EDF's five-year fix could put you in a jam

Published 14th Mar 2010

Hedging against rising prices could cost more in the long term


EDF energy has launched an unprecedented five-year energy fix, but experts are wary of recommending the deal to consumers.

EDF’s Fixed Price 2015 allows consumers to hedge against rising prices until June 2015. This protection comes at a premium, however — at £1,197 a year for a typical family, it is over £300 more expensive than the cheapest online tariff on the market, First Utility’s iSave V3 at £889.

It also comes with steep exit penalties of £100 for both gas and electricity if you leave before June 30, 2011, £75 each if you leave before June 30, 2012, and £50 for each if you leave before June 30, 2013.

Mark Todd at energyhelpline.com, a comparison site, said: “Energy prices are dropping so capping your tariff doesn’t make sense in the short term as you will miss out on any more price cuts. Ofgem, the watchdog, is predicting consumers’ bills are going to rise but top deals would have to be raised by more than 33% for it to be a good buy.”

EDF said: “This product is a first for any major energy group and provides stable prices for up to five years against a backdrop of uncertainty.”

Figures from Energyhelpline show that up to 3m households are locked into expensive capped tariffs and therefore missing out on recent price falls. All the big six suppliers — British Gas, Npower, Scottish & Southern, EDF, Eon and Scottish Power — have announced cuts of 4% to 8% on their standard tariffs.

Nevertheless, consumer groups are criticising providers for not discounting deeply enough — particularly as wholesale prices have dropped by 60% since peaking in mid-2008. Figures released last week by uswitch.com, another comparison site, show consumers have been left with a £3.1 billion hole in their pockets, facing energy bills that are 31% — or £279 — higher than in 2008.

Ann Robinson at Uswitch said: “Online energy plans are now about £300 a year cheaper than standard plans, offering us all the chance to bring our energy prices back down to pre-2008 levels.”

Source: ' Sunday Times '

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