Energy bills on the rise: Time to rethink your tariff? | Tenant news

The energy regulator has announced that on 1 January 2025, gas and electricity prices will rise by 1 per cent to £1,738 a year for a typical household paying a dual fuel bill by direct debit.

This rise comes three months after the 10 per cent increase in October 2024. So, is it time to switch to a fixed-rate deal? Here’s what you need to think about doing.

What tariff are you on?

If you don’t know your tariff, check it now. Most people are on standard viable rates, which means it’s the supplier’s default rate. Suppliers can charge up to but not over the Energy Price Cap, which is set by Ofgem.

On a standard variable tariff, the price of energy usually changes every three months, when the Energy Price Cap is reviewed in January, April, July and October.

Your supplier will contact you if your rate changes - they might send a letter or email. 

Suppliers can charge different rates for their standard variable tariff, so it’s good to shop around. You can swap to another deal whenever you want.

What if I’m on a fixed deal?

A fixed energy tariff means your unit rates and standing charge stay the same for the length of the contract you agree with your energy supplier.

If the wholesale price of energy changes, you’ll still pay the rate you agreed on your contract. This is good news if energy prices rise, but if the price of goes down, you may end up paying more than you need to.

However, if you prefer to budget a fixed amount to help you manage your outgoings, you might consider choosing a fixed tariff. 

A fixed tariff usually lasts 12 months, although you can sometimes fix for longer.

If you have 49 days or less left on a fixed tariff, you can switch for free. If you have 50 days or more left on your fixed tariff you might have to pay an 'exit fee' if you want to switch.

Should you stay or should you go?

There’s not a simple answer for this, unfortunately, but doing your sums helps.

Some energy suppliers may offer cheaper, fixed-price deals. However, while they offer certainty for a set period, you might find yourself stuck at the higher price if prices fall.

When considering fixed-price deals, Ofgem says people should seek independent advice from organisations like Citizens Advice and consider what is most important for you - the lowest price or the security of a fixed deal.

Price comparison website Uswitch warns people to check whether fixed deals have exit fees before signing up, look closely at forecasts, and at what is being offered. MoneySavingExpert has more information on switching.

Uswitch also has a handy online tool that allows you to find the best deals. Check it out.