Could capping prove a mistake?

1carminestocky

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.

Or decreases, of course. :rolleyes: Even our inept Govt will come under increasing pressure to do something about the energy comapny's historic reluctance to decrease their prices in line with wholesale/oil prices with quite the haste they increase them with. Don't forget a Government just 22 miles away has had the guts to limit gas/electric price rises to a maximum of just 2%. British Gas never nationally advertise a tariff that is heavily weighed in the public's favour (Click 5 remains theirr little secret).

moonrakerz

1carminestocky wrote: »

British Gas never nationally advertise a tariff that is heavily weighed in the public's favour (Click 5 remains theirr little secret).

Surely any tariff that is "heavily weighed in the public's favour" is a figment of the imagination ? Such a tariff would mean the supplier selling at a loss and no company will do that.

As I have said before, the capped/fixed tariffs are carefully calculated by the suppliers to maintain/increase their profit levels. No sane finance director is going to offer prices to the public unless he is absolutely sure that he isn't going to lose out, he certainly isn't going to gamble that the retail price of his product will or will not be higher than his capped/fixed price he is offering now.

We are constantly told that gas/electricity prices are tied to oil prices, hence the huge rises being implemented and forecast. If the oil companies are unwilling to offer capped/fixed prices for their fuels how come the gas/electricity suppliers seem to be able to do this ? Being cynical again (sorry) - are they onto a "nice little earner"?

Michael_Nottingham

1carminestocky wrote: »

Or decreases, of course. :rolleyes: Even our inept Govt will come under increasing pressure to do something about the energy comapny's historic reluctance to decrease their prices in line with wholesale/oil prices with quite the haste they increase them with. Don't forget a Government just 22 miles away has had the guts to limit gas/electric price rises to a maximum of just 2%. British Gas never nationally advertise a tariff that is heavily weighed in the public's favour (Click 5 remains theirr little secret).

In France EdF is mainly state owned and the Government force EdF to subsidise their residential and business customers (something the EU are unlikely to allow for too much longer). They also have a substantial nuclear industry where production costs aren't linked to oil. If the Government did the same thing here they would instantly stop new generation investment which would mean blackouts in 10-15 years.

Cardew

Michael_Nottingham wrote: »

In France EdF is mainly state owned and the Government force EdF to subsidise their residential and business customers (something the EU are unlikely to allow for too much longer). They also have a substantial nuclear industry where production costs aren't linked to oil. If the Government did the same thing here they would instantly stop new generation investment which would mean blackouts in 10-15 years.

Nice to see informed comment.

Cardew

moonrakerz wrote: »

Surely any tariff that is "heavily weighed in the public's favour" is a figment of the imagination ? Such a tariff would mean the supplier selling at a loss and no company will do that.

As I have said before, the capped/fixed tariffs are carefully calculated by the suppliers to maintain/increase their profit levels. No sane finance director is going to offer prices to the public unless he is absolutely sure that he isn't going to lose out, he certainly isn't going to gamble that the retail price of his product will or will not be higher than his capped/fixed price he is offering now.

We are constantly told that gas/electricity prices are tied to oil prices, hence the huge rises being implemented and forecast. If the oil companies are unwilling to offer capped/fixed prices for their fuels how come the gas/electricity suppliers seem to be able to do this ? Being cynical again (sorry) - are they onto a "nice little earner"?

Moonrakerz,
I don't think I have ever disagreed with a post of yours before, but I take a different view to you on this subject.

Take BG as an example. They have 2.1 million customers(of 16 million) on fixed price tariffs. - there are 2 tariffs finishing next year and one in 2010.

My tariff finishing on April 30 2010 and started in 2005 had a modest premium at the beginning and the 2006 rises put me 'in profit' and is certainly their cheapest tariff even now, and presumably a rise for Click 5 is imminent.

So as BG needed/wanted to raise £XXX million in their latest round of price increase, that must have been raised from the 13.9 million customers not on fixed tariffs.

Obviously that will mean that the 13.9 million will pay more than if 16 million had shared the pain - but that won't bother BG.

