The Lemon Fool

Hi all,

It's a bit unlike me to be struggling with a decision, particularly when sitting in front of a spreadsheet using accurate data However, I keep getting emails from Money Saving Expert telling me to switch to a fixed deal before it's too late, the world comes to an end, and I become much, much worse of.

I only switched supplier a few months ago and this tariff is no longer available from them, so I know full well I will be switched to a higher cost tariff any day now when the cap rises by 12% in October. However, my spreadsheet tells me the cheapest 12 month fix highlighted by the MSE Cheap Energy club is currently 30% higher than my current variable tariff based on accurate meter reading data from the past 12 months. So the variable tariff could rise by 12% now, and again by 12% in April, and I'd still be better off on a variable rate tariff assuming it went up in line with the cap.

Is anyone else in the same position currently dealing with the same conundrum?

All the best, Si

simoan wrote:Hi all,

It's a bit unlike me to be struggling with a decision, particularly when sitting in front of a spreadsheet using accurate data However, I keep getting emails from Money Saving Expert telling me to switch to a fixed deal before it's too late, the world comes to an end, and I become much, much worse of.

I only switched supplier a few months ago and this tariff is no longer available from them, so I know full well I will be switched to a higher cost tariff any day now when the cap rises by 12% in October. However, my spreadsheet tells me the cheapest 12 month fix highlighted by the MSE Cheap Energy club is currently 30% higher than my current variable tariff based on accurate meter reading data from the past 12 months. So the variable tariff could rise by 12% now, and again by 12% in April, and I'd still be better off on a variable rate tariff assuming it went up in line with the cap.

Is anyone else in the same position currently dealing with the same conundrum?

All the best, Si

I assume you are using now and April hypothetically in terms of when rates might change?

IMHO it's one of those impossible conundrums given the unknowns. If gas prices continue to rise, maybe the variable tariff could rise by 30% or more, but on the other hand, fixed rates might fall.

So it boils down a decision on how important certainty is over a possible higher or possible lower cost. Your spreadsheet (your head) can give one side of the equation, but the other side is down to your heart

staffordian wrote:I assume you are using now and April hypothetically in terms of when rates might change?

Nothing hypothetical; OFGEM review the price cap every six months and any changes are made in April and October. If wholesale energy prices continue to increase in the coming months it is almost certain another rise will come in April 2022.

staffordian wrote:IMHO it's one of those impossible conundrums given the unknowns. If gas prices continue to rise, maybe the variable tariff could rise by 30% or more, but on the other hand, fixed rates might fall.

So it boils down a decision on how important certainty is over a possible higher or possible lower cost. Your spreadsheet (your head) can give one side of the equation, but the other side is down to your heart

I agree. It's a bit like buying shares - you don't know what the future holds and what the share price will do. However, I switch energy supplier every year and have never been in this situation before as for many years wholesale energy prices have been relatively stable, so it was just a matter of finding a better deal. I am leaning towards sticking with a variable rate tariff for now, rather than twisting and guaranteeing paying 30% more as advised by MSE.

Thanks for your thoughts.
All the best, Si

Ah, I was overlooking the OFGEM cap, not really appreciating it's significance here. I guess all variable tariffs are subject to it then. I too swap most years, but always go for a fixed rate so the workingsand implications of the cap have passed me by.

I too looked at my options yesterday, having received an MSE email, but for me it was a no-brainer to stay put. I'm fixed until the end of Jan 2022 and the best swap now is around £260 dearer, as well as a £60 exit fee from my current deal.

I suppose it's possible that come next January the best deal might be well north of what's currently on offer, but getting a far cheaper rate for the first half of next winter should more compensate for that.

staffordian wrote:Ah, I was overlooking the OFGEM cap, not really appreciating it's significance here. I guess all variable tariffs are subject to it then. I too swap most years, but always go for a fixed rate so the workingsand implications of the cap have passed me by.

I too looked at my options yesterday, having received an MSE email, but for me it was a no-brainer to stay put. I'm fixed until the end of Jan 2022 and the best swap now is around £260 dearer, as well as a £60 exit fee from my current deal.

I suppose it's possible that come next January the best deal might be well north of what's currently on offer, but getting a far cheaper rate for the first half of next winter should more compensate for that.

The thing is, and here’s the rub, fixed rate deals are not subject to the cap. So you could easily switch from a variable rate to a fixed tariff which is higher than the cap!

All the best, Si

I am with whoever it was who bought SSE's retail business (They still use the SSE logo) My two year fixed price deal expires anyway at the end of September and I have just signed up for a one year fixed price deal with them again. As far as I could see it looks as near to replicating my current rates as I am going to get at the moment.

It is though a gamble because who knows the future. MInd you I have a simpler problem because I am only buying electricity. My heating is oil.

Dod

Well, that didn't take long! Today I got the email showing the rate changes from my present supplier. Only a 45% increase!!

I have now switched to the lowest 12 month fix shown by MSE from Avro Energy for a mere 30% increase in my energy bill. I knew I was on a low variable rate (it was the best in the market in May when I last switched) but a 42% increase is a a bit of a shocker. The Avro 12 month fix has no exit fees so I will maybe switch again early next year if any better value deal becomes available.

Anyone coming off a 12 month fixed rate deal in the coming months is going to be in for a bit of a shock.

All the best, Si

simoan wrote:Well, that didn't take long! Today I got the email showing the rate changes from my present supplier. Only a 45% increase!!

Ouch! But at least it made the decision easier

simoan wrote:Anyone coming off a 12 month fixed rate deal in the coming months is going to be in for a bit of a shock.

Our combined gas and electricity bill is around £700 and the best we could get were we to swap now is within spitting distance of four figures. So yes, a shock, but at least not a surprise now...

staffordian wrote:

simoan wrote:Well, that didn't take long! Today I got the email showing the rate changes from my present supplier. Only a 45% increase!!

Ouch! But at least it made the decision easier

Yes, literally overnight the fixed deal with Avro, a mere 30% increase in bills, became a no-brainer! A much easier decision than this time yesterday. I think I'll be buying thick woollen clothing and those gloves with no fingertips for the coming winter...

All the best, Si

I've just fixed for 2 years, estimated 25% more for the year than we're currently paying - but I like a fix. I'm expecting to be roughly right that gas prices won't be averagely lower for the term at least it'll be a good enough deal if not the best.
SO suggested we clean the chimney and burner in the front room - seemed a feature when we bought the house but it's never been lit, we have that pile of willow and cherry I stacked at the bottom of the garden last winter. I think our central heating is most used in the morning rather than the evenings.

I'm currently on a fixed tarrif with EOn that expires on 18th November, which has penalties for early switching. So I can't change until at least 49 days before, when we will just be into October and I presume fixed tarrifs will then have gone up more, to reflect the raising of the cap and increased gas prices.

Drat, it appears my current supplier (PfP Energy) has just gone kaput and I've been transferred to British Gas. I guess that'll mean I need to do an unexpected switch.

Stompa wrote:Drat, it appears my current supplier (PfP Energy) has just gone kaput and I've been transferred to British Gas. I guess that'll mean I need to do an unexpected switch.

Yup. And they seemed so good after the hassle I had with Scottish when YE went bump in December. That's 2 suppliers gone under within 3 months of me switching to them. Shall I warn people if I switch again

Oops!

https://www.ofgem.gov.uk/publications/o ... nformation

Maybe I should put a stop to the that direct debit Avro will be taking next week!
All the best, Si