Energy bills predicted to go up - should you switch to a fixed price energy tariff?

With energy prices forecast to rise by 51% this autumn, we look at whether it's worth switching to a fixed tariff and what to do next

Close-up of energy bills and Smart Meter on a kitchen worktop
(Image credit: getty images)

With energy bills already sky high and expected to shoot up by another 51% in October, based on typical average use, you may be thinking about fixing your energy tariff before the price hike. We explore whether it’s worth doing this and what your options are.

Customers on a variable energy tariff have already seen their bills go up by an average of 54%, thanks to an increase in the April price cap - adding £700 more to annual gas and electricity bills, based on typical use.

Unfortunately, when the next energy price cap is set in October, your bill could skyrocket again by an average 51%, according to analysts at Cornwall Insight (opens in new tab) - adding another £900 to your annual bill. 

With that in mind, our analysis shows that if you are on your provider's standard variable tariff and are offered a fixed rate 'deal', it may now be worth considering if it is no more than 35% higher than the current price cap. Anything more, and you could be at risk of paying more than the predicted October price cap rise.

While MoneySavingExpert first came up with similar analysis, we've crunched the numbers to show that if you are on your provider's standard variable tariff and can get a fixed rate at up to 35% more than what you currently pay, then it's worth considering, assuming the current price rise predictions turn out to be correct. We have found one offer so far, which we explain below.

To be clear, if you get one of these deals you'd pay more than you do now but in the hope you pay less than what prices will rise to from October. The question is whether you'd save enough from October to make it worth paying more now.

Guy Anker, The Money Edit director, says: “It may seem galling to pick a deal now that is more than what you’re paying, especially with prices being so high already, but costs will almost certainly sky-rocket in October so the choice is about whether you can pay more now and stick to that rate for a year or so, rather than seeing prices rise possibly by a lot more in the autumn. 

“But fixing isn’t for everyone, so think carefully before you make your decision. It’s all about your attitude to risk and only you can make the decision. Whatever you choose, you are gambling to some extent as there are no certainties in this period of wild economic and political whirlwinds. 

“But if you're the sort of person that needs surety, you might want to consider angling to a fixed-rate tariff, if you can find a suitable deal. Hopefully our analysis can help you understand the possibilities and risks.”

Though we can’t be sure how energy prices will change in the future, our analysis below shows that by fixing now, your bills will go up, but over the course of the year you could save money or break even if energy prices do go up by 51% in October as predicted. But we can’t be certain what will happen with prices. 

To help illustrate the potential savings by fixing now, we analysed the average prices, based on typical use, you could pay per month depending on what fixed-rate deal you’re offered. But remember, you will only save money if the price predictions come true. Note: these are not actual prices and are based on average typical use with an October price cap rise of 51% in mind. We have not looked at potential price increases in 2023.

  • If you do nothing, then based on the average cap rate, the cost is around £164.25 per month between July and September and then £248.02 per month (based on average typical use) when the October price cap comes in, which is estimated to be an increase of 51%. That’s an estimated annual payment of £2,725 between July 2022 and June 2023 if predictions come true. 
  •  If you fix at 30% above the current cap, the average monthly payments could be around £213.50 - based on average typical usage. That’s an estimated annual payment of £2,562 between July 2022 and June 2023. That could be a cheaper option than if you do nothing, assuming the forecasts are correct.
  • If you fix at 35% above the current cap, the average monthly payment, based on typical use, could be £221. That’s an estimated annual payment of £2,652 between July 2022 and June 2023. Here, it’s a little bit cheaper than if you did nothing - again, that is if predictions come true. 
  •  If you fix at 40% above the current cap, payments could be around £230 per month, based on average typical use. That’s an estimated total of £2,760 between July 2022 and June 2023. This is more expensive than doing nothing and staying on your current tariff - so we don’t advise fixing on a rate that is more than 35% higher than your current deal. Again, this assumes the latest forecasts for the October price cap are correct.

Whether you decide to fix or not is essentially a ‘gamble’ and you should consider your attitude to risk before you go ahead with locking in any fixed rate, especially as we don't know where energy prices will be later in 2023.

This information only applies if you are on a standard variable tariff; if you are already on a fixed-rate tariff then you are most likely already on a good deal.

HOW CAN I GET A FIXED-RATE ENERGY DEAL? 

A handful of providers, such as E.on and EDF, have previously offered decent fixed-rate deals to existing customers who are on a standard variable tariff or coming to the end of their fixed-rate deal. These offers come and go fast - so if you spot one and you want it, act quickly.

There is currently one open market deal that could be worth considering. Available to both new and existing customers. Utility Warehouse’s Green Fixed 30 tariff (opens in new tab)is a one-year fix that is 27% more than the current price cap, making it the cheapest deal on the open market. However, there is a catch. You also need to sign up to two other services from Utility Warehouse, such as broadband, Sim-only contract or boiler and home cover. This may not make financial sense for you, especially if you are locked into other deals. Think carefully before making this switch. If you are able to make the switch and take on two other products which offer you good value, then it is worth considering. 

If you don’t want to take that deal, and your existing supplier doesn’t have a decent offer at the moment, keep an eye out for future offers, and apply the 35% rule: if it’s more than 35% higher than the current price cap, it probably isn’t worth switching to. If it’s less than 35% more expensive (for example, it’s 31% more expensive), then it could be worth considering.

We will keep this page updated as well. 

Kalpana is the Editor of The Money Edit.

She’s an award-winning journalist with extensive experience in financial journalism. Her work includes writing for a number of media outlets,  including national papers and well-known women’s lifestyle and luxury titles, where she was finance editor for Cosmopolitan, Good Housekeeping, Red and Prima.

She started her career at the Financial Times group, covering pensions and investments.

As a money expert, Kalpana is a regular guest on TV and radio; appearances include BBC One’s Morning Live,  ITV’s Eat Well, Save Well, Sky News and more. 

She was also the resident money expert for the BBC Money 101 podcast and co-author of the e-careers personal finance course.

A well-known money and consumer journalist, Kalpana also often speaks at events.

She is passionate about helping people be better with their money, save more and be smarter spenders.

Follow her on Twitter and Instagram @KalpanaFitz.

With contributions from