Although energy companies have to by law give the consumer 30 days before they implement any price rises and we have not had such a warning, there are signs that there could be future hikes in the pipeline.
Two of the top six energy firms – Npower and Scottish Power have each made changes to their tariffs, with Npower discontinuing its cheapest tariff to replace it with a higher fixed rate, whilst at the same time reducing the price of its online variable rate product. Scottish Power have also been tinkering around with tariffs by stopping its cheapest online variable rate deal and its cheapest fixed tariff, and replacing the cheaper fixed tariff with a more expensive one.
Problem is they haven’t introduced the new variable rate yet. Moreover, we have Centrica, who own British Gas, telling consumers to be aware of imminent price hikes that may occur later this year, as the wholesale price of gas is rising by 15% every year. So should we be worried? Well, E-on state that they will not be raising prices for residential customers for the rest of the year. On the other hand, this time last year saw similar tinkering with tariffs before a big price hike from the top six energy companies.
So what are your choices if you do decide to switch tariffs and energy suppliers? You have variable rates, fixed rates or capped rates. Variable rates are subject to change in line with wholesale energy prices. This means that although they may start much lower, they could become a lot more expensive than that in the long run.
Fixed rate deals are where the tariff is fixed for a number of months. The problem is that if there is an energy drop in prices, you could be stuck with a higher tariff. The thing to remember with fixed rate deals is that they are often a little more expensive than standard deals right now because they protect you against price hikes. Paying a little more for a fixed deal now could save you in the long-term, though. You need to see exactly how long the fixed term is for and if there are any exit fees, should you wish to buy your way out of it. Capped energy deals ensure that you do not pay more than a set amount over an agreed period, however, you could pay less if prices fall.
As we start to stop using our heating and gas and electricity, it is easy to begin to forget about price hikes but now could be a great way to save money in the near future. Scott Byrom, who is an energy expert is convinced that the recent changes by Scottish Power and Npower’s could be significant. He says, “Scottish Power and Npower both removing and changing their best fixed energy tariff in recent weeks is certainly something to sit up and take notice of and could certainly be early indications of a potential price change.
Those wanting to be proactive and protect their finances couldn’t switch at a better time by looking at EDF Energy’s “Blue + Price Promise” which offers consumers fixed rates until Sept 2013 with no termination fee should you switch if prices where to fall between now and then. Opting for this tariff really is a no-brainer for those wanting to ensure they are on the best deal for their household energy. The announcement from Centrica further supports the urgency around getting on the best deal NOW before the best deals go up in price as we’ve already started to see.”