Although these are usually the most expensive deals on the market, they are protected by the energy price cap, which sets upper limits on how much firms can charge. However, this cap now stands at its highest ever level. Regulator Ofgem increased the price cap by £139 to £1,277 in October.
Analysts at HSBC warned that the further rise could lead to a 15pc increase on bills when the price cap is next reviewed in February. This could potentially push the cap up to £1,468 from April next year, a further £192 increase.
What can you do about it?
If you are moved to a new supplier, or your fixed-term deal comes to an end, be very careful before locking in to a new fixed-term deal.
In some cases, providers have removed cheaper default tariffs from their websites and increased the cost of fixed-priced deals. This means customers may be unaware it would cost them less to simply roll on to their supplier’s default tariff, rather than switch deals.
For example, last month the cheapest fix was £1,177 while today the cheapest fix is round £1,700, according to Martin Lewis of Money Saving Expert.
A spokesman for comparison site Compare the Market said: “In most cases, fixed tariffs currently on offer are more expensive than being on a default or variable tariff. We urge people to check carefully before fixing any deal at this point in time.”
It may be cheaper for the time being to remain on a default tariff, which is protected by the price cap, until better deals become available again. You can switch away from these deals at any point without incurring any fees, so you are not locked in.
What happens if my supplier goes bust?
If your supplier goes out of business, Ofgem will switch you to a “supplier of last resort”, and any credit with the older energy provider will be transferred across.
Affected households should take meter readings as they will need to pass these on to their new supplier.
Energy firms are worried that if multiple firms go bust at once, the suppliers left to pick up the pieces may not have the capacity for an influx of new customers. The Government has agreed to offer state-backed loans to help transfer large numbers of customers from failed suppliers.