Are you all going for capped?

Just spoke to C again at sp, I got him again

The fixed price offer 2011 is being wound down, it should not be on any broker sites ect and will def not be offered on the phone. however its still available if you are an online sp customer!

If you are not an SP customer and you find the fixed til 20011 on a site you might be able to switch online but i think you will have to be bloody quick!

i took the fixed 2011 no standing charge, there is little difference in NSC or a SC.......... unless you have a holiday/caravan home .

One other thing c said to me was the the offer had been withdrawn because they had given it to so many people, its being pulled after only 2 months. They have filled the numbers early!

The decision to cap/fix is a gamble if it means you have to pay more today than you otherwise would.

Obviously, the greater the premium, the greater the gamble.

We are well below average users, perhaps in part due to some of the worthy ideas gleaned here on MSE

In order for us to cap/fix, it would mean paying a premium today of at least 20%
Our supplier has only recently increased rates by ca. 15%.
Who knows if, when and by how much our supplier will increase rates by again?

For me such gamble is too high.

For every month the price remains unchanged, we could have another month with a 40% increase and still break even on a straight line basis.

Obviously, if the price does increase next month by 40% I will lose the gamble.

But lets look at this sensibly.

We've just suffered a 15% price increase which was considered bad. Will any company increase prices overnight by 40%?

Whilst not directly related, but energy all the same, crude oil 14 days ago (when all the talk of gas/electricity increases was going on) reached the dizzy heights of $135 per barrel - today it is available for $122 per barrel, a reduction of about 10%.
(Edit: actually the $122 per barrel was the price 48 hours ago. Prices on Thursday were about $128 per barrel & Friday they peaked at a record breaking $139 per barrel. It just goes to show how volitile, and perhaps artificial, prices currently are due to speculators. Energy is currently the new dot com bubble)

Don't get me wrong, I'm not suggesting gas/electricity prices are set to fall anytime soon, but the scare mongering stories of 2 weeks ago suggesting prices of gas/electricity poised to go up by another 15%-50%, may now end up going up at the bottom end rather than the top end of that range.

In our situation, perhaps our supplier won't put prices up for another 12 months? History shows they have never increased prices more than once per year and this last increase followed 2 years of price stagnation.

If in 12 months time our supplier puts up prices by a whopping 40%, we would still break even over 2 years. I think most longest capped/fixed deals (the so called 2011 deals) end 31/12/2010 - that's only 2 years 6 months away.

Now, I've always referred to a straight line basis of break even, because it's simple. Actually if you want to be more accurate, the calculation should be done using the TVM method (Time Value of Money)
This would then take into account the fact that £1 spent today is infact more costly than £1 spent next year.

By not opting for a fixed/capped rate today, perhaps I will end up losing the gamble, but without a clear crystal ball telling me what will happen in the future, it's a gamble I'm certainly happy to take.


Edit: a better explanation of the TVM concept here:
http://www.teachmefinance.com/timevalueofmoney.html
and here:
http://www.investopedia.com/articles/03/082703.asp

I calculate that on EON (who are the cheapest suplier for me) their fixed price rate is 4% higher than the Online Extra Saver V5 that I am on at present.

So unless they keep their price increased under 4% (NOT very likely!) I would save money. Of course, its now a gamble as to when I switch as the sooner I switch the sooner I pay 4% more.

MORPH3US wrote: »

@ neil9313...

I am thinking of signing up to the SP fixed price gas and elec....

Do you know if there are any tie-ins.... i.e. if I decide to switch before 2011, will I have to pay a charge?!?

M

from what I know and have seen, if you get on the orignal fixed on line feb 2011 then its no pen/charge & you can leave before the deal/contract

The new deal for SP 2011 has a £50 leaving fee, BG has a £75 one I have read! The sp one is still online

I went for the gamble of NOT capping

I spoke at length to an employee at Atlantic who went through the increases in april , and the history of increases of that company and her view on the future , i am not silly i know she isnt going to say there WONT be any increases but i felt comfortable when i got off the phone

I think scaremongering tactics are being used by all the big 6 in relation to capped/fixed tariffs and its a disgrace

Its a sad state of affairs when people are choosing to pay MORE than they should simply because the big 6 just pass on their increased costs straight on to the consumer whilst maintaining heathly profits

The customer ALWAYS pays in the end , i just chose to control WHEN