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Should I renew onto a fixed plan given the current energy crisis?

  • 23 September 2021
  • 2 replies
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I’m currently at the end of a fixed tariff, with the options seeming to be either a fixed tariff at ~£240/m or the variable tariff at ~£160/m.

Does anyone have any thoughts/input as to how high the variable tariff is likely to be raised, as I’m wondering if going to the Fixed at the moment might be locking in at the peak if the price drops in six months after winter...

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Best answer by nealmurphy 23 September 2021, 16:04

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Hi @gwyn 

Firstly I should point out that everyone’s situation is likely to be different, but a few general points that will hopefully be useful:

The standard variable tariff is price capped. Most suppliers are currently at or just below this cap because the way the wholesale market is at the moment means they are not making any profit. The forthcoming price cap rise comes into force at the beginning of October. This is in place for six months. The next price cap change will take place in April 2022. As the cap is based on wholesale prices the current system will mean that the cap will rise (probably considerably).

A lot of suppliers are offering Fixed tariffs that are fixed for two or more years. These are currently from around 4p/kWh or more above the variable tariff. This would give you some certainty on what you’ll be paying and your price would not be impacted by what happens next April and beyond. If Fixed tariffs start to come down in price next year then you could always swap if this would give you a better rate - having a tariff with no exit fees is useful if you are likely to do this, although you may still be better off switching even with exit fees.

One unknown is what the price of Fixed tariffs will be available in six months’ time. You could chose to go on the variable tariff now and see if there are any deals available prior to April (although if it’s anything like the situation now, getting in early would mean you’d probably get a better deal).

Another thing to watch are the standing charges as these are now varying considerably between suppliers. If you don’t use much energy this will impact on your bills more than if you were a high user of energy.

 

Userlevel 6
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Although unlikely IMHO... Ofgem can change the price cap more than twice a year. It is just that to date they have only changed it twice a year. There hasn't been any reason to change it more often. The Ofgem rules allow them to change the cap more often. 

We also have the governments Heat and Building strategy which we may finally see before the  COP26 Climate Change  Conference and the government has a budget statement in October. All of these could have an impact on energy bills based on government action. 

Many suppliers have stopped offering the price caped variable tariff to new customers completely for the time being. 

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