Energy customers risk bill hike as fixed priced deals end
A host of fixed or capped priced deals safeguarding people from energy price rises are coming to an end in March 2010. Six fixed or capped energy plans, some dating back as far as 2006, will end next month. As a result, if people aren't vigilant they could see their energy bills rocket, warns uSwitch.com, the independent price comparison and switching service.
Four of the six plans coming to an end allow customers to pay by cash or cheque with the average bill coming in at £1,093 a year. In contrast, the same customer moving onto a standard plan today could expect to be paying £1,232 a year on average - £139 or 13% more. This bill shock is because of the marked difference in energy bills today compared with four years ago when many of those coming off fixed price plans signed up. In 2006 the average household energy bill was just £735 per year while today's bills are some £497 or 68% more expensive.
However, on the flipside, two of the fixed price plans coming to an end are direct debit only and were set up fairly recently - November 2008 and February 2009 respectively. These plans cost £1,164 on average compared with today's average standard direct debit price of £1,129 - in other words these customers will actually be saving money if they move to a standard plan when their fixed price plan ends.
4.6 million UK households are currently on fixed or capped energy plans and suppliers are expected to be contacting householders on plans that are due to end to let them know what their options are. But with British Gas recently cutting its standard prices and other suppliers expected to follow suit, fixing prices again straightaway might not be the best option. Likewise, moving to an expensive standard plan could cost customers dear. To make sure that they make the right move, consumers are being advised to check the market and shop around for their next deal instead.
Online energy plans currently offer the best value for money, with the cheapest online plan £333 cheaper than the average standard plan, and £217 cheaper on average than the six fixed price plans coming to an end in March. If households do their homework they could actually come out of a fixed deal and see their energy costs fall. But, if they don't, they could be facing a substantial price hike instead.
Thomas Lyon, energy expert at uSwitch.com, says: "Many of the households about to lose the protection of a fixed price energy plan are coming back onto a market that will look very different from a few years ago. Prices are on average £497 or 68% higher than in 2006 and this will come as a shock to many. With energy prices so high consumers face an important decision and we would urge them to take the time to shop around.
"Fixed plans are right for some, but given the current potential for further price cuts they could be the wrong move for many households. Online energy plans consistently offer the lowest prices, coming in at around £300 a year cheaper than standard tariffs and also £217 cheaper than the average fixed plan about to expire. An online plan could be a good option for those who want to enjoy low prices today while having the flexibility to move onto a fixed price plan in the future if it looks like prices are going to go up.
"For those who prefer the security of a fixed price plan our advice is to see what your current supplier can offer, but then compare with other fixed price plans in the market to find the most competitive deal. It's also important to be aware that most fixed or capped plans carry an early exit fee - consumers should always check the small print carefully and ensure that an energy plan meets their needs before signing on the dotted line."
For more information visit uSwitch.com.