ScottishPower: fix your energy bills for two years
ScottishPower has launched tariffs allowing you to fix your energy bills for two years. But are they any good?
ScottishPower has just introduced a fixed deal that will take you through two winters until the end of March 2014. That's about 17 months by the time the switch goes through.
It also has another slightly more expensive deal lasting two full years.
Looking at “medium” users of gas and electricity, and averaging the cost of the 17-month fixed tariff in all regions, the average price of the Online Fixed Price Energy April 2014 tariff comes in at £1,140 per year. (Note: the tariff's called “April 2014” but the deal ends in March 2014.)
The two-year tariff, called Fixed Price Energy November 2014 (ending in October 2014), costs an average of £1,155 per year for medium users, or £15 extra.
Neither tariff has exit penalties.
What's not to like?
We might be getting used to bills in the low thousands of pounds, but you can do a lot better than that.
For medium users of gas and electricity, the 17-month fix averages around £100 more expensive per year than the cheapest variable tariff, which is the Spark Energy Spark Advance tariff. This costs an average £1,040 per year and it also has no exit penalties. It's the cheapest variable deal in all regions except south Wales, where the First Utility iSave version 12 is a few pence cheaper.
In order for the 17-month fixed deal to work out more cheaply, the cheapest variable deals might have to rise by more than 13% before the winter is out. Alternatively, variable deals will have to rise 8% towards the end of winter and 8% again at the start of next winter. I have taken into account the fact that we use more energy in winter.
For the two-year fix to be worth it, the cheapest variable deals will either have to go up by 15% before the winter is out, or up by 9% this winter and another 9% before the next.
Those rises certainly aren't impossible, but it means that these fixes are far from cheap. Remember, although SSE is increasing its standard prices from next week - and that is usually a sign of further increases to come - the suppliers price very differently for the cheapest online deals, and increase their prices at different times.
Strange quotes direct from ScottishPower
This seems to be because, through its website, it is pushing a version of the two-year deal that includes extra services, such as an annual service for your boiler.
I'm not at all convinced the high extra cost is worth these extra benefits. Packaged products are rarely cost-effective and this one doesn't look any different.
There are cheaper fixes
There are cheaper fixes out there than you'll find with the major suppliers like ScottishPower.
The First Utility iSave Fixed Price version 4 March 2014 will last you the same time of about 17 months by the time the switch goes through. According to Matt Ridout of energyhelpline, this costs under £1,090 per year, on average, for medium users.
Using my own analysis of regional data, I estimate that this tariff is just 3% to 6% more expensive than the cheapest variable tariff in every region, making it a much better buy than the ScottishPower fixes.
First Utility is cheapest in 12 of the 14 regions. In the Norweb and East Midlands electricity regions – to use the old regional terms – the Ovo New Energy Fixed tariff is the cheapest fix. However, this lasts 12 months instead of 17.
The average Ovo fixed price for the East Midlands is £1,060 and for Norweb it is £1,100. This tariff is less than 3% more expensive than the cheapest variable tariff in both of those regions, making it a good buy, too.
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