Energy price tariffs that guarantee a fixed rate may not deliver the promised benefits, studies indicate

In the ever-evolving energy market, the question of whether fixed energy tariffs remain a budget-friendly choice for consumers has become a topic of discussion.

The energy price cap, a government-set limit on the maximum price energy suppliers can charge customers for each unit of energy, is predicted to increase by 9% in October, representing a £146 annual rise. This impending increase has sparked a reconsideration of fixed energy tariffs, which are contracts offered by energy suppliers where the price per unit of energy is locked in for a specific period, typically one to three years.

Martin Lewis, a renowned financial expert, suggests that if you find a fixed deal no more than 9% higher than the current price cap, it could be worth locking in, especially for high energy users. This advice comes as the average savings from the top ten cheapest fixed-rate tariffs on the open market now amount to just £5 annually compared to the energy price cap.

However, James Mabey, an analyst at Cornwall Insight, an independent firm specializing in energy research, states that it is unlikely we will see a return to consistent three-figure savings from fixed energy price tariffs anytime soon. This sentiment is echoed in the analysis conducted by Cornwall Insight, which reveals that the potential savings from fixed energy price tariffs have significantly declined, as customers could previously save between £60 and £80 per year.

The decline in savings from fixed energy price tariffs has led some consumers to question if switching is still worth the effort. While fixed tariffs provide consumers with protection against price hikes and help with budgeting, they won't benefit if energy prices drop. Moreover, exit fees for long-term fixed deals can be high, and the potential savings may outweigh these costs.

It's important to note that some of the best fixed deals might only be available to existing customers. For instance, the currently most cost-effective fixed-price electricity tariffs are offered by ENSTROGA with the "Fairpower X" tariff at 15.00 ct/kWh, followed by Tibber Germany with a dynamic tariff at 19.12 ct/kWh and Rabot Energy with "rabot.home flex" at 20.58 ct/kWh. Many providers also offer introductory bonuses that can significantly reduce costs in the first year.

Energy price rises and regulatory decisions are reshaping the energy market, potentially impacting the value of fixed tariffs. As the market continues to evolve, it's crucial for consumers to stay informed and make informed decisions about their energy choices.

In conclusion, while the current savings from fixed energy price tariffs are minimal, they could become more attractive if the energy price cap rises. Therefore, it may be worth considering a fixed deal, even if it is slightly above the current price cap, especially for high energy users. However, it's essential to weigh the potential savings against any exit fees and to keep an eye on the market for the best deals.