Provided they ration the number on fixed tariffs, and bearing in mind that other companies also offer fixed tariffs, it won't make them too uncompetitive.

Just my opinion of course.

1carminestocky

Cardew wrote: »

Moonrakerz,
I don't think I have ever disagreed with a post of yours before, but I take a different view to you on this subject.

Take BG as an example. They have 2.1 million customers(of 16 million) on fixed price tariffs. - there are 2 tariffs finishing next year and one in 2010.

My tariff finishing on April 30 2010 and started in 2005 had a modest premium at the beginning and the 2006 rises put me 'in profit' and is certainly their cheapest tariff even now, and presumably a rise for Click 5 is imminent.

So as BG needed/wanted to raise £XXX million in their latest round of price increase, that must have been raised from the 13.9 million customers not on fixed tariffs.

Obviously that will mean that the 13.9 million will pay more than if 16 million had shared the pain - but that won't bother BG.

Provided they ration the number on fixed tariffs, and bearing in mind that other companies also offer fixed tariffs, it won't make them too uncompetitive.

Just my opinion of course.

Does this calculation take into account the fact that you had effectively been paying 'over the odds' for your fuel for up to 12 months? Knowing your thouroughness when it comes to such matters, I'm sure you have factored this 'overpayment' into your sums, but IME many people don't even think about it.

Cardew

1carminestocky wrote: »

Does this calculation take into account the fact that you had effectively been paying 'over the odds' for your fuel for up to 12 months? Knowing your thouroughness when it comes to such matters, I'm sure you have factored this 'overpayment' into your sums, but IME many people don't even think about it.

Yes!

As I said above my tariff had a modest premium above the standard rates.

In fact I have just dug out the letter of confirmation. The tariff started on 29 Nov 2005 and runs until 30 Apr 2010.

The premium* over their standard gas tariff was 2.8% and for electricity it was 4.8% below*(e.g. discounted) the standard tariff. (there were penalty charges ranging between £15 to £45 for leaving early)

* Percentages based on the 20,500/3,300kWh average consumption

I also got modest dual fuel, DD and paperless billing discounts.

Again as said above against the standard rate tariff I was quickly in profit, however the introduction of the various BG click tariffs complicated matters - but I have been cheaper than them for some while.( I keep getting letters from BG 'congratulating' me on having their cheapest tariff) and bear in mind that I have over 20 months left.

However the point I was making is that all the Utility companies are in a win/win position. They need to raise £xxx millions and they simply raise their prices. They 'lose' a little on the fixed tariffs and the other customers compensate by paying slightly more.

1carminestocky

Aaahh, modest increase on the standard tariff, not quite the bargain I thought/ you claim? Looks to me like you have been paying 3.032p Tier 1 and 2.113 since 2005 on Gas. I'm suspecting (in the absence of Click products at the time?) there would have been way cheaper deals elsewhere compared to BG's standard tariff at the time? So not *really* a great comparison as to 'savings'? What you are saying, in effect, is that you are 'in profit' compared to one of the UK's most expensive tariffs?

SHIPSHAPE

1carminestocky wrote: »

Aaahh, modest increase on the standard tariff, not quite the bargain I thought/ you claim? Looks to me like you have been paying 3.032p Tier 1 and 2.113 since 2005 on Gas. I'm suspecting (in the absence of Click products at the time?) there would have been way cheaper deals elsewhere compared to BG's standard tariff at the time? So not *really* a great comparison as to 'savings'? What you are saying, in effect, is that you are 'in profit' compared to one of the UK's most expensive tariffs?

Exactly the point.

All a BG capped tariff does is cap it against BG's prices which are, and always have been, the most expensive.

I am absolutely certain that during the stated period simply switching to the cheapest provider at regular intervals would save most money.

1carminestocky

SHIPSHAPE wrote: »

Exactly the point.

All a BG capped tariff does is cap it against BG's prices which are, and always have been, the most expensive.

I am absolutely certain that during the stated period simply switching to the cheapest provider at regular intervals would save most money.

Agreed. Not forgetting the potential for cashback on switching (cashback sites have been in existence since before 2005, Quidco I believe commenced trading in that year and they were by no means the first)