Fixing your energy bills now until after May 2015 could pay if energy firms raise tariffs ahead of election
Vote Labour in 2015, and get frozen gas and electricity bills – that was the promise from Ed Miliband. The bold announcement has not only thrown the big energy firms into a tailspin, but it has also left consumers wondering what it means for domestic energy bills between now and then.
In recent weeks and against a backdrop of warnings from the likes of British Gas that gas and electricity prices are about to rise – probably by around 8% – canny householders have increasingly been looking to get on to a fixed tariff. Just two weeks ago we highlighted the best short- and long-term deals, and plenty of readers have been grabbing a tariff that guarantees their prices for a set period.
Miliband's speech to the Labour conference, and the promise to freeze prices if he is elected, has at least pushed the energy market failure's centre stage. However, it has also led some observers to suggest that the big energy firms, which still supply well over 90% of UK homes, could try and raise prices even faster ahead of the next election.
A superficial reading of the situation would suggest that consumers who are confident of a Labour victory should consider looking for a deal that fixes their prices until after May 2015.
Assuming the coalition government goes the full distance, Labour could take office in May 2015. A look at the table below shows there are several tariffs that will let you fix your prices until that date. If Miliband wins, it could mean that households fixing now could enjoying static household energy bills until November 2017.
According to Mark Todd, who set up and runs the comparison and switching site Energyhelpline.com, consumers should move fast to bag a good fixed price tariff.
He has joined the likes of Which? in welcoming Miliband's intervention. "Everyone seems to agree that the energy market is broken and these are hugely radical proposals to shake it up. The worry is that energy suppliers will just hike their prices prematurely in 2015 if Labour look like they will win the election," he says.
"What really needs to be set is a fair maximum price for energy. This needs to be fair for consumers and fair for the industry so that it keeps the lights on but also stops customers being ripped off. This kind of system is used in other countries in Europe and is similar to the original regulation regime which was implemented just after privatisation. I do believe Miliband's plan is workable but it does need a bit of tweaking first," he adds.
Those looking to insulate themselves from future price hikes have two realistic options.
M&S Energy currently has the absolute best deal but it only fixes prices for exactly a year – until September 2014. At £1,139, this undercuts all the other deals on offer, but you'll have to move fast, as it is likely to be pulled any time.
The alternative is one of a handful of longer-term fixes, many of which will take you past a likely May 2015 election day. ScottishPower's Help Beat Cancer Fixed Price Energy allows users to peg prices until January 2017. The tariff costs an average of £1,350, which is £211 a year more than the M&S deal but still a £70 saving on the typical current annual bill of £1,420. Npower has the longest capped deal, which runs until March 2017, and costs slightly less at an average of £1,341 a year.
That's a big price premium over the M&S deal, so perhaps a better bet would be SSE's two-year capped plan 2 at £1,274 a year.
First Utility has some cheap deals, but reservations about its customer service levels will deter many people.
If the M&S deal is pulled, ScottishPower's Online Fixed Price Energy November 2014 deal is worth considering. At £1,195 it's a good balance between price and length of fix - although it won't get you close to the run-up to the next election.
And, as ever, consumers should compare tarriffs for their particular postcode, as prices do vary.
• The Guardian offers its own comparison service. Go to Guardianenergycomparison.co.uk or call free from a landline on 0800 634 3874 – Mon-Fri 9am-8pm, Sat-Sun 9am-5pm.
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