Unsure what to do at the end of your energy contract? Could you save by switching supplier? Here's what to do, and how to avoid overpaying on standard variable rate tariffs.
The definition of fixed rate is simple - it’s the term given to a plan or tariff offered by a supplier where the price that customers pay for each unit of energy they use is fixed for the duration of the contract and isn’t subject to potential price changes depending on market conditions. Other plans are classed as “variable”, meaning the price that customers pay can go up or down at the whim of the supplier.
Fixed price energy plans, though, will always cost customers the same amount for their duration and will end on a set date, generally after twelve or eighteen months. Fixed rates give customers a sense of security in terms of always knowing how much they’re going to be charged for their energy from month to month.
The main benefit of fixed price energy is the fact that the price is guaranteed to not get more expensive while customers are on that plan. This offers protection from suppliers raising prices in response to outside factors like wholesale gas fees or conflicts in key supply areas. The total cost of energy for the duration of the tariff, therefore, may end up significantly cheaper than it otherwise would be.
Having said that, there are people who prefer the flexibility of a standard variable tariff because they tend to be rolling contracts that go from month to month (though there are exceptions, so make sure you check if you decide to sign up to one). This gives them more power over their energy than those on a fixed tariff, who are usually committed to them for up to 18 months (unless they wish to leave early and probably incur an exit fee). Whether you opt for a fixed plan over a standard plan may well depend on what you feel is most important in terms of price and flexibility.
It’s always a good idea to keep track of when your fixed price energy tariff is coming to an end and mark the date down in your diary. Your supplier should notify you (whether it’s by letter, email or even text message) 49 days before the plan is due to end. This is the period during which you can switch to a new deal without incurring any early exit fees if they apply to your plan.
When your plan enters this period, start shopping around for a new deal. If you haven’t switched by the date your plan ends, you’ll be rolled onto your supplier’s standard variable plan, which could suddenly see you paying much more than you currently are.
The key to comparing fixed price plans is to know exactly how much energy you currently use and which plan you’re currently on. Price comparison websites usually ask for details of your current usage and plan, so the more accurate you can be in terms of what you tell them, the better. This will enable their systems to match you with the most suitable deals.
The information you need can usually be found on your latest bill, whether it’s for the last month or the last quarter. It can be difficult to find your exact usage on there but, once you have, write it down somewhere to refer to it if you intend to search multiple websites. Once you’ve been presented with the available plans, you can use filters that take the likes of exit fees, billing options, incentives and more into account to help you find the best possible fixed price plan.
To find a cheap fixed rate energy deal, the easiest thing to do is to use a price comparison website. Simply enter relevant details about your current plan and usage into the system to find all the plans you could switch to. You should then be able to use a filter to enable you to exclusively view fixed price energy tariffs from the various suppliers, thereby allowing you to easily see which one is most suitable for your budget and circumstances.