Is now the time to opt for a fixed-price energy contract?

With the volatile nature of energy prices a fixed-price contract may prove tempting but you must do your homework writes John Hearne

A fixed deal won’t suit everyone, but now at least we have a choice.

Flogas has become the first supplier to offer a fixed energy deal in the Irish market in almost three years.

It comes at a time of continued volatility in the energy market. Over the last two years, consumers have faced an endless raft of price increases.

As the name suggests, a fixed energy deal keeps the price unchanged for the duration of the contract; in this case one year.

But beware — this doesn’t mean that you get the same energy bill every month. It simply means that you enter into a contract to buy your energy at a fixed rate. Use more gas or electricity and you’ll pay more.

Daragh Cassidy of Bonkers.ie says that fixed energy deals are relatively common in most other countries but that the last fixed deal to be offered in Ireland was in early 2020, from Budget Energy and Iberdrola, both of which have now left the market.

Flogas is offering a fixed unit price for gas, electricity and dual fuel for both new and existing customers. The standing charge is also fixed.

On top of this, the company is offering a €300 welcome credit to everyone signing up to a dual fuel plan, and a €150 welcome credit to those who sign up to a gas or electricity plan only.

“It’s been a tough time for energy customers as we all know,” says Mr Cassidy. “Given all the uncertainty, many households have been asking for fixed energy deals…for a year or so. However these haven’t been available in recent years until now.”

He points out that the price certainty that these deals offer will help with budgeting, and asserts that they’re good value — if you can use that word in today’s market.

“Usually fixed energy deals are more expensive than variable energy deals as you’re paying for the certainty of locking in a price for an entire year. However most households which use an average amount of gas and electricity will find these deals among the cheapest in the market right now.”

A fixed deal won’t suit everyone, but now at least we have a choice. Before you transfer to Flogas, however, take the time to see what’s out there and make sure you get the best supplier for your needs.

Like all fixed price contracts of course, there is risk attached.

“The downside of a fixed energy deal is that the price of gas and electricity might fall during your contract and that you’ll be locked into paying the higher price for the remainder of the year.”

Mr Cassidy goes on: “No one can say for certain how energy prices will pan out over the next year or so. Although wholesale energy prices have eased slightly in recent weeks, the outlook is still very uncertain. Indeed in December the wholesale price of electricity in Ireland shot up again by over 90% compared to the previous month, having fallen for a few months in a row. So this is a risk consumers have to weigh up.”

If you do sign up and suddenly discover you’re paying way over the odds for your gas or electricity, you can always break your contract. If you do however, they’ll hit you with a €50 per fuel early exit fee, and you may also have to pay back any welcome credit you got.

Cassidy is also keen to point out that there are plenty of other ways to keep your energy bills in check this winter.

First and foremost, insulate your cylinder.

“We all know this”, he says, “but it’s a biggie...When we think of energy guzzlers we immediately think of the tumble dryer or the electric shower. However, heating water uses more energy than anything else in most homes and can account for half of your annual electricity costs in some cases.”

You can reduce your water heating costs by up to 30% just by properly insulating your tank. A good three-inch thick lagging jacket will pay for itself in no time and save you a bundle. Also, there’s a misconception among many Irish people that turning on and off the immersion uses more energy and that it’s cheaper to continually keep your water hot. This is false. Only turn on your immersion when you need hot water. Don’t leave it on 24/7 – as it’ll just increase your bill.

In the same vein, do all you can to conserve hot water.

“When washing your hands or rinsing the dishes, don’t leave the hot tap running too long as you’re literally pouring money down the drain. And it goes without saying that a shower will usually use far less hot water than a bath, particularly if you invest in an Echo shower head.”

Some of us are very fond of our showers, but if possible, try to keep it below five minutes. You could also try cold showers — they’re supposed to be great for your health.

When it comes to doing the dishes, stick with the dishwasher. It uses around half the hot water you’d use if you were washing your dishes by hand. So it’s good for the environment as well as your pocket.

A mid-range dishwasher can do a full 65 degree cycle for around 1.5 units of electricity or 65 cents at today’s elevated prices (even less if you run it at night and have a night saver meter or smart meter).

Just make sure you only turn it on when you have a full load. And there is no need to pre-rinse (you’re wasting water and besides, dishwasher tablets actually clean better when there is some dirt to stick to).

Up to 80% of the energy that your washing machine or dishwasher uses is for heating the water, not for running the machine. This is why Eco washes often take much longer than standard washes - they’re heating the water up more slowly to save you money. So go for the 30 degree wash for your clothes where possible, as well as the 50 degree wash for your dishes.

Also, only use your machine when you have a full load. While some newer machines are intelligent enough to know when you have a half load, most are not.