Energy prices continue to increase, and they show no signs of slowing down. Due to this, a lot of people have been considering fixed tariffs. These are tariffs that might make consumers pay more money now but will save them money in the long run. This is because their rates will stay the same as energy rates increase. The question with fixed tariffs is, and always will be, “Will energy prices keep going up?”
A new fixed tariff from Scottish Power is the longest fixed tariff available. It lasts for a shocking three years. Although this sounds great now, with energy prices expected to keep increasing, consumers have to ask themselves if they expect energy prices to keep increasing for the next three years. If so, this fixed tariff will save a lot of money. If energy prices do not continue to rise for that long, people might find themselves paying for more than they should.
This is the longest running fixed tariff since rival EDF launched its Blue Price Freeze. This tariff lasts until November of 2016 and Scottish Power’s will last until January of 2017. Either way, both of these deals last a long time, and it seems like this is a growing trend. More and more energy companies are now offering longer tariffs with the hope that they will keep consumers longer.
Based on the average rates right now, both of these deals will cost around £1,350 a year. This is a pretty high rate considering the fact that most people are not paying that much for energy prices right now. However, fixed tariffs have always been a gamble. If energy prices keep going up like they have been, this rate will look like a blessing by next year. If not, the people who sign up for the tariff will find themselves locked into a terrible rate.
Energy comparison site Energyhelpline said that there is a balance that needs to be found here. For the people who are happy switching energy providers every few months, short-term deals are the best. However, for the people who hate switching, the convenience of a long-term tariff may be worth the higher rates now with a chance to save a little money later.
Energyhelpline actually recommends the long-term deals for most people. It said that it is worth the extra money now to avoid the hassle of switching every few months. Not only that, but these long-term deals usually turn out to be pretty competitive.