MSE News: Would you fix your energy costs for five years?

kippen_noedel

7% above standard is probably 25% above the cheapest rates available

if you are worried about future prices it at least gives you security,

pay your money take you chance/choice but don;t complain if prices jump another 35% in the next year and you did nothing when the opportunity was there.

Pincher

"until death us do part, unless I manage to hook up with somebody foxier than you, in which case I want to be able to dump you online with the minimum of fuss."

I see nothing wrong with exit penalties, if they are clearly displayed in the Key Facts. People have no problems with Early Redemption Penalties with thousands of pounds on fixed rate mortgages, so why is a £100 exit penalty such a big deal.

As for the EDF deal, it seems to be priced at 7% above standard tariff,
but nobody here would be on that. Let us say we are on the cheapest online tariff and paying £900 a year, and the EDF five year fix is £1,200 a year. Assume prices are increasing 8% linearly, which is roughly £80 a year. In year one,we are overpaying £300, year two £220, year three £140, year four £60, it's only in year five that we win by £20!

So all we are doing is to pay the high prices that won't be here for another five years. In total, we will be overpaying £700 over the five years. AND we get penalised for switching away.

What kind of an idiotic deal is that :eek:

Gorgeous_George

There is no way that I would fix for 5 years at such a huge cost. Pincher is spot on.

Anybody who takes up this offer needs their heads read.

On the whole, I like exit fees as they make uSwitch and other worthless organisations less proftable.

GG

Bark01

Pincher wrote: »

"until death us do part, unless I manage to hook up with somebody foxier than you, in which case I want to be able to dump you online with the minimum of fuss."

I see nothing wrong with exit penalties, if they are clearly displayed in the Key Facts. People have no problems with Early Redemption Penalties with thousands of pounds on fixed rate mortgages, so why is a £100 exit penalty such a big deal.

As for the EDF deal, it seems to be priced at 7% above standard tariff,
but nobody here would be on that. Let us say we are on the cheapest online tariff and paying £900 a year, and the EDF five year fix is £1,200 a year. Assume prices are increasing 8% linearly, which is roughly £80 a year. In year one,we are overpaying £300, year two £220, year three £140, year four £60, it's only in year five that we win by £20!

So all we are doing is to pay the high prices that won't be here for another five years. In total, we will be overpaying £700 over the five years. AND we get penalised for switching away.

What kind of an idiotic deal is that :eek:

How about working out if you would of saved money (so far) if you had taken out a simialr deal in July 2008?

Pincher

Bark01 wrote: »

How about working out if you would of saved money (so far) if you had taken out a simialr deal in July 2008?

Similar? Do you mean the price you fixed in July 2008 at was 30% higher than the cheapest you could have got at that time? Subsequently, prices jumped by 50%, so you still won.

Assuming the cheapest you can get currently is £900, a 50% increase is £1,350 p.a., 30% increase is £1,170.

If I actually thought the worst case rise during the next five years is 50%, and I fixed at £1,350, I would be paying the worst case price for the entire five years. I will need my head examined.

If I think the worst case rise is 30%, which Ofgem warns, and I fixed at £1,170 (roughly the EDF deal), still crazy.

There is a point beyond which a fix no longer makes sense.
I am very happy to fix for five years with a 7% premium, on the current best price I can get, which is £900 + 7% = £963. Show me that offer, and I will jump to it.

So, we can do a quick survey.

"What is the highest price you would fix at for a five year fixed deal?"

My answer is: £990, equivalent to £900 + 10%.

Prices are based the average consumption used by the comparison sites.

kippen_noedel

Bark01 wrote: »

How about working out if you would of saved money (so far) if you had taken out a simialr deal in July 2008?

Prices for gas are around 13% more expensive today than in July 2008, some electricity is marginally cheaper 1-2%

However on the average 3300kwh el & 22500kwh gas DF usage your pocket would be an average 22% better off over the same time period had you taken a fixed price.