Gas burner The Big Six suppliers (British Gas, Npower, Scottish Power, EDF Energy, Eon and Scottish & Southern Energy) have brought in price hikes in recent months, blaming the rising cost of gas and oil on the wholesale markets.
Just yesterday (Monday) British Gas’s parent company Centrica hinted at a price rise with news that the wholesale price of gas and power for delivery next winter is around 25 per cent higher than last year, but the price paid by households has yet to reflect this higher price.
Overall there are two price hikes expected this year but the effects won’t be noticed until it’s too late to bag one of the cheap fixed rate deals around today.
Increases of 15 per cent are widely expected between August and November.
With the average annual energy bill for both electricity and gas at £1,150, a 15 per cent rise would add £172, would take it to £1,322.
Insiders say that an extra price hike is being planned in the next couple of months.
To avoid dealing with higher prices next winter, it makes sense to consider signing up to a cheap fixed rate tariff now.
The cheapest deals are from EDF fixed until September 2012 costing around £1,009 or with Npower fixed until July 2012 at £1,014.
EDF’s Fixed price 2014 will cost around £1,084.
Fixing your bills does come at a premium given that the cheapest overall duel fuel tariff from British Gas’s Websaver 11 plan at £931.
But for those who like to have a set budget, fixing is worth considering. The worry is that by the time the increases show on our bills when the temperatures plummet, it will be too late to bag one of today’s cheap deals as they will have been taken off the shelves and replaced with more expensive options.
Mark Todd at energyhelpline.co.uk, says: “This year, energy prices are almost certainly going to go up again. The only way to avoid price rises is get a low cost fixed rate deal from a supplier. Like fixed rate mortgages, these deals guarantee the price you pay for up to three years and are often much cheaper than standard tariffs. But there is a complication, by the time price rises are announced all the best fixed rate deals will be gone. That’s why if you want a cheap fixed rate deal you must switch now.”
If you haven’t switched for a number of years, there are significant savings to make if you plump for an internet tariff. Fixing will bring less savings, but will protect you from future prices rises.
New rules from Ofgem, the energy industry regulator, should make it easier to keep on top of what you're paying.
Energy suppliers must now give customers 30-days notice of any price increase. In the past, they could tell them up to 90 days after the rise.
The change is designed to give customers time to switch provider before price increases.
Hannah Mummery, energy expert for Consumer Focus, says: "People clearly need to be given fair warning if prices are going to go up, not told months after the event.
"This welcome move will help give people the opportunity to budget for higher bills, weigh up their options about whether to switch supplier and shop around."
Written by Holly Thomas, deputy personal finance editor of the Daily and Sunday Express. This article was first published on May 11, 2011. Holly's opinions are her own and for general information only. Always seek independent, professional, financial advice.