What is it?
A tariff is considered as fixed when energy supplier promises to not change the cost of the product for an agreed upon time frame - typically one year period, but it can vary between energy suppliers.
Are they any good?
Fixed tariffs are designed with consistency in mind. It's only natural that energy suppliers want their customers to stay with them for as long as possible, so they create these fixed tariffs to entice new users to sign up.
Given the longer nature of the contract, fixed tariffs are typically cheaper than that of its variable countertype. Additionally, energy suppliers may attach additional perks to certain fixed tariffs as a reward for committing to their product for a period of time. These rewards may consist of discounts or subscriptions to third party services, like Spotify or Amazon Prime.
So, whether or not they are "good" entirely depends on your usage and your current living situation.
What's the catch?
There's always the other side of the coin to consider. With the cheaper rates that come with fixed tariffs, there is also the long term commitment to consider and the price that comes with breaking the contract early.
Additionally, typically after the contract is over, customers are moved to a variable tariff that will be more expensive. (They are not allowed to automatically put you in another fixed tariff without your explicit request and approval). Energy suppliers rely on the fact that many customers forget to check their energy bills after their contract ends or that they are not aware that their new tariff is considerably more expensive.
Dispelling the myths
A common misconception is with a fixed tariff, customers are tied in for the duration in the term - this is not true. As a matter of fact, it is possible to leave at any point before the end date.
With most fixed tariffs, there are exit fees associated with early termination and the range in price heavily depends on the energy supplier, the program, and date of cancellation through proration. It is frequently the case that the cheaper the tariff, the higher the exit fee will be, but it's also not always the case.
That said, termination fees don't apply for contracts that are ending within 49 calendar days.
What about 49 days?
Ofgem has a number of rules that protect the customers from unfair practices. Amongst many other rulings, Ofgen states that:
- Suppliers will be required to notify customers that their current fixed-term is coming to an end between 42 and 49 days before the contract ends.
- Between this notification period and the end of the fixed term contract, suppliers will be banned from charging a termination fee should the customer decide to switch.
For more information, you can read about that ruling here:
It is never too early to start looking for a new tariff. When you find one, you can apply to switch and as long as the switch happens during this window, the switch will be applied penalty free.
Of course, with Labrador, all this will be taken care of for you so you'll never have to worry about it. #shamelessplug