Energy suppliers have sparked an online price war, as households coming to their end of their fixed-rate tariffs look to switch suppliers. So where should consumers go to get the cheapest deal, and should they fix or risk further price increases? Almost five million households, that is one in seven, are on a fixed-rate energy tariff, meaning that the cost of their gas and electricity is fixed for 12 or 18 months. Many flocked to these deals after last year’s unprecedented price increases. Gas prices rose by 47 per cent and electricity by 28 per cent, which left many households struggling to pay their bills.

However, experts say that customers coming off a fixed rate could face a sharp increase in the cost of their energy if they allow themselves to be placed on their supplier’s standard tariff. For example, households on npower’s One deal, which ended yesterday, will find that their bills jump by an average of £210 a year if they revert to the standard deal today.

ScottishPower customers on the Fixed Price 2009 deal, which ends on August 31, could be charged an additional £340 a year, according to Moneysupermarket.com, the comparison website.

Scott Byrom, of Moneysupermarket.com, says: “The big increases that bill payers face when their current deals end could wipe out any savings they made when they fixed last year. The timing is crucial when looking for a new energy product. Move off your fixed rate too early and you could face termination fees of up to £75. Move too late and you may find yourself switched to the standard deal automatically, or be locked in to a less attractive fixed deal. Aim to switch about four weeks before your deal ends.”

The good news is that last week EDF, npower and ScottishPower all improved their variable online tariffs in an effort to lure customers. The best deal is now EDF’s Energy Online 5, at an average of £982 a year, though this is not available in some regions, including the South East and South West. The next best offering is the British Gas Websaver 3, at £1,018, according to Confused.com, another comparison website.

Experts say that it is best to opt for a variable tariff, rather than a fixed rate, because no price increases are expected soon. Joe Malinowski, of TheEnergyShop.com, says: “Wholesale costs have fallen by about 50 per cent since their peak in September, yet the average bill has only decreased by 5 per cent. So, really, we should be seeing further cuts in the price of energy.”

The most competitive fixed-rate tariffs are about £100 more expensive than online variable deals. The best is currently EDF’s Annual Fix version 3, at £1,097 a year. This is followed by ScottishPower Fix ’n’ Flex, at £1,111, according to Confused.com.

The controversial cost of the Government’s green energy measures is expected to add about £92 to household bills, though this will not come into force until 2020.

The exact cost of your gas and electricity depends on where you live. Consumers should go to a comparison website and type in a postcode to search for the cheapest deal.

If you do not wish to switch energy supplier, savings could still be made by changing tariffs with the same company. Alison Morrison, of Which? Switch, the comparison website, says: “Millions of consumers are still languishing on a standard tariff and paying their bills quarterly. Simple steps, such as paying by monthly direct debit or through an online account, can reduce bills. It is also important to give your supplier regular meter readings, instead of relying on their often inaccurate estimates.”

Consumer groups continue to urge energy suppliers to pass on falling wholesale prices. Consumer Focus, the watchdog, calculates that energy customers are overcharged by £74 a year because suppliers have not passed on wholesale price falls to consumers. It says that gas prices should be at least 7.4 per cent lower and electricity 3.1 per cent lower. This would save customers £1.66 billion a year. Ofgem, the energy regulator, has started producing quarterly reports on the relationship between wholesale and retail costs, but says that there is “no evidence” of unfair pricing from suppliers and that Consumer Focus’s calculations are “misleading”.

Consumer groups’ frustration with energy suppliers was exacerbated this week after British Gas announced that its half-year pre-tax profits rose sharply to £299 million, from £166 million. Although British Gas reduced its standard gas tariff by 10 per cent in February and cut electricity prices by 10 per cent in May, its profits were boosted by the cold winter.

Robert Hammond, of Consumer Focus, says: “Any business needs to make a profit, but it must also give a fair deal to its customers. Wholesale energy prices have come down and remain low, so we believe that energy companies should be making significant further price cuts.”

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