Could capping prove a mistake?

moonrakerz

Geoff_W wrote: »

The other was the same tariff, but without the energy monitor and £35 penalty.
Geoff

So the "free" energy monitor was actually worth £35 !

Michael_Nottingham

zorber wrote: »

I dont understand why people are still talking about energy companys increasing prices, with fuel prices now on the slide and the cost of a barrel down by 25%+ then surely any company now increasing prices will be seen as profiteering in this country. If it is also true we are now susidising the EU price then something needs to be done by the watchdog on this.

I would be expecting energy prices to actually decrease before long!!

Zorber - compare the % increase in the cost of oil over the last year to the % increase in your Power and Gas bill and you will soon see that prices are unlikely to go down any time soon. Just like on Petrol, all the money is made upstream, however unlike Petrol where prices change by the day Power and Gas retailers only update prices periodically. Hence Retail prices don't always move in line with wholesale prices in the short term.

SHIPSHAPE

SwanJon wrote: »

I can be surprised by many things - often I don't decide to be surprised, it just happens.
In this case someone has been overcharged £900 in between 18 months and two years.
The average electricity bill for a year is less than that, so they would need to have been charged double or used a huge amount - hence my suprise.

Yes, but these are capped tariffs we are discussing and what can happen to customers bills. And I compared this particular capped tariff of BG to the lowest available tariffs during that period.

Did you know, for example, that BG standard tariff's are, at the moment, 50% more than Scot & Southern's standard on gas and about 35% more for electricity?

Factor in these differences plus a premium to cap plus the fact that Southern will increase some 3 months after BG and repeat this process 3 maybe 4+ times in a two year period and it is very easy to see where customers have needlessly paid well over the odds for their energy.

I see it every day.

Capping buys nothing more than the knowledge that a price rise will not affect a customer from a particular supplier.

Regular switching has a more realistic effect on saving. Martin is way off the mark on this subject.

SwanJon

SHIPSHAPE wrote: »

Yes, but these are capped tariffs we are discussing and what can happen to customers bills. And I compared this particular capped tariff of BG to the lowest available tariffs during that period.

The fact that they are capped is irrelevant to the ratio of costs. I find it hard to believe that the ratio was 2:1 (capped:best available), the other option is that the custoer is an incredibly high user.

SHIPSHAPE wrote: »

Did you know, for example, that BG standard tariff's are, at the moment, 50% more than Scot & Southern's standard on gas and about 35% more for electricity?

A quick check on a comparison site gives me the following results using energywatch's average kWh values
BG Standard :SSE standard
Gas=863.16:586.96 = 1.47:1
Ele = 459.78:410.33= 1.12:1
So you're about right for the gas, but for electricity the difference is only 12%, not 35%

SHIPSHAPE wrote: »

Factor in these differences plus a premium to cap plus the fact that Southern will increase some 3 months after BG and repeat this process 3 maybe 4+ times in a two year period and it is very easy to see where customers have needlessly paid well over the odds for their energy.

Can you guarentee that SSE will always be able to wait 3 months? Can you guarentee that there will be 4 price rises in the next 2 years? (that would suggest capping may not be all that bad.) Like Cardew I am on BG's 2010, and yes there was a time when I was possibly paying more than click customers, but it didn't last long and I now have one of the cheapest prices (no longer) on the market - over the 5 years I will have saved money.
The premium at the time was small (in my case it was actually cheaper to protect than stay on the standard tariff). Quite a few of the capped/fixed tariffs havn't had a premium, including BG's new one (if you don't include the current price rise)

SHIPSHAPE wrote: »

I see it every day.

Capping buys nothing more than the knowledge that a price rise will not affect a customer from a particular supplier.

Well, if I cap/fix with company X I won't get company Y's price rise, so I wouldn't be affected by any company's price rise.

SHIPSHAPE

SwanJon, looks like we agree to disagree!

However, I am certain that the best policy is to regularly switch rather than to cap with one supplier.

