Wednesday, 25 September 2013

OUT FREEZE ED!

*** WARNING - the information below was updated and was accurate on 10 October 2013. But these deals can be pulled at any time.***


You can freeze your gas and electricity bills for the next four winters. That is two years longer than Labour leader Ed Miliband promised at his party conference this week.

If Labour wins the election in May 2015 he would freeze prices soon after and it would last until January 2017 when a new regime of price controls will begin. But three major energy companies are currently offering fixed tariffs which start now and end around the same time - one ends two months later than Labour's promise.

If you freeze now you will avoid price rises for four winters - including the one coming up. There was widespread speculation before Ed Miliband's speech that British Gas was preparing for a rise of around 8% (£100 on the typical dual fuel bill) and other suppliers would then follow suit.

The deals
Npower Price Protector fixes prices from when you take it out to 31 March 2017 - two months longer than Labour's plans and covering four winters. It costs a bit more than a current standard tariff - £84 a year more - but it will save you money over the next four years. If you're on a better deal than the standard tariff the extra cost of the fixed deal will be more expensive now. But it will almost certainly save you money over that period. There is no penalty for leaving early if a better deal comes along. It is the cheapest and longest lasting of the log fixes on offer. 

EDF Blue+price freeeeze also lasts until 31 March 2017. It is about the same price as the Npower deal and has no penalty for leaving. 

Scottish Power Fixed Price Energy (Help Beat Cancer) fixes to 31 December 2016 - a month before Labour's deal would end. You can leave the deal at any time but there is a penalty if you do of £50 for a dual fuel deal. It is currently almost £100 more than an average standard Scottish Power tariff. 

So what's the catch?
If you fix now with any of these deals you will be paying slightly more now. But as price rises are announced in the next few weeks - as is widely expected - you will beat that rise and may end up paying no more this winter than if you didn't fix. And over the next three winters you will almost certainly save money. Freezing your tariff also has the advantage that you know what you will be paying.

Fixing the price of your fuel is a gamble on future prices. If they go up you will be happy. If they go down you will be out of pocket. But you can leave these three deals at any time - only Scottish Power has a penalty for leaving and it is modest.

These deals are only available to credit customers not prepay customers and savings will be greater if you pay by monthly direct debit and do not get paper bills. They come with a 'dual fuel' discount discount for customers who take gas and electricity - not everyone can. 

Short term fix
If you are not keen on paying a bit more now to freeze your bills for four winters a short term fix may be better for you. First Utility iSave Fixed freezes prices until 30 April 2015 and is the cheapest for an average dual fuel bill user but has a £50 per fuel penalty for early leavers. Pioneer Energy No Worries Fixed lasts for 12 months from when it is taken out and has a £30 per fuel penalty. Scottish Power Online Fixed Price Energy lasts to 31 March 2015 with a £25 per fuel leaving penalty. Npower Online Price Fix lasts to 31 October 2014 (expect it to disappear before that date) and EDF Blue+ Price Promise lasts to 31 March 2015. Neither has a penalty. 

Other choices
In between those eight long and short-term fixes there are seventeen others currently on the market. Before switching do check out the customer service of the energy company you are switching to. Some large and some small have poor reputations. Which? has assessed them here http://www.which.co.uk/switch/energy-suppliers/energy-companies-rated

Price rise speculation

Before Ed Miliband's speech there was widespread speculation in the press that British Gas would shortly announce an 8% increase, adding around £100 to the average annual dual fuel bill. No announcement has yet been made and British Gas refuses to comment but it makes a statement to investors on 14 November and will probably announce any change before that. 

SSE - which owns the Atlantic, Southern, SWALEC, and Scottish Hydro and supplies the M&S Energy brand, has announced a rise of an average 8.2% from 15 November. Inevitably the complex changes mean some will see a lower rise than that and some considerably more. Smaller supplier Ebico also announced a rise from 15 November - in its case of 9.8%. Others are expected to follow suit. 

Some politicians have suggested the SSE rise is to pre-empt Miliband's promised freeze. That is not true. First, we knew prices would rise this winter. Second, it is too long before the May 2015 General Election. Pre-emptive rises next winter cannot, of course, be ruled out. 

The wholesale price of gas - which affects the price of electricity too - has risen since last winter. And wholesale prices make up half the cost of your bill. The cost of transmission (the pipes and wires) is a fifth of your bill and it is also rising. So too is the cost of going green(er) and helping low income families. So the pressure on prices is only upwards. Since 2008 there have been 93 price changes - 72 have been rises.

Switch and save
If you just want the cheapest deal now and don't want to fix, then go to one of the accredited switching sites like Switch with Which (www.which.co.uk/switch/) or www.energyhelpline.com which gives you £15 cash back. The best guide to switching is Money Saving Expert www.moneysavingexpert.com/utilities/you-switch-gas-electricity. It also runs the Cheap Energy Club which helps with the switching process and lets you know if a cheaper deal comes along. 

If you have  never switched and are on a standard tariff then you will always save by switching - on average nearly £200 a year. If you have switched before you will probably be able to find a cheaper tariff though the saving will not be as great.


You will also save more than 5% on your bill by changing to a monthly direct debit if you do not already pay that way. The disadvantage is that the energy company charges you each month on estimated use and you can end up in credit. You should be refunded any surplus once a year – and more often if you ask for it.

Other circumstances
If you are a tenant you can still switch supplier. Ofgem has a guide to that 
https://www.ofgem.gov.uk//publications-and-updates/switching-supplier-quick-guide-tenants

If you are on a pre-pay meter then you can still switch though the choices are more limited and the savings not as great. If you can it is best to change to a credit meter and pay by monthly direct debit. 


If you have a poor credit record or are in debt to your supplier switching may be more difficult.

13 comments:

  1. First Utilities fixed offers (April 2015 and Jan 2016) are both cheaper than the EON tariff I'm currently on!

    ReplyDelete
  2. I just switched from an Eon Age UK which ended Feb 14 to a 1 year fixed from Dec 13 for no charge. This gets me the pre-increase rate and locks in for another year and there was no charge. I like Eon as they allow monthly payment via Debit Card. I'm not keen on DD as I've run up some pretty large credit balances in the past.

    ReplyDelete
  3. This comment has been removed by the author.

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  4. Don't forget uSwitch.com, the biggest energy comparison site in the UK.

    Also, a word of advice if fixing your energy bills - try to pick a tariff that doesn't have an early exit fee so you can switch again if prices happen to go down.

    Find out more here: bit.ly/fixedenergy

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