Household energy bills continue to soar as Ofgem increases the price cap once again. Which is why Martin Lewis, the man behind the Money Saving Expert, is urging bill payers to look into fixed tariffs as it may work out cheaper.
A fixed rate tariff is a contracted rate you pay per unit of energy, and will be set for an agreed period of time - normally around 18 months, but as the energy regulator Ofgem increases the limit a supplier can charge for each unit of gas and electricity this October, entering a fixed tariff may save you in the long run.
The average annual bill is expected to cost £3,582 a year, that's £355 a month compared to the current average of £164 a month. And as if that isn't enough, the cap will now be renewed every three months, instead of six, meaning bills will increase even further this coming January.
READ MORE: I asked E.ON for a fixed price energy tariff and was shocked by the response
Consumer Editor, Gemma Sherlock, recently analysed how much you could save on a fixed tariff with British Gas, on its Oct 23v4 one year fix. Although the initial yearly price of £3,811 is more than the current average of £3,582, this would save households when the cap goes up again. They will pay a lot more now but have a better deal down the line.
Octopus Energy customers could get a cheaper deal too on a fixed tariff option for the next energy price cap, although it is best to check direct with the supplier as the depends on a person's energy usage and location. You can check regular fixed tariff options with energy suppliers on the MSE website here.
Fixed tariff option with Octopus Energy
On its 12 month fixed tariff, which is its cheapest fixed rate, the daily unit rate is 77.6 p/kWh, 53.95 p/kWh for night unit rate and has a standing charge of 43.72 per day. This is estimated from a Yorkshire postcode and it would vary slightly depending on the area.
Moving to a fixed tariff in the times when the price is constantly rising can provide households with more assurance that they will be paying the same amount. The price cap currently means an average home on a standard variable tariff is charged no more than £1,971 for gas and electricity, but with the cap predicted to rise in October this will get more expensive.
Octopus Energy has said it costs them over £4,000 to a buy a year's worth of energy from the wholesale market which is why households shouldn't rule out moving to a fixed tariff.
An Octopus Energy spokesperson said: "If a customer is looking for security and prefers to know how much they will pay for energy each month for the next year, they may want to fix their prices.
"If a customer prefers to wait to see if energy prices come down again over the next months, they could stay or move onto our SVT, and for example fix it at a later date."
Octopus Energy's standard variable tariff is currently capped £50 cheaper than the price cap at £1,921, although there is potential this will increase.
Can't afford to pay your bill?
Octopus Energy recently introduced a financial hardship fund (of £6m) for households struggling to keep up with costs. Octo Assist is open to all customers who need help and can be accessed via an online tool.
In a statement Octopus Energy highlighted its range of support. A spokesperson said: "We talk to 40,000 customers a day, and we know how hard it is right now for many people. We are in frequent dialogue with the government and our regulator Ofgem on how best to address this and are doing all we can to help customers ourselves in the meantime.
"We can offer a number of support options based on circumstances and need, including access to existing schemes, monetary credits from the fund, or personalised account support. We also offer a number of ways to help customers save money in a practical way, including making homes and heating more energy efficient."
Its energy efficient measures include its Winter Workout, which claims to help households reduce gas consumption by an average of 12%, the installation of thermal imaging cameras to identify draughts and its electric blanket scheme to more than 7,000 customers who were struggling to heat their homes.
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