HOUSEHOLDS have been urged to lock in their fixed energy deals now as a number of cheap tariffs are set to be axed due to mayhem in the Middle East.
In the past week, wholesale gas prices have reached a 12-month high as the US-Israeli war on Iran has sent costs surging.
Electricity prices are tethered to wholesale gas prices, meaning things such as Ofgem’s price cap could be raised or lowered in response.
The unexpected volatility comes as the price cap is set to drop by 7% on April 1 to £1,641.
But experts have said that households should consider fixing now to secure a deal cheaper than the upcoming price cap.
This warning comes as around 57 energy tariffs have been repriced or removed from the market in the past 72 hours following the surge in oil and gas prices.
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Laura Hinton from MoneySuperMarket Energy said: “While the April price cap adjustment will safeguard customers from price hikes for now, energy price rises are now more likely later in the year.”
Currently one of the cheapest tariff available is the E.ON Next Fixed 15 m v7 tariff, with an average annual cost of £1,533.
That is £225 less than the current price cap, and £108 cheaper than the new cap coming into effect in April.
The tariff is available exclusively to MSM members and anyone signed up to itsmails.
A fixed tariff can be a helpful way to make sure you are not at the mercy of a fluctuating market if the price per unit looks like it will go up.
However, it is important to remember that it does not mean your bill will be the exact same each month.
Just yesterday, Simon Francis, coordinator of the End Fuel Poverty Coalition, said Brits could feel the impact of rising prices as soon as this July when the next price cap is set to come into effect.
If the fighting is prolonged households could see more than £500 added to their energy bills this summer, according to Resolution Foundation.
The Think Tank also told The Guardian that if energy prices don’t drop any increase to living standards would be wiped out.
Its analysis of the Office for Budget Responsibility forecast published yesterday found that low income households are set for a 3.9% or £800 increase in living standards.
Lower-income households are set for a bigger bump in living standards, up 3.9% or £800. This would be the second strongest year for living standards in the past two decades for poorer families.
But this risks being wiped out if energy prices don’t drop.
Ruth Curtice, chief executive at the Resolution Foundation, told the outlet: “This coming year is set to be a decent one for living standards, and a bumper one for poorer families, as wages and benefit support rise above the level of inflation.
“But a fresh energy price shock risks puncturing this good news.”
SHOULD YOU SWITCH AND FIX?
A fixed tariff can be a helpful way to make sure you are not at the mercy of a fluctuating market if the price per unit looks like it will go up.
However, it is important to remember that it does not mean your bill will be the exact same each month.
Your supplier locks in the price you pay per unit, but not how many units you consume.
The more energy you use in a month, the more you will have to pay.
However, these tariffs can be a helpful way to protect yourself from price hikes if gas and energy prices go up.
These types of contracts can also be a helpful way to manage your monthly spending.
But if energy prices come down you will still have to pay the price you agreed at the start of your contract.
Many suppliers also expect customers to pay an exit fee if you change your mind.
It is always important to read your contract before you sign up and talk to your provider if you have any questions.
You should always compare tariffs using a comparison website like uSwitch or MoneySupermarket.com before you switch.