So, are you better off fixing your tariff now or staying on the standard variable tariff (SVT)? We’ve put together a helpful guide to support you in making the right decision for your home.
Included with a fixed tariff.
No unexpected price increases.Current predictions by Cornwall Insight suggest that, energy prices could rise again in early 2024. By fixing your tariff you are protected from fluctuations in the price cap, meaning your energy price cannot increase during the length of your contract.
Budget with confidence. Know exactly what you are paying for each unit of energy you use, allowing you to budget for your bills with confidence.
Not included with a fixed tariff.
Flexibility. Whilst a fixed tariff offers more security, it comes at the cost of flexibility. Fixed tariffs have a set contract duration (usually one or two years). If you want to switch tariffs during this time you may be subject to exit fees.
Prices may get lower. The flipside of being on a tariff that doesn’t change with the price cap, is that if prices get lower you will be fixed at a higher energy price until the end of your contract.
Energy market predictions.
To help keep you informed, we have summarised the latest price cap predictions from Cornwall Insight1. These figures are not guaranteed, and are for your guidance only.
Ofgem announced on 25 August 2023 that energy unit prices will fall in the October price cap. This means the price you pay for your energy will go down, and the average household bill2 will be lower. However, current forecasts predict that prices could begin to increase in 2024.
According to the latest predictions by Cornwall Insights, prices are expected to rise in January and then gradually decrease over 2024. This means that right now you may find that fixed tariff deals appear to be more expensive than the current standard variable tariff price (SVT). However, as the fixed tariff deals will not increase with the price caps, you may save money over the full term of your contract if prices rise as predicted. Just be aware that this is not guaranteed and predictions can change over time to reflect changes in the energy industry.
The energy market has stabilised significantly in the last few months, but unexpected changes could happen at any time. Geopolitics has a huge influence on energy prices, so a further escalation in the war in Ukraine or tensions rising further over Taiwan could see the wholesale gas price rise, which would eventually lead to higher bills again. Ongoing discussions over how the price cap is calculated and other energy legislation may also have an impact on energy prices heading into 2024, causing these predictions to change.
Is now the best time to fix my tariff?
Unfortunately, like you, we cannot see into the future - which means you can never be certain when the best time is to fix your energy tariff. We recommend instead weighing how much you value the certainty of a fixed price with the affordability of your fixed tariff quote.
If you feel that you can comfortably afford the energy price you are quoted for the next 1 to 2 years, then you may enjoy the security that comes with a fixed tariff. You will be protected from price increases, and can feel confident that your bills are within your budget for the duration of your contract. No more stress around price cap announcements, instead sit back and relax.
However, if you would prefer to wait and see how the market develops, you may be able to get a better quote in the future. Just be aware that this is not guaranteed, and you also risk your energy prices increasing.
Ultimately, the decision to get a fixed tariff, and when, is up to you. There really is no right answer. So unless you stumble across a time traveller from the future, be wary of anyone telling you otherwise. (And let’s be honest, if you did, you’d be asking for lottery numbers not fixed tariff prices. We know we would!)
Since July you have no longer received government support from the Energy Price Guarantee (EPG), which kept the maximum energy price at £2,500 a year for an average household. No longer receiving this government support will not increase the cost of your bills. This is because the price cap is already below the current £3,000 (From 1 July) threshold, so you are already paying less than you were under the EPG.
Struggling to pay.
If you are struggling to pay your bills we are here to support you.
The E.ON Next Community is a space for customers just like you, sharing their experiences to offer a helping hand. Find support or suggest your own unique topics, plus get involved in discussions of all the latest news. Join the conversation now.
1 Energy prices forecast by Cornwall Insight are for a dual fuel energy customer paying by Direct Debit.
2 An average household, according to Ofgem, is a 2-3 bedroom home with 2-3 residents, and average household energy use of 12,000kWh of gas use and 2,900kWh of electricity use per year.
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