Could capping prove a mistake?

agent_orange_2

If the energy companies who have yet to apply the latest increases, hold back on increases, the likes of British Gas will surely have to drop their prices in order to keep their existing customers from deserting. Those that haven't signed on for capped period that is.

SHIPSHAPE

jhp wrote: »

At the present time its a mistake not to have capped IMHO.

As a previous poster has mentioned, this is a very sweeping statement.

How could you determine this when you cannot possibly know what tariff, and with what company, every customer in the UK is on?

For example, a British Gas customer who has now decided to cap their prices are simply capping prices that British Gas are charging.

And with British Gas the most expensive of the lot a customer is simply voluntarily agreeing to continue to pay the most expensive tariff, and an extra premium for doing so!, until 2009, 10 or even 11!

Yet during the next few years one only has to shop around and sign up for the most competitive tariff regularly. Standard tariffs are just 28 day rolling contracts and a lot cheaper than British Gas' capped deals.

It's madness and alarming how people are so easily duped.

Why on earth are British Gas advertising heavily to get people on capped rates? To save you money?:rotfl:

Cardew

SHIPSHAPE wrote: »

As a previous poster has mentioned, this is a very sweeping statement.

How could you determine this when you cannot possibly know what tariff, and with what company, every customer in the UK is on?

For example, a British Gas customer who has now decided to cap their prices are simply capping prices that British Gas are charging.

And with British Gas the most expensive of the lot a customer is simply voluntarily agreeing to continue to pay the most expensive tariff, and an extra premium for doing so!, until 2009, 10 or even 11!

Yet during the next few years one only has to shop around and sign up for the most competitive tariff regularly. Standard tariffs are just 28 day rolling contracts and a lot cheaper than British Gas' capped deals.

It's madness and alarming how people are so easily duped.

Why on earth are British Gas advertising heavily to get people on capped rates? To save you money?:rotfl:

Is not "how people are so easily duped" in itself a "very sweeping statement"

I do not dispute that there is a valid argument against cappping now; but equally there is a valid case for capping. It is a gamble pure and simple.

If you care to go back to some threads on MSE in 2005 you will find loads of post making exactly your point on the BG fixed to April 30 2010 tariff. i.e. "Why on earth are British Gas advertising heavily to get people on capped rates? To save you money?" and advising everyone not to cap.

Well anyone who ignored that advice has done very well indeed and they still have over 20 months of 'cheap' prices left.

Indeed I am not aware of any capped/fixed price tariff from any company that has not been a success for the customer.

SHIPSHAPE

Cardew wrote: »

Is not "how people are so easily duped" in itself a "very sweeping statement"

I do not dispute that there is a valid argument against cappping now; but equally there is a valid case for capping. It is a gamble pure and simple.

If you care to go back to some threads on MSE in 2005 you will find loads of post making exactly your point on the BG fixed to April 30 2010 tariff. i.e. "Why on earth are British Gas advertising heavily to get people on capped rates? To save you money?" and advising everyone not to cap.

Well anyone who ignored that advice has done very well indeed and they still have over 20 months of 'cheap' prices left.

Indeed I am not aware of any capped/fixed price tariff from any company that has not been a success for the customer.

I stated 'how people are so easily duped' and did I not include the word 'all' people. If I had then yes, it would have been a sweeping statement.

However, back to the points here, I know of hundreds of people (I work in the energy sector) who have not had success with capped tariffs and the vast majority are BG customers.

For an example, one person from yesterday was into the last six months of a three year fixed tariff for BG and they have overpaid by a massive £900 had they just switched to the cheapest supplier, and actually stayed with them for that period, rather than capping.

And any 'success' I do see, which are actually few and far between, have saved a pittance.

Unlike what Martin suggests, there is never a bad time to switch as the vast majority of people would find a cheaper tariff right now.

MrBlonde_2

olly300 wrote: »

Not true.

When I looked into capping I over estimated my gas consumption and got found capped tariffs where £250 more expensive per year. If I actually capped then the figure would have been greater as I don't use as much gas as I thought.

Click 5 prices will increase at some point soon, Martin says the online tariffs usually increase around six weeks after the standard unit prices increase. On top of that you would still have to face a year and a half of potential further increases. You have are paying 9.8% over the old (pre price rise) tariff which is now fixed until Dec 31st 2009. In my opinion you made the right move, for peace of mind at least.

MrBlonde_2

1carminestocky wrote: »

Sweeping statement IMHO. I capped with the BG Price Protection 2009 (i.e. one of the 'earlier', 'good guy' caps, before the recent price increases) and then discovered I would be paying OVER 40% MORE for my electricity compared to my previous tariff, BG Click 5. Panic/hysteria allows companies to 'pull a fast one' and that DEFINITELY happened here.

sorry meant to quote this person

msmicawber

I suppose it depends on individual circumstances. In my case, I've benefitted in the past from capping as tariffs rose beyond what I was paying on my capped tariff. I did the sums to check last time. I've capped again this time partly because of that and because I'd rather know how much to budget for than run the risk that prices will go up substantially and I won't be able to afford to have the heating on.

SHIPSHAPE

MrBlonde wrote: »

Click 5 prices will increase at some point soon, Martin says the online tariffs usually increase around six weeks after the standard unit prices increase. On top of that you would still have to face a year and a half of potential further increases. You have are paying 9.8% over the old (pre price rise) tariff which is now fixed until Dec 31st 2009. In my opinion you made the right move, for peace of mind at least.

The only thing achieved is an acceptance of an expensive tariff.

And why would anybody wish to pay a premium on top of the most expensive tariffs in the first place?

The cheapest supplier of the big six would have to raise their gas prices by about 110% and their electric by some 40% just to equal BG's tariffs-and then about another 10% on top of that to equal the cap price!

It's shocking.:huh:

PrinceGaz

So long as you can afford to pay more should prices rise, my approach has been never to cap but instead to always shop-around for the best deal.

I don't want to let energy-suppliers charge me more than necessary and lock me in to being with them, for possibly cheaper electricity in future (I don't have a gas supply). I certainly wouldn't want to buy into capped tariffs now when the gas market is turbulent, and there is some possibility of prices being unlinked from oil, which would send gas prices tumbling, despite what is happening in Georgia.

SHIPSHAPE

PrinceGaz wrote: »

So long as you can afford to pay more should prices rise, my approach has been never to cap but instead to always shop-around for the best deal.

I don't want to let energy-suppliers charge me more than necessary and lock me in to being with them, for possibly cheaper electricity in future (I don't have a gas supply). I certainly wouldn't want to buy into capped tariffs now when the gas market is turbulent, and there is some possibility of prices being unlinked from oil, which would send gas prices tumbling, despite what is happening in Georgia.

This is absolutely the correct approach to take. Common sense dictates that one should seek out the best price at all times rather than settle on quite expensive capped tariffs and being locked in.

Energy contracts are only 28 day rolling contracts anyway so one is able to up and move as and when, provided there is no significant debit to transfer.

Contrary to Martin's advice, which is almost always very sound, there is never a bad time to switch and there is never a good time, with certainty, to cap.