the Middle East. They're higher than they were at the beginning of the year, despite the April price cap dropping to £1,641 - this is because its level was locked in before the war began. However, it's likely to increase in July. While we can't be certain how much it will go up by, the latest predictions indicate an increase of around 13.5%.
So should I fix my deal?
At the moment, deciding whether to fix your deal generally depends on how much you value locking in energy prices and knowing what you'll pay for the duration of a contract. While there are some savings to be had, these could disappear at any moment depending on what happens in the Middle East, so the main benefit will be that locking in a fix now will protect you for at least 12 months through the highest usage period in winter.
If you decide to do nothing, the April price cap will offer protection from these price spikes at least until it changes in July. We don't know whether this spike is short- or long-term - the longer it lasts, the more likely it will cause the price cap to rise.
You can see our advice based on different situations below.
If you're on a fixed energy deal with more than 49 days left on your contract, you can fix again if you want to, but you should probably stay put for now.
This is because you'll probably have to pay an exit fee to leave your contract early, and it's unlikely that you'll find a cheaper fixed deal with prices currently high and likely to stay that way for the rest of the year. If you do decide you want to fix, make sure you factor your exit fees into your potential savings.
If you don't want to fix, you can manage your energy usage to save money instead.
If you're on a "standard variable" or "default" energy deal, you should strongly consider switching to a fixed deal.
Your rates are determined by the energy price cap, which is set at £1,641 per year for an average use household paying by Direct Debit.
Wholesale prices are likely to increase in July and stay high for the rest of the year, so you should fix to guarantee that your rates will stay at the same level for at least the next 12 months. Remember, though, that the actual amount you spend on energy will depend on the amount of energy you use).
If you're on a fixed energy deal with less than 49 days left on your contract, you can switch to a new fixed deal now - and you should strongly consider doing so, even if it's more expensive than the current deal that's due to end.
When your fixed deal ends, you'll roll on to a standard variable tariff, so your bills could go up by as much as 13.5% (at current estimates) from July and stay at that level or higher for the rest of the year.
You don't have to wait until the end of your contract to switch. If you're inside the final 49 days, you can switch without paying any exit fees.
What should I consider when switching energy?
Do consider exit fees. You may change your mind about your fixed deal and want to switch again. But if this happens after your cooling-off period, you might have to pay an exit fee. Not all tariffs have exit fees but most do, so make sure to check the terms of your current tariff.
Do consider the length of the deal. Most tariffs last for 12 or 24 months. During this time the price cap could rise or fall based on market conditions, so consider how long you would like to stay locked in for.
Do stay informed. Keep a close eye on the market and run regular comparisons to see what deals are on offer. If you sign up for alerts, you can stay close to what’s happening in the energy market and find out when a good deal comes along.
Don’t get a deal you can't afford. Make sure you can afford the deal you choose and don’t rush into one that you'll struggle to pay for.
Don’t just look at the direct debit amount. The price you pay through Direct Debit each month is usually based on your estimated energy usage over a year. This may not be the actual cost. Make sure you look at the unit rate and standing charge to work out how much you will be charged for your energy usage. You can also see how it differs from what you’re paying now. Find out more about fixing your energy deal here.
Customers will have to consider their finances and how important price certainty is to them before signing up to a fixed deal. The right decision for someone else might not be the right decision for you, so make sure you consider all your options carefully.
You can compare energy prices and deals that are currently available by clicking below.
Run an energy comparison
Click here to compare energy prices and get started on your energy switch.