Fixed price gas and electricity contracts give you peace of mind that your tariff will never increase and that you can stay on top of your payments, but do you know how they actually work?
Fixed rate contracts offer attractive tariffs due to an unwavering price per kilowatt over a designated amount of time (frequently one year as a minimum term). These plans are especially popular due to not being affected by energy price increases, but there is a pitfall to watch out for; early exit fees.
Enter fixed rate contracts now available
Fixed rate energy contracts will lock you into a certain tariff for between one and four years, with longer-term contracts usually offering the most attractive rates, as a reward for your loyalty. If at any point you discover a contract with more appealing rates and you decide you wish to leave your current supplier, however, you will normally find that the longer your fixed-rate contract is, the more expensive your early release fee.
A common mistake is to assume that on a fixed rate tariff, you will be paying exactly the same amount every single month, for the duration of your contract, but that’s not quite right. While the price per unit of energy won’t change, your usage WILL affect what you pay, which is why winter months are still the most expensive for consumers, who up the heating! Installing a smart meter is a fantastic way to track your consumption, so you have no surprises come bill time.
What you need to do when your fixed rate contract is ending.
If you know that your fixed rate energy plan is due to end shortly, you need to tackle a few issues, most pertinently:
Check what plan you will automatically revert to – You might find that your current supplier intends to switch you to an attractive plan, in which case, that’s great, but it is likely to be a standard tariff, which will be liable to price fluctuations.
Shop around – Make a note of the prices that you are facing when your fixed rate plan ends and then compare them to all of the potential energy contracts out there.
Give notice to your current supplier – As soon as you know you will be leaving your current supplier, give them warning, as you might find there is a minimum notice period to comply with.
Points to remember:
- Fixed rate plans vary from one to four years in length.
- Be aware of early exit fees.
- Monthly payments will vary, according to energy usage.
- Standard tariffs will likely kick in as soon as your term ends.