Help! I don't understand energy bills

[MintGreenDream]

This might sound silly but I've never paid energy bills as they've always been sorted by someone else. I've just moved in to a new house and I'm confused by the options that Octopus (and i assume others) offer.
I can choose either Fixed or Flexible.
Fixed is slightly cheaper and 'locks your unit rates and standing charge for 1 year' - is that a good or bad thing?

I'd really appreciate someone helping me understand what the best option is, without judgement for not knowing in the first place :-)

Thank you

Fixed means you are guaranteed that rate for a certain period (a year in your case). Flexible means it could change up or down. Depends if you like the certainty of knowing what you’ll pay per unit, or are hoping prices might drop.

I think there are predictions for whether prices are likely to go up or down, which may help you make your decision. If it’s forecast to go up, fix. If it’s forecast to go down, flexible is probably better.

The fixed deal from octopus is pretty good actually because you're not locked in for any minimum period. So if prices go down then you can switch to a better rate with no penalty. Win-win

To clarify, neither is an ‘all you can eat’ type deal like on a phone contract or internet. Those don’t exist. You will pay that price per unit, so using less power will always be cheaper and using more will always cost more.

sorry if you know this but lots of people think the ‘price cap’ means they can use an unlimited amount of electricity for a set price, which it doesn’t.

I did fix with Octopus as the price cap is going up in January. The good thing is that Octopus lets you switch to a different fix with them without a penalty if a better deal comes up.

Please note that it's the standing charge price and price per kwh that's fixed so if you use more you will pay more but at a lower underlying price per unit.

That's really reassuring. I thought it was saying that but kind of sounded too good to be true.

Thank you so much for your replies all - a big help, as I was feel a bit overwhelmed!

I find flexible better xxx

But OP says her fixed offering is cheaper. And prices are predicted to rise in January. And she can switch with no penalty if there is a better Octopus deal. Why stick with the more expensive flexible tariff when its cheaper to fix?

This is the first year I've fixed (back in September).

Make sure to put in meter readings every month. Keep an eye on what you're actually spending (based on readings) and what you're being charged (unless you switch to variable DD, which I think sensible, but some people seem to like a fixed monthly charge). Both might seem obvious, but there are always people on MN who a) seem to think their monthly DD, especially if on a fixed rate, covers them for whatever and/or b) end up owing/being owed lots by their energy company because they just go off the DD.

Unless you go for a variable DD, an energy company's set monthly DD is likely to be quite a bit higher than their estimated annual cost/12. Octopus suggested something like 145/month where their annual cost/12 is about 115 for us. We paid 155 for November, which was a cold month with temperatures hovering around zero. So on a fixed DD (as opposed to a fixed rate) we'd be overpaying.

If it's any help, Martin Lewis suggested getting a fixed deal on his money programme a few weeks ago.

My bills work out cheaper :)

This depends entirely on what price you are offered to fix at and what the variable tariff does while you are fixed. They won’t ’work out cheaper’ just because you are on a flexible tariff, unless your flexible tariff is cheaper than the fix would have been.

Octopus are great!

I’m not sure you understand energy prices.

Worth bearing in mind that advice like this can change almost by the day.

In about August, I looked at fixing but it was more expensive than the predicted increases over this winter so I didn't.

I looked at it again in September and this time it was cheaper so I fixed for a year. The deal I signed up to was withdrawn and replaced by a more expensive one a few days later.

Moneysaving Expert gives detailed advice and a calculator to help you make the decision:

https://www.moneysavingexpert.com/utilities/are-there-any-cheap-fixed-energy-deals-currently-worth-it/

But in reality, the difference in price isn't enormous - perhaps £10/20 pm either way at the absolute most unless there's a huge shift in the price of energy over the coming year, which of course could happen and did happen with the war in Ukraine etc and how we've ended up where we are now.

My energy bill is never high and I'm careful with heating etc

But @teatoast8 if you fix you could be paying less per kwh and therefore your bill would be even lower.

Well I'm happy to be paying £57 :) fixed would be higher

And that's gas and electric

That depends on what fix you were offered when you looked at your energy deals.

The OP is asking about now, and right now, the best advice is to fix because if the anticipated rise coming.

The price you pay per month isn't the fixed part though. The fixed amount is the underlying price per kwh that you pay