'Gas and electricity prices: more rises to come? Predictions...' blog discussion

StuartGMC

MSE_Martin wrote: »

Recession fears have driven down winter's wholesale gas & elec prices by 15-20% in the last few weeks. If this holds, next Jan's predicted 20% energy price hikes are more likely to be 0-10%. Should I cap? As the cheapest caps cost 15%ish more than the cheapest non-capped tariffs, savings are less likely.

Martin
I think we shouldn't overlook the OPEC and non-OPEC moves on oil production quotas; as noted by others regarding the linking of natural gas to oil price rather than decoupling and relying on demand it means it is tricky to predict to say the least.

I think it would be useful in your comments to include a timeline with the comment on premiums for fixing; as I noted earlier I thought a 13.8% premium over 1 Sept 2008 price rise from ScottishPower was a worthwhile gamble for a 3yr fix; I wouldn't do so at 22% for this period and similarly I wouldn't go with 15% for a 12month fix (as most energy use is Oct-Apr, so in effect most of your expectation for a rise has to be in this period to make it worthwhile and is perhaps why so many expire in Sept / Oct period?)

So it is important to look at the fixed period, then the premium over present prices for this vs the potential underlying trend for rises in this duration and weighting for consumption in the Oct-Apr quarters.

I look forward to your comments
Stuart

MSE_Martin

StuartGMC wrote: »

Martin
I think we shouldn't overlook the OPEC and non-OPEC moves on oil production quotas; as noted by others regarding the linking of natural gas to oil price rather than decoupling and relying on demand it means it is tricky to predict to say the least.

I think it would be useful in your comments to include a timeline with the comment on premiums for fixing; as I noted earlier I thought a 13.8% premium over 1 Sept 2008 price rise from ScottishPower was a worthwhile gamble for a 3yr fix; I wouldn't do so at 22% for this period and similarly I wouldn't go with 15% for a 12month fix (as most energy use is Oct-Apr, so in effect most of your expectation for a rise has to be in this period to make it worthwhile and is perhaps why so many expire in Sept / Oct period?)

So it is important to look at the fixed period, then the premium over present prices for this vs the potential underlying trend for rises in this duration and weighting for consumption in the Oct-Apr quarters.

I look forward to your comments
Stuart

While I understand your rationale. I quite deliberately avoid longer time lines - i think beyond 6 months in current flux days is very difficult to call. And (in blog discussion raterh than in my actual guide) i'm willing to say I think that there is time to wait and see before risking losing a cheap cap - if prices do jump there is always the gap to cap.

magyar

MSE_Martin wrote: »

If i aske dyou to put your money on it where would you go

Martin, I'm willing to bet you a virtual 1p that we see no further price rises this winter, and a small (5-10%) cut in prices in the spring. Wholesale gas is still firm but electricity prices should be coming right off towards summer 09.

My only caveat is the pressure which the government are putting onto the utilities to reduce prices on pre-payment meters. Whilst it's good news for people who pre-pay, these meters go cost more to run, so this has to be adsorbed by everyone, which might temper any fall in prices.

SteveL41

I'm new to the forums and don't know if this is the place to make a suggestion. But here goes.

I buy gas and electricity from Scottish Hydro Electric. Yesterday I received a letter from their Chief Executive dated (just) September 2008 telling me that "From 25th August 2008 we will have to raise gas prices by 29.2% and our electricity prices by 19.2% on average."
I immediately rang them to complain about retrospective price increases being notified as if they hadn't happened yet. I was told politely that they have 8 million customers and it takes time to notify everyone. They also said if I provided meter readings there and then, they would ensure the old prices were applied to my account up until that day. I did, and said I was surprised that this was not the default position.
Top tip - anyone with SHE should ring 0845 078 6782 (open til 2pm Saturdays, 8pm midweek) and complain about the retrospective increase, and they will be offered the old rate without question.

magyar

Hi Steve and welcome to MSE

You're right, and in fact I would recommend this to anyone, irrespective of your supplier.

All companies have an obligation to also keep you on the old tariff if you are switching within two weeks to another company too. If you're switching because your rate has been put up, then make sure you call up your existing supplier and ask them to keep you on the old rate until you leave.

(And when you get the bill, make sure they did this, too!)

StuartGMC

MSE_Martin wrote: »

While I understand your rationale. I quite deliberately avoid longer time lines - i think beyond 6 months in current flux days is very difficult to call. And (in blog discussion rather than in my actual guide) i'm willing to say I think that there is time to wait and see before risking losing a cheap cap - if prices do jump there is always the gap to cap.

Martin
Thanks; I agree predicting is not easy, but I guess what I was not saying clearly is for people to consider their energy use vs the time frame of the cap / review. So if you use 70% of your annual power consumption Oct-Apr then it may bias your decision on capping now, Jan or Apr...

Just after I opted to take the cap with 13.8% premium BG (Centrica) changed their fixed offer to run to end of Jan 2012 but also increased rates some 7% in my area; resulting in the premium to cap increasing to about 22%. I've run a check online best deals against our fixed tariff and get:

EDF Energy – Dual Fuel - £1109 i.e. £101 saving per year (£8.42per month)
Scottish Power Discounted Online 2009 Dual Fuel - £1112 i.e. £98.22 saving per year (£8.19 per month)

or, 9% premium over present offers.

My intention is to monitor every quarter (or if prices do change significantly) and if the differential opens too much due to price falls then I'll bite the bullet for the exit fees (£100). [FONT=Arial, sans-serif]
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Chrysalis

Martin the wholesale drops I expect to continue into 2009 as well as oil continues to drop.

confused31_2

Im so glad i never fixed mine now, mind you it was a risk at the time, which i was willing to take.

MSE_Martin

confused31 wrote: »

Im so glad i never fixed mine now, mind you it was a risk at the time, which i was willing to take.

Depends when you were looking. The huge majority who fixed when we were saying "cap" on the site are better off - having both saved in the meantime - and now are still paying less than the post cut prices.

If you were looking afterwards (post july from memory) then you're overpaying.

Timmaa

I've been looking at my utilities and have decided to change suppliers.

EDF is the cheapest supplier for my region and annual consumption. And their new V2 fixed tariff works out 3.2% more expensive for me than their Energy Online V6 over the next 12 months (which is the next cheapest option). There would be a combined exit fee of £50 before 31 March 2010.

I suppose my selection of tariff depends on the predicted movement in combined utilities prices over the next 12 months. What's the general opinion on that?