Fixed Rate Energy Tariffs

Fixed Rate Energy Tariffs

Fixed-rate energy tariffs, also known as fixed-price or capped tariffs, are designed to protect homeowners from increasing energy prices.

How do they work?

They work by guaranteeing that the price you pay per unit of energy will remain fixed at an amount agreed between the customer and supplier for a set amount of time.

This means that even if gas and electricity prices across the rest of the market rise over the next two or three years.

The typical time that a fixed-rate tariff lasts – you will have peace of mind knowing that this wont affect the amount you pay each month or quarter.

Knowing how much your energy will cost for the next few years will also make budgeting a lot easier.

What are the drawbacks?

While a fixed-price plan might save you from any price hikes over the next couple of years, it will also prevent you from taking advantage of any market price drops.

In fact, if energy prices fall during your agreed period, you could be left paying a much higher price for your gas and electricity supply.

It is also worth bearing in mind that fixed or capped deals are generally more expensive than standard variable plans because of the ‘price guarantee’ they offer, and are the only tariffs that can include a fee for switching before the end of the agreed term.

Is it suitable for me?

Fixed-price plans are ideal if you are willing to pay a little extra for the peace of mind/reassurance of having a guaranteed energy price. It is also beneficial if you are going through a difficult financial period and need help budgeting.

However, before agreeing to a fixed-rate tariff you must make sure that when your capped deal expires the chances are the cost of your energy will rise you’ll need to prepare for the possibility of a sudden price jump when your capped deal expires.

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