Those who cap are simply taking themselves out of a market where savings can be made otherwise.

I've yet to hear of anybody who has capped and been a success of any note-apart from yourself of course. And I believe you too but it's just a very rare thing that I come across and that is on a daily basis.

SHIPSHAPE

SwanJon wrote: »

Can you guarentee that SSE will always be able to wait 3 months?

SSE's policy is to always be the last of the big 6 to raise. This is intended to keep their customer base as solid as possible and to attract new custom. And it works-more customers are joining and most are BG customers.


Can you guarentee that there will be 4 price rises in the next 2 years? (that would suggest capping may not be all that bad.)

No I could not. Trends are the most important indicators here and the trend is of price rises.

However, can you predict there will not be cuts? In that sense capping would prove foolish would it not?


Well, if I cap/fix with company X I won't get company Y's price rise, so I wouldn't be affected by any company's price rise.

And you wouldn't be affected by the benefit of simply switching to the cheapest supplier at, say, every 3 or 4 months or so.

Why deny yourself that opportunity yet settle on an expensive tariff instead?

..........

jem16

SwanJon wrote: »

Like Cardew I am on BG's 2010, and yes there was a time when I was possibly paying more than click customers, but it didn't last long and I now have one of the cheapest prices (no longer) on the market - over the 5 years I will have saved money.

As I said earlier I chose not to take BG's 2010 in Nov 2005 and switched to London Energy(now EDF) and latterly to Scottish Hydro. So far I will have saved around £550 over those 3 years. At the moment I'm fixed to end November 08.

Now I can't foretell what will happen over the next 20 months but I have £550 of savings to play with so far.

Richard019

Am I being naive here? Yes I know that oil is paid for by the $. But we pay for our gas and electricity by the £. It doesn't really matter if the oil price in $ is going down if the £ is moving relative to the $ and the Euro and I've not yet seen anybody factoring that in.

Plucking figures from thin air to illustrate what I'm getting at:

A $150 barrell 6 months ago was costing £75.
Just because it's now $112 a barrell doesn't mean it's cheaper for Brits if the exchange rate changes mean it's still £75. The companies are still going to have to convert their costs to £ to charge us so it would make no difference.

Cardew

jem16 wrote: »

As I said earlier I chose not to take BG's 2010 in Nov 2005 and switched to London Energy(now EDF) and latterly to Scottish Hydro. So far I will have saved around £550 over those 3 years. At the moment I'm fixed to end November 08.

Now I can't foretell what will happen over the next 20 months but I have £550 of savings to play with so far.

Hi Jem,

It should be pointed out that your case is atypical.

As we discussed over the past couple of years, for some unknown reason EDF did not increase the prices on the particular version(3.1?) of the tariff for those ex-London Energy customers and those prices were well below other EDF customers and of course most(all?) other companies.

Two other points;

Firstly, the tariff for Scotland(where Jem16 lives) on London Energy/EDF was particularly advantageous, and that advantage was greater than other areas.

Secondly, your financial advantage is also because you have now switched to a capped tariff; so to a certain extent you are extolling the virtues of capping - but just get the timing right!!

This post will no doubt produce the usual moronic comment by a recently joined member.

Cardew

Richard019 wrote: »

Am I being naive here? Yes I know that oil is paid for by the $. But we pay for our gas and electricity by the £. It doesn't really matter if the oil price in $ is going down if the £ is moving relative to the $ and the Euro and I've not yet seen anybody factoring that in.

Plucking figures from thin air to illustrate what I'm getting at:

A $150 barrell 6 months ago was costing £75.
Just because it's now $112 a barrell doesn't mean it's cheaper for Brits if the exchange rate changes mean it's still £75. The companies are still going to have to convert their costs to £ to charge us so it would make no difference.

Yes the £/$ exchange rate is also a big factor in oil costs; The UK£ has lost about 6% in value since the start of August.

Energy companies can(and no doubt do) buy currency ahead on the Forward market - but that is a double edged sword.