Utility bills are a big concern for many homeowners. It seems like gas and electricity bills go up every single year, but there is actually little you can do about this without a fixed-rate tariff. You can continue to switch, but that is only one defence. The recent news reveals that twelve energy providers have taken down their fixed-rate tariffs.
Instead, they have been replaced with more expensive deals. Some say that this is as a result of the Brexit vote, which is already pushing up major household bills.
So what is this all about and what does it mean for you?
What Actually Happened?
that twelve energy providers are now preventing customers
from fixing the rate of their energy bills. In layman’s
terms, the energy providers can increase your prices every
single year, and you
can do nothing about it. Your only option is to pay those
bills or to find another supplier.
There is nothing to prevent energy providers from doing this. It just means that previously energy providers had to implement them in order to remain competitive. Since they have made this move all at the same time, they are staying on equal terms.
And the chances are that other energy providers are soon to follow. It is common practice for all the energy providers to move in lock step with each other.
Why are Energy Providers Doing This?
They are doing this because all of them have international operations. The decline of Sterling means that importing energy into the UK becomes more expensive. We are a consumer of energy, not a producer, at least not these days, so energy providers are paying millions of pounds more than they were before, as a result of the declining currency.
The option for them is to take the losses and to ride out the wave, or they can pass those costs onto customers. Naturally, they have done the latter, and there is nothing to stop them from doing this.
Will it Push Up Your Energy Bills?
It is highly likely that this will push up energy bills in the coming months. In general, energy bills are always rising, even during times when the economy is prosperous. There will likely be a significant jump in the coming months and years because the energy suppliers need to recoup their costs.
Only a rising Sterling will reverse this. In the meantime, households can only hope that the government implements a law that will prevent them from pulling fixed-rate tariffs. However, you should not hold out much hope for that.
What if You Are Already on a Fixed-Rate Tariff?
The current change will not impact you at all. You signed an agreement with the energy supplier, and they have to honour that agreement. Typically, you will come to the end of your fixed-rate tariff and then you would fix your rate again. Unfortunately, if your energy supplier no longer offers this option, you will have no choice but to go to a normal tariff or switch suppliers.
Many of the energy suppliers will be looking to gradually get people away from fixed-rate tariffs. Since Brexit and currency fluctuations are expected to last for years to come, most people are going to feel the increase in bills.
Can Switching Help?
Now you have to start thinking about switching. It is true that switching can help. The energy providers still compete with each other on the margins. And it is true that the government-backed switching scheme has made it easier to switch than ever before.
The problem is that this is only going to save you a few pounds every year. The best way to offset these costs is to do your best to use less energy. Go green by switching off appliances when you are not using them and resisting the urge to turn on the central heating when you can just put on a jumper.
It may not be an ideal scenario, but it is your best defence against unscrupulous companies and their rates rises.