Consumers should get rid of fixed rate deals on energy

According to experts many consumers in the UK are continuing to make over the top payments on their gas and electricity bills simply because they have failed to drop the fixed price schemes that they signed up to last year or the year before, when prices were on the up. Since late 2005 and through 2006 many people signed up to fixed rate schemes with their energy suppliers after being warned that the cost per unit would be rising. And indeed, the rates for energy usage did rise. However, since the beginning of this year energy suppliers have been slashing energy prices following the reduction of wholesale energy prices.

Even though energy suppliers have cut their prices this year – with British Gas cutting prices twice – those on a fixed tariff will not see any benefits from these price cuts, as their rates are fixed. As an example, those on the fixed tariff with British Gas could save over £130 a year by switching to standard tariff, and those on the British Gas Fix and Fall scheme could save nearly £200 a year by switching to the standard rate.

Although these fixed tariffs do take into account potential future rises, some experts predict that the energy prices will not be rising again for some time, at least a couple of years, and that it is pointless to continue paying higher rates for this long. One energy expert stated: 'I don't think gas prices are going to rise in the foreseeable future - by that I mean this year and next year. So I would switch out of a fixed-rate deal. Last year the suppliers were unclear as to whether they had enough gas supply so put up prices in a panic.'

He added: 'But we have new supplies from Norway and Holland which are much more stable, and they seem to be fairly indifferent to price. There is a liquid natural gas plant being built in Newhaven in East Sussex, which will be massive and further increase supply.'