Energy Guides

Capped energy tariffs

Article updated: Tuesday 26 May, 2009

As you are probably already aware, energy prices have been fluctuating greatly in response to wholesale prices thus it can be very difficult to predict how things will stand in the next couple months let alone years.

This guide will tell you everything you need to know about capped energy tariffs, and how you can minimise the effect of price rises by fixing your energy today...

• 1. What is a capped energy tariff?
• 2. Are there any drawbacks?
• 3. Make sure you shop around
• 4. Save on your energy bills

1. What is a capped energy tariff?

Capped, or fixed price, tariffs work by guaranteeing that the price you pay per unit won’t rise for a set amount of time - usually for 12- to 24-months.

As well as helping you budget, you might avoid some hefty price hikes by fixing your energy costs, saving you money.

If you do go for a capped tariff (also known as fixed tariff), make sure that you know exactly when your deal ends since you’ll need to prepare for the possibility of a sudden price jump when it expires.

2. Are there any drawbacks?

Knowing how much your energy will cost you for the next few years makes budgeting a lot easier, but it will often mean that you’ll have to pay a premium. Because of the price guarantee they offer, capped deals are invariably more expensive than standard variable plans.

These are also the only tariffs where you might incur a fee for switching if you do so before the end of your agreed term.

3. Make sure you shop around

Don’t just assume that all capped plans are the same. Some guarantee your prices for one year, while some will fix them for longer.

It is also important to note that some suppliers will reduce your capped price per unit of gas and electricity if their standard prices fall, while you might find that others do not offer this. The key is to shop around and make sure that you think about your needs before signing up. The primary advantage of capping your gas and electricity prices is that it provides reassurance knowing the exact price you are paying for your energy. It is also beneficial for those who need help budgeting during a difficult financial period especially if energy prices continue to spiral upwards.

Energy tariff guide >>>

4. Save on your energy bills

Comparing and switching is quick and easy when you use the EnergyChoices.co.uk calculator

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