Are fixed gas and electricity deals cheaper?
We look back at whether fixed tariffs have saved customers money over the past few years.
I've been looking back at what data I can find to see whether fixed energy tariffs will have worked out better than variable ones over the past few years.
I've recorded quite a lot of these figures myself over the past five years, but I have also asked price comparison site energyhelpline for a few more, and I've been looking through some old articles too.
Shorter fixed deals are competitive
I've been surprised to find that, looking back over the past few years, fixed deals lasting roughly one year have usually worked out well for customers.
I think that, if you shopped around before buying the fixed tariff, you should have paid no more by the end of the deal than someone who stayed flexible on cheap online variable deals. Some fixed tariff customers will even have paid less.
Unsurprisingly, when one-year fixed deals have been much more expensive than variable deals, it's been a closer call.
When fixed deals have been around 5% to 10% higher than the cheapest variable deals, it looks like you might have saved virtually nothing or even paid more for the privilege of a fix.
Today, shorter fixed tariffs again look very competitive. Some of them, such as ScottishPower's Online Fixed Price Energy November 2013, or EDF's Blue +Price Promise September 2013, are even cheaper than the cheapest variable tariffs in some areas.
Longer fixes don't look so good
Back in the noughties, British Gas offered some ludicrously cheap multi-year fixes that worked out very well for its customers.
Such mis-pricing appears to be a thing of the past.
Some of these were still more expensive than the cheapest variable tariffs even in the final year of the fixed deal.
When the time comes, don't underestimate flexibility
While I think it's a fine idea to get a cheap, short-term fix when they're around, such as today, when they're not around, variable tariffs offer more flexibility than you probably realise, and therefore the ability to save more money than you give them credit for.
As you probably know, when one supplier puts prices up the others do too – but that affects just older tariffs and standard tariffs. Over the past four years, suppliers have not increased cheaper, newer, online tariffs at the same time.
Furthermore, Ofgem told me that your supplier is not normally allowed to charge you exit penalties if you leave because your supplier is raising its prices.
Put all this together and it means you can hop off your deal as the price goes up, penalty-free, and go onto the best deal on the market, with reasonable confidence that the price of that new tariff won't go up along with all the rest.
However, watch out for npower, which ties variable tariff customers in through devious means.
The supplier will only pay you your annual discounts if you stay for a whole year. Make the mistake of leaving one month before an anniversary (in the 11th month, 23rd month, and so on) and you will lose almost a whole year's discounts, which can add up to more than £100.
That wipes out any savings you'll have made by switching tariffs in the first place. This loss of discount applies even if you leave because npower is raising its prices.
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