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Research reveals pitfalls of fixed rate energy tariffs

Research carried out by has revealed that energy customers who sign up to fixed-rate tariffs can in fact pay over the odds for gas and electricity.

Take for example the Fixed Price March 2013 tariff which was offered to British Gas customers in May 2011. The deal was advertised as being more expensive than the firm’s standard tariff, but because British Gas was expected to increase its gas and electricity prices in the coming weeks, a number of customers hedged their bets on the new tariff and many paid the price for doing so.

A study by found that some British Gas customers who signed up for the Fixed Price March 2013 tariff paid around £800 more than they would have had they switched to the most competitive variable rates.

Speaking to the Guardian, Joe Malinowski, who set up in 2003, said: “This tariff was sold to British Gas customers who were coming off previous fixed-price deals, but it was just a terrible deal. It was offered at an initial 30 per cent price premium over standard prices but was only available direct from British Gas”.

Malinowski believes that all customers should shop around for the most competitive rates, but those whose fixed-price tariffs are coming to an end have an added incentive to compare deals because they very often lose money after being switched onto standard rates. estimates that npower customers who are on the fixed-rate Go Fix 11 tariff will lose out by around 21 per cent when their deals end. That means many will end up paying an extra £214 a year on electricity and gas central heating.

Although the research by has been useful for understanding how fixed-rate tariffs affect customers, the news that some people lose money on such deals is hardly news at all; in fact, losses really ought to be anticipated by energy customers, who should only consider long-term, fixed-rate tariffs if they are willing to bet on substantial variable-rate increases. The gamble only sometimes pays off.

Commenting on the research, a British Gas spokesperson made the point clear by stating: “Fixed-price products are offered to customers to insure against price rises and to guarantee the price they will pay for their energy for a fixed period… prices can go down, as well as up”.

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