All fixes, whenever entered, into should come down on 1 April although the rate will vary. For smaller energy companies, the reduction will be less because they haven’t been charged the eco costs that bigger ones have.
Martin Lewis explains:
www.facebook.com/watch/?v=1228405302712066
Fixing now will protect you from the inevitable increases that will come due to the current conflict.
Current fixes are likely to be withdraw very soon due to that.
Exit fees are charged by many suppliers so you would have to take that into account anyway.
I also factor in how good customer service is. I have chopped and changed over the years and have been with some shockers for that so don’t mind paying slightly more for a better experience.
If the fixed rates on offer could save you a £100 over the year so cover any exit fees, I’d go for it - all other things taken into account.
Transcript of what Lewis says about switching fixes now:
If you're already on a fixed energy tariff, it will get cheaper on the 1st of April. There's a lot of confusion about this and lots of people saying to me, should I get a new fix? Well, I just want to talk you through it.
So, in a What will happen to my fix? nutshell, on the 1st of April, all bills are getting cheaper. So, if you're on a fix, whether you got that the day before the 1st of April, the month before, or six months before, the rate you pay for energy will drop on the 1st of April. How much will it drop and why? Now, typically the amount it will drop, it's the unit rate of electricity that will fall by about 3.5 p per kilowatt hour, which is typically about 13% of what you pay on the unit rate right now. And the unit rate of gas will drop by 0.33 kilowatt hour, which is about 6% roughly on average. That's for most firms, but if you're with a smaller firm, you'll get a reduction, but it won't be as big. And the reason for that is what's happening to policy costs.
The first one and the big one is a thing called the renewable obligation. 75% of the cost of that is being taken off energy bills and instead being paid for by the state. And this applies to all energy bills. And when I say the state, of course, that means through general taxation or through debts that you can get into the politics of that yourself. I'm just talking about energy bills. So that's the main reason for the reduction.
And then there's another thing which is the eco scheme that ends permanently in March. And that was paid for through bigger firms energy bills, which is why bigger firms will see a bigger reduction because that's ended. Smaller firms weren't paying for it anyway. So they'll only get the reduction from the renewables obligation.
The Why the confusion? reason ... there's been so much confusion about this is this fall happens at the same time that the price cap falls. Now the timing is deliberate, but the two things are separate. Lots of factors make up the energy price cap. The biggest reason it's falling in April is because of this reduction in policy costs. And it's the same reason we're seeing this unprecedented change in other bills is happening at the same time. But even though the same reason is driving them, they are actually two different things. The the price cap doesn't affect fixed rates. It's a policy cost that affects fixed rates.
So Should I fix now? lots of people saying to me with prices coming down, including fixes, should I be fixing right now? Well, this isn't a reason for you to get a new fix. I mean, if you get a new fix or your existing fix, they're both going to come down as long as it's a bigger firm by the same amount on the 1st of April. So, of course, you can go and do a comparison now.
And if you go and do a comparison and you find a new fix that is cheaper than your existing fix and do factor in any early exit penalties, then yes, you might want to move to it uh just cuz it's cheaper. Because if it's cheaper now, then when they both drop on the 1 of April, it will still be cheaper. But if it's more expensive now, when they both drop on the 1 of April, it will still be more expensive.
So, this isn't a driver for getting a new fix. This is just for you to know if you're on a fix. And frankly, all bills, those on time of use tariffs and those on EV tariffs, they should all be dropping on the 1st of April. Though with the time of use tariffs and the EV tariffs, exactly how much they'll drop is more complex because they don't work in the same way with the simple unit rate.
