Anyone tussling with this question?
Our fix is ending soon and we've been offered a fix that is 133% above the current (April to Sept) price cap. Martin Lewis has set a notional level for new fixed deals, below which, given the probable prices rises in the pipeline, he believed that a fix is "worth considering". That level is 145%.
He's saying that if your new fix is no more than 145% higher than the current price cap you should consider taking the deal. I did all the maths on a spreadsheet and came out with a figure of 133%. I then used the 'Should you fix" tool on MSE and was given the advice that that the new fix we've been offered is "strongly worth considering".
If the price rises as predicted, we would save £1,100 over the price cap rates. Not a small amount. But.....but...this is the first time when buying energy that I've felt I'm taking a gamble. Either way I have to make a choice. The outcome of the choice is likely to either cost £1,100 or give us a windfall of that amount. It all seems a little wild west.
As Lewis points out, if the government decide to enter the market and either tamper with the price cap or give help related to it, fixers' potential gains could be turned into significant losses.
Anyone else facing this decision? What's your view on what the government will do?
Our fixed rate finished just before the first cap rise in April, annoyingly. British Gas have offered me a couple of fixed rates since then. I read Martin's advice and decided not to go for it. The thing that put me off is you start paying the higher rate immediately, and they were only offering me a fix for about 10 months.
I read in the Guardian this morning that whole sale gas prices have fallen because of the expectation that the EU will soon bring in a big raft of interventions. Although then Russia turned off the main gas pipeline so maybe wholesale prices have gone up again.
I decided just to try to cut down on our usage. I started by unplugging chargers when we weren't using them, in a month I saved about £20 - I had no idea they used so much power when plugged in.
I am going to wait to see what the Govt does next. I would like to see things like stop linking electricity to gas prices and stop linking standing fees to gas prices. VAT cut would also be good. More windfall taxes etc.
I have absolutely no faith in this Govt though and I'm not expecting much to change under Truss, but I think they really have to do something, I can't imagine how horrendous it's going to get for millions of people if they don't intervene somehow.
My view is that this government -indeed, any government of whatever political hue - will have to intervene in some way, if the prices rise to horrendous levels. Otherwise I could envisage civil unrest to rival or outstrip the Poll Tax riots.
However, the problem is guessing what form such assistance might take. If it were by knocking down VAT and the green supplement, one would expect pro rata reduction for all, whether or not on fixed deal (i.e the fix is on the gas, not on the statutory add-ons )
If done by direct subsidy to energy companies then, as you say, those on fixed deals could miss out, if the effect was to bring the unit prices below those of fixed deals.
I have read one commentator who suggests that help should not be across the board but should focus on lower income groups who simply don't have the wherewithal to draw upon, rather than "subsidise the rich" who would have to curb their lifestyle but not face a choice between heat or eat.
If you feel you can outguess the market against so many dynamic economic and geopolitical variables then I wish you luck, Hugh!
Different world outlook at the time but years ago I took a three year fix at higher than prevailing prices. The gamble won, though it was a bit of a shock to adjust to the upped price levels suddenly at the end of the fix!
From a newsfeed just now. Spin the roulette wheel for a surefire prediction!
Auxilione, a consultancy that updates its predictions daily, reduced its price cap forecast for April next year by £23 - the third drop in a row.
The forecast for April's cap is now £5,539 per year for the average household, if energy prices stay as they are today. That's more than £2,160 lower than at the start of the week.
The January cap forecast went up by £19 in the latest prediction, but it too has fallen nearly £900 from a peak of £5,632 earlier in the week.
Yesterday’s Guardian had a comprehensive list of the measures being taken by other European governments to help their populations, and there’s talk of a co-ordinated EU initiative to cap all wholesale prices. The worry is that neither Truss nor Sunak have made any concrete proposals (apart from non-specific “tax cuts”) so far and a fear that both candidates’ ideological free-market philosophy (and a drive to undo any state intervention ideas sanctioned by Johnson) will stymie any moves to mirror policies seen as coming from the hated EU.
What seems particularly galling is that (even on my current tariffs) the standing charges have tripled in the last year. I can see why Kw/hr unit prices have risen, but increasing standing charges — simply the cost of squirting gas or electricity through pipes and cables — looks like real profiteering.
Yes I didn't realise standing charges were linked to wholesale gas prices - as are electricity charges. Imo these should all be unlinked. I'm assuming this is where the unexpectedly large profits are coming from.
Being a bit of a smart Alec I troll comparison sites and entered into a 2 year fix in April 21. Six months later that firm went bust and good old British Gas came to our aid and we were put on their standard variable tariff. Our Direct Debits have fluctuated ridiculously since. Contact with them is hopeless, agree something over the phone only to find that another department deals with that who then disagree with previous advice, etc,etc. Please bring back the good old Electricity Board and Gas Board shops. Though come to think of it they would resemble battle grounds now. I followed Martin Lewis as much as I was able but in the end gave up and now face whatever is thrown at me. It's a minefield. A gamble.
But as Julie B and Don point out; why do standing charges have to increase so much simply because wholesale prices increase ?? Don't understand that at all. Other than reducing standing charges back to say the level of 2 years ago and clawing back huge profits of energy companies to offset price increases I really don't have a clue what can or should be done.
To quote citizen Smith : "Come the day of the revolution brother.................."