Powergen, a subsidiary of integrated electricity and gas company E.ON, has introduced its first ever fixed-price energy product, which ensures that energy prices will remain at current standard prices until January 1, 2009. This applies for both new and existing customers.
The company implemented the scheme following a survey it had conducted. It found that, although 35% of consumers wanted to fix energy prices in order to avoid price fluctuations, 57% would not be prepared to pay a premium for doing so.
Commenting on the new deal, utilities expert at moneysupermarket.com Scott Byrom said that: “the new fixed rate product is now the cheapest capped deal on the market, and there is no penalty charge to exit it.”
However, he noted that energy prices were unlikely to rise dramatically in the near future, adding that, if anything, they were more likely to fall “as providers continue to battle for market share”. Therefore, he points out that fixed-rate products may provide no benefit to the consumer at all.
Founder of price comparison and switching service SimplySwitch.com, Karen Darby, agrees with Mr Byrom, adding that, “thanks to the fierce competition within the energy sector, there are better options available. If customers really wish to protect themselves from future price rises, several providers offer capped (rather than fixed) deals which protect customers from rising costs but will also pass on savings if prices fall.”
Ms Darby asserts that, “energy prices would have to rise by up to 25% before a fixed deal became the cheapest option.” She urges customers to research all the options carefully before making a decision.
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