As the energy crisis hits households hard, many people are looking at fixed-rate energy deals as a possible solution. But should you switch to a fixed-rate energy deal or weather the storm a bit longer?
While it may look tempting, experts have always urged people to avoid fixing their bills and instead stay on a standard tariff protected by the cap. It comes as bill prices continue to rise and families are really starting to feel the pinch, Wales Online reports.
The Times reports that the energy price cap could rise by 42 per cent in October, to £2,800 for an average household according to Ofgem last week. Uswitch indicates there are currently 13 fixed tariffs available that charge less than £2,800 for the average household.
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The cheapest comes from Eon at £2,600 a year. Meanwhile, Ovo is offering two-year fixed deals that work out at roughly £2,700 and £2,500 for the average dual fuel customer.
But experts are reluctant to recommend a switch to a fixed tariff just now. The current price cap stands at £1,971 for an average family - so an immediate switch would lose saving s over the next four months.
The consultancy Cornwall Insight expects the price cap to be £2,790 from October to December, then to rise to £2,818 between January and March. If it stayed at £2,818 between April and June 2023 then a tariff protected by the price cap would average £2,529 over the next 12 months. This would mean you would pay about £66 more a year with Eon.
Justina Miltienyte of Uswitch explains: "The price cap could change up to eight times over a two-year fixed deal, so it’s very hard to predict whether you will be better off staying on a standard variable tariff or fixing. It’s a case of how much you value certainty and what you can afford to pay. Some households may prefer to pay over the odds to have the stability of a fixed deal that will cover next winter when their energy use will be higher.
"For most, the premium will be too high for household budgets to cope with, so it is probably still more realistic to stick with the price-capped standard variable tariff for now. It’s crucial that you don’t feel pressured into taking out an expensive fixed tariff if you will struggle to manage the cost."
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