Fixed price energy customers: what to do next

If you managed to fix your energy tariff last year, you'll have avoided the price hikes that hit other households. But with many fixed price energy plans set to end this summer, you may be wondering what to do next…

The heat was on last June as millions of people flocked to fix their energy costs.

In a bid to escape soaring prices, many customers locked in to attractive fixed rate tariffs before the price hikes predicted by experts could take hold.

Unfortunately, many of these affordable energy deals - which protected many people from energy rate rises - are now coming to an end.

If this applies to you, it's vital that you review your energy costs. Otherwise, you could face a serious payment shock this summer…

The story so far

After a round of energy price cuts this winter, it's possible some people have forgotten their fury over last year's incredible price rises.

However, cast your mind back and you may remember that the cost of the average household's energy shot up by roughly 40% in 2008!

As a result, five and a half million homes in England were pushed into fuel poverty* according to Consumer Focus - a five fold rise over just five years.

Sadly, the energy price cuts announced earlier this year have done very little to cancel out the impact of last year's steep rises.

Big bills

If you didn't lock into a fixed rate energy deal last summer, you'll probably have been feeling the pinch of inflated energy bills for a year now. This will ring especially true for those who have never switched suppliers or haven't done so recently.

In fact, if you've never changed your energy provider, you could save up to a whopping £391 by switching now.

Unfortunately, even those who did manage to secure an affordable deal last year now look likely to be hit with bigger bills. That's because when time is up for fixed price tariffs, most energy providers will shift their customers onto far more costly 'standard' plans.

Scary stats

In July 2008, the average fixed price plan cost £1,046 per year according to statistics from Energylinx.

Today, though, the average standard plan works out at a significantly pricier £1,243 a year for households who don't pay their bills by direct debit. That's a difference of £197.

This means households used to paying for fixed rate energy could face an increase to their annual energy bills of almost £200!

However, Energylinx data shows that, right now the cheapest online energy plan, British Gas's Websaver 3, costs £1,018 a year. Not only is this £225 cheaper than the average pay-per-bill standard plan - it's actually £28 cheaper than last summer's average fixed price deal!

Here's a quick guide to the cheapest deals on the market right now:

Supplier	Tariff	Average Annual Bill
British Gas	Websaver 3	£1,018
E.ON	Energy Online Extra Saver 14	£1,040
Npower	Sign Online 15	£1,063
Scottish Power	Energy Online Saver	£1,064
SSE	Domestic Standard Online	£1,075
EDF	Online S@ver 1	£1,090

*All calculated using average annual consumption 20,500 kWh for Gas, 3,300 for Electricity and payment by Monthly Direct Debit.

Steps for saving

To ensure you aren't caught out by higher energy costs, it's important to shop around for a new deal as soon as your existing fix expires.

Following these four simple steps could help save you a significant sum.

Step 1. Run an online comparison

Using an online comparison tool is one of the easiest and quickest ways to compare energy prices from a range of suppliers.

You'll need to supply the system with your postcode and details of what you're currently paying for your energy. This will allow it to calculate how much you could save by switching and inform you which tariff is the cheapest one for you.

Remember to check when your fixed deal ends before committing to a switch, however; if you try to exit your energy plan too soon, you could be hit with a penalty charge.

Step 2. Go for dual fuel

If it's possible for you, opt for a 'dual fuel' plan (where you buy your gas and electricity from the same provider).

Dual fuel plans often make energy cheaper than it would be if you purchased your gas and electricity separately. What's more, it's likely to be more convenient; you'll only have to contact one provider if you have any queries about your energy billing or usage.

Step 3. Pay by direct debit

It's often cheaper to pay your energy bills by direct debit. Many suppliers will offer you a discount in return for the security of knowing how and when you'll pay them.

According to Energylinx, paying by direct debit could shave £97 off the annual cost of a standard dual fuel plan.

Step 4. Go online

It's often the case that the cheapest energy tariff available is for online customers only. If you opt for an online plan, it's possible you'll have to supply your energy provider with online meter readings and manage your account via the worldwide web.

If you are happy to do this, it's a bonus for suppliers; it means there is less administration and less cost involved in billing customers.

As a result, some of the money they save can be passed on to you and me!

Should I fix now?

Right now, some industry insiders believe energy prices could come down further in 2009. On this basis, it's easy to argue that choosing a fixed price energy plan makes little sense right now.

However, in an uncertain economic climate, there is no way to guarantee what will happen.

What's more, oil prices have recently started to rise again. This suggests that, in the long term, energy prices will once again go up.

If you prefer the security of knowing how much your energy will cost you each month, locking into a fixed rate energy deal might be right answer for you.

While opting for a fixed price deal means you probably won't pay the lowest possible price for your gas and electricity right now, some people are prepared to pay a slight premium for peace of mind.

If you are tempted to fix, be aware that most capped plans now carry an exit fee.

If your plan comes with this kind of charge, you'll have to pay for the privilege of leaving your supplier before your fixed deal finishes.

Therefore, it's crucial you check the small print carefully before you sign on the dotted line. Also, if you're planning to move house in the near future, make sure any fixed energy tariff you pick is portable.

Above all, no matter what kind of energy deal you choose, make sure you always do your homework first. Remember: regularly reviewing your tariff is the only way to ensure you remain on a competitive deal and pay the cheapest possible price for your energy.

If you're worried or unsure about how switching works, you can read our simple guide and frequently asked questions to find out more about getting a better deal on energy.

* According to Consumer Focus, a household is in fuel poverty if more than 10% of its annual earnings are spent on energy.

**Articles featured on BeatThatQuote.com are for information purposes only and reflect the views of individual writers. Articles are not, and should not be considered as, financial advice. BeatThatQuote.com strongly encourages our readers not to rely solely on information contained within this article/our website, but to conduct their own research and seek independent advice about the financial products they purchase.**