Energy prices are coming down! Hurray! Well, not really. To make any proper savings you’ll need to get them yourself.
Three of the big six energy companies have announced they’re cutting prices, and the others will probably do the same soon. Sounds great doesn’t it? In theory any cut is a good thing, but it’s unlikely you’ll save any money from them right now.
It’s only a small cut
Even though wholesale gas prices have dropped massively (possibly by 29% according to the Beeb), the cuts we’re seeing are around 4 or 5%. That’s not going to make a huge difference to your bills.
Some cuts don’t start until late February
I know British weather is unpredictable, but the coldest temperatures should be behind us by the time British Gas and Scottish Power discounts start at the end of February. Since it’s only gas prices that will fall – not electricity – savings will be minimal.
They’re still more expensive than fixed deals!
The new lower prices are only for what’s called variable tariffs, which is where the price you pay per unit of energy can go up and down. In most cases these prices per unit are more expensive than ones which are fixed, where it’s an agreed price for the length of the contract.
People, including me, have been banging on for ages about saving on your energy bills by shopping around and fixing. If you’ve done that, these cuts won’t make a blind bit of difference.
If you’ve never fixed – or you’ve let your fix lapse – the price cuts could give you a short term saving, but you’ll save even more by getting a fixed deal, possibly hundreds of pounds. Make sure you read my 7 steps to cheaper energy Be Clever Basics guide, which has been updated, as it now only takes 17 days to switch provider.
You can switch and fix again
If you’re worried that once you’ve fixed – or if you’re already fixed – that cheaper fixed deals will be offered, then you can just switch and fix again on the new tariff. You might have to pay an exit charge to leave a supplier before the end of the contract, but if you’re worried about that there are some which don’t have penalty fees.
If you are looking for cheaper fixes there’s one thing to be careful of. Comparison sites will estimate what you’ll pay over the next 12 months. If your fix ends before that period, they use your suppliers variable tariff, which can really distort the difference in prices and suggest you’ll be making a saving when you won’t. Read my article from last October for more detail.
So get fixing! If you are worried about the cost of heating when the cold weather hits, remember it’s a great excuse to stay under the duvet for longer!