Households urged to fix energy costs

Energyhelpline.com says over the last 10 weeks the wholesale price of gas has risen by 45%.

This is based on what firms pay now for gas next winter, as they often buy well in advance (see the Cheap Gas & Electricity guide).

Wholesale electricity prices for this summer and next winter have risen by 30% over the same period.

Energy firms usually pass on rises in the price they pay for gas and electricity onto consumers, resulting in higher household bills.

However, this hike in our bills has yet to happen, though some of the cheaper deals for new customers have been pulled.

Top tariff to go

The current top one-year fixed rate, based on average consumption, Eon's FixOnline v8, will be pulled "in the near future", the power firm has confirmed.

MoneySavingExpert.com understands this is scheduled to happen next week though the date may be brought forward if a rush of customers sign up.

The average household will pay £883 a year on that deal, though it comes with a £30 penalty if you switch before July 2011.

Mark Todd, Energyhelpline co-founder, says: "As fixed rates ebbed at their lowest level for two years, a few weeks ago we urged consumers to take a gamble by fixing the price of their gas and electricity amid signs energy prices are beginning to rise again (see the Should you fix your energy? MSE News story)."With wholesale gas prices having recently shot up, time is running out for those who want to get the best deals around. Even though standard prices are set to remain steady for the time being, it's not going be long before other energy companies start pulling their cheap fixed tariffs. "Those who rest on their laurels are very quickly going to find themselves unable to capitalise on these great opportunities to pick up a great low price tariff and lock it in."

Our view

Martin Lewis, MoneySavingExpert.com creator, says: "Predicting gas and electricity prices is a difficult game so it's best to focus on what we know, in that cheap fixed rate deals are being withdrawn.

"That is indicitive of a trend of upward prices but that is far from saying standard prices will rise.

"If you are looking to lock into a cheap deal you should do that sooner, rather than later. It gives insurance against prices rising at the cost of a small penalty in the unlikely event prices drop and you switch to a cheaper deal.

"Most people who fix will save when you factor in the cashback available by switching, so it is a no brainer."

How to find the best deals

Households can sometimes cut their bills by hundreds of pounds a year by checking the tariffs available via a specialist comparison site, and switching (see the Compare Gas & Electricity and Get Cashback guide).

Those languishing on their supplier's standard tariff or who get bills through the post are almost certainly paying too much.

While the cheapest online deals for typical users are less than £900 a year, those on a standard tariff typically pay around £1,200.

If you opt for a fix, you are fixing the price you pay per unit of energy, not your actual bill. So the more you use, the more you pay.

Further reading/Key links

Slash energy costs: Cheap Gas & Electricity Your rights: Fight Energy Direct Debits Capped tariff help: Is Your Cap/Fix Ending Soon? Boiler protection: Boiler Cover