UK warned against freezing gas and electricity bills

As the prices of gas and electricity have risen over recent months, so more utility operators have begun offering long-term fixed rate deals.

With the continued shocks to international energy prices, and with doom-laden commentators predicting energy insecurity, capping your gas and electricity rates may seem like good insurance against future shocks.

But price comparison websites have pointed out that as gas and electricity prices have risen between ten and 15 per cent in recent months, now may not be the best time to sign up.

As well as paying a premium to keep prices capped, prices fixed now will stay at a peak if, as predicted, wholesale energy prices and the knock-on retail value of gas and electricity falls.

"This may well be one of the highest points in the commodity cycle, with an improving UK gas import position from 2007 onwards putting downward pressure on future market prices," said senior utilities analyst David Scott.

"ScottishPower's 2004 offer would have saved the customer money against the average tariff, yet in its second incarnation, after it was extended in 2005, would have proved to have been more expensive," he added.

"Although further increases in wholesale prices are still possible and suppliers have warned customers that wholesale prices might go up or down, the industry may well be bottling-up a problem if current fixed price offers do badly.

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