"Energy bills set to rise sharply next winter" - Guardian. Time to fix?

lardconcepts

We're on a ScottishPower Twinheat plan which we've just switched to and is working out reallly well for us so far.

However, at the time of switch last month, they tried to persuade me to lock into a capped tarrif. I hardly thought it was worth it.
Now I've just seen this:

http://www.guardian.co.uk/business/2011/may/09/energy-bills-to-rise-this-winter-centrica

Britons should be braced for higher energy bills this winter after Centricawarned that wholesale gas and electricity prices have risen by a quarter compared with last year.
Centrica blamed the ongoing unrest in the Middle East and the Fukushima nuclear crisis following March's earthquake and tsunami in Japan for pushing up the cost of power. Domestic bills, the energy giant said, do not yet reflect this.
"In the UK, the forward wholesale prices of gas and power for delivery in winter 2011/12 are currently around 25% higher than prices last winter, with end-user prices yet to reflect this higher wholesale market price environment," said Centrica, which owns British Gas, on Monday morning."

Should I get on the blower ASAP and lock in for the extra 5% or so it costs, bearing in mind the above?

grizzly1911

Your gamble. How long is the fix for?

My fixed online deal is due to end soon. It was a great deal. Cheap at the time 12 months ago.

Since then we have one round of price increases and when I come to renew the tariff the current new deal will factor in the increases for the next 12 months so I will end up jumping two lots of price increases in one go - ouch.:eek:

Or you could argue that as the price changes anyway I am on a variable tariff anyway just that I know it will always go up on the anniversary rather than once or twice during the year.

The trouble is we all have this mindset that prices will only go up, which suits the suppliers, so it just depends on the premium you are willing to pay.

If you could lock in at a sensible premium for say 5 years then that probably would be worth it.

I find it surprising that these major players only buy forward for 12 months or less, methinks that they surely must be able to forecast demand forward 4/5 years themselves or at least a base load.

Another thing that I think strange is that behind all their retail fronts which "struggle" to make a profit they have generating arms/wholesale supply businesses that turn in mega profits.;)

Pincher

I understand that energy contracts are tradable up to 18 months in advance.

In any case, you need to buy into these contracts when they are cheap, so if everyone is speculating the energy prices are going up inexorably in the next five years, the price you can fix at will be even higher than current variable rate.

grizzly1911

Agree - but if you know it is only going to go up then fixing isn't really helping in the long run.

Once you have done it once you are just in another increasing cycle, if you are lucky and got something like the soon to be extinct EONFOL8, then re -entry is even more painful as the escalator has gone up further in the meantime.

I knew, when I moved to EON, that it was a one off down shift but I had to give up qtrly payment on receipt of paper bill, move online and to DDR. That was the real saving to the power companies and that is why we got such a good deal. Now we are on board the drawbridge has been pulled up the cost to go back is too penal.

The real issue is the ever spiraling increases with no real check or control. The government and regulators don't care. The Power Companies are there to make bigger and bigger profits end of.

grizzly1911

The cynic in me also wonders if one of the main reasons for getting us to conserve/reduce energy is that because overall consumption continues to rise is they want to put off network capacity upgrades for as long as possible.......;)

lardconcepts

grizzly1911 wrote: »

Agree - but if you know it is only going to go up then fixing isn't really helping in the long run.

No sure I understand that - if the fix is until 2013, and the price of the fix is an extra 10p/day on the standing charge, then that makes for a roughly 8% increase on the bill. BUT the last increase was 9%, and all the talk in the news is of 10-15 hikes this year.

So let's say it goes up 10% this Sept, and another 10% next Sept, although the "shock" of the rise after June 2013 will be greater, surely having paid less UNTIL that point is a benefit?

Before earlier today, I was under the impression that once a price rise had been announced, the old "fix" rates immediately vanished.
But two people on the phone have told me that if they announce a 10% increase tomorrow, there's now a 30 day waiting period before it comes in, during which time I can phone in and changed to the capped rate. Which seems to take the gamble element out of it. So I'll do that instead!

grizzly1911 wrote: »

The cynic in me also wonders if one of the main reasons for getting us to conserve/reduce energy is that because overall consumption continues to rise is they want to put off network capacity upgrades for as long as possible.......;)

Doesn't seem a bad thing, does it? Fewer cables and pylons, fewer power stations etc - I think if everyone was encouraged onto an offpeak tarrif and more use was made of air source heat pumps instead of resistive heating (where possible), we'd not need the extra infrastructure anyway. Sadly, they've gone down the solar PV bribe routem, so that probably won't happen.

housebug

grizzly1911 wrote: »

The real issue is the ever spiraling increases with no real check or control. The government and regulators don't care. The Power Companies are there to make bigger and bigger profits end of.

Exactly. The average wage doesn't even pretend to keep up with the cost of living and hasn't for several years now. The only alternative we have is to try to cut back even further than we've already done. A drop in consumption may please the Green Team, but at the same time it can also serve as another excuse to hike rates because profits drop along with the consumption.

Hamster. Wheel.

lardconcepts

grizzly1911 wrote: »

Your gamble. How long is the fix for?

Until 2013. Looks like it's time to act:
http://www.channel4.com/news/scottish-power-leads-way-with-big-energy-price-rise

Scottish Power was first off the blocks, announcing a 19 per cent increase in the price of gas and ten per cent more on electricity tariffs from 1 August. It means that the average household on a dual fuel tariff will have to pay £180 a year more - taking their total annual bill to around £1,400.

Unhelpfully, right now http://www.scottishpower.co.uk/your-home/new-customer/energy-products/electricity.aspx?prodType=discounted says
"Page titleeeee" and that's all...