Is fixing a con - you decide?

backfoot

Foreversummer,

I think that there is something in that. I am a high end gas user and the premium to fix is enormous.

I have looked at my relative's situations where their usage is more modest and there is more of a case to fix. Probably only still break even at best but on lower numbers less overall risk.

macman

Going back to your first post, I don't understand why you think that fixes would ever be cheaper than your current variable tariff? If they were, everyone would be on a fix.
A fix is simply a tariff where you pay a premium to insure against future price rises. It's not a cheaper tariff-although it may turn out to be so if variable prices rise more than the premium.

backfoot

Not in the traditional sense of fixing or hedging.

A long term fix should be a product/contract where the Customer is agreeing to keep their business with one Supplier over a period of time. Say 3 to 5 years.

The supplier then gets a guarantee of capacity from which they can negotiate better terms with their Suppliers. In this case, the more joining the Club, the more the purchasing power. It's a win/win situation all down the line.

So other things being equal,without the externalities which currently exist, a long term fix should actually lower the price.

Unfortunately, the marketing gurus of the suppliers pile in and work on the fear. All these fixes generally do is fool customers into paying 'predicted price rises' out in advance.

None of them are offering this as a genuine payback for a long term agreement, they are simply capturing market share while setting premium rates at levels to maintain their margins.

deshepherd

foreversummer wrote: »

I beginning to think that if your usage is at the lower end of the spectrum there is not so much differential in fixing, whereby, like me with higher usage the gap to fix is much wider?

Or is it because I've been used to the cheapest online tariffs that the jump seems so huge? £430 pa extra to fix with eon for 2 years seems just massive and just too much.

Though note that Eon haven't announced any price rises in what seems to be the current round ... how do the figrues stack up if there's a 15% rise - given the other companies that have already announced this then I'd say thats quite likely.

Cardew

apt wrote: »

I fixed electricity with British Gas for a few years until April 2010 with the night rate electricity costing under 1.9 p per kw/h. I would be surprised if you would find a variable rate that came close to that at the time. The fixed rates are that cheap at the moment, but the EDF 2014 rate is a reasonable insurance against a series of price rises, particularly as the exit fees in the second half of the term are low.

I was also on that tariff - along with 1.1 million others apparently!

When it was introduced in late 2005 there was no premium over the BG standard rate(gas was a little higher, electricity lower IIRC and cost neutral) - this for a 4.5 year fix.

Incidentally BG only had Standard Rate or various fixed tariffs in 2005.

Now the premiums for fixing are considerable.

backfoot

Cardew wrote: »

I was also on that tariff - along with 1.1 million others apparently!

When it was introduced in late 2005 there was no premium over the BG standard rate(gas was a little higher, electricity lower IIRC and cost neutral) - this for a 4.5 year fix.

Incidentally BG only had Standard Rate or various fixed tariffs in 2005.

Now the premiums for fixing are considerable.

Yes that was the original concept of fixing. Rewarding you for being a long term customer as per my post above.

Benefits arising from investing for a period of time. Like bond rates for example.

undaunted

A gamble maybe, a marketing tool for them certainly but a con no. They basically offer you two options (fixed tarrif or a none fixed) & it's upto you which one you feel is best.

Personally given the premiums for fixing I'm not convinced it's worthwhile & whether I'm right or wrong remains to be seen but you pays your money & you takes your chance

BoxerfanUK

My EON fixonline 8 has just finished and i've now switched to the EDF fixed until 2014 tariff.

Under fixonline 8 my monthly payments were £72 per month duel fuel but now thats ended this would go up by quite a bit.

I did the usual Uswitch thing and the cheapest non fixed deal based on my annual usage now comes up at £95 per month. Under the EDF 2014 this will be £109 per month, so £15 per month more.

Personally, I'd rather pay that extra knowing that it can't go up now for almost 3 years. Also, after March 2012 the penalty exit fee is only 30 quid, so if prices really did come down (yeah right!!!) then I could switch out quite cheaply.

keith1950

Hi undaunted, the point I made earlier was all about timing any switch to a fixed or capped tariff.

I would never listen to the news about rising prices and jump into a fix without any research .

So far scottishpower and bg have increased prices and the other 4 have rises imminent.

I timed my switch carefully and already ( on my consumption ) the fixed/capped tariffs that I chose are showing as the cheapest tariffs on comparison sites, although they have now been withdraw and replaced with dearer alternatives.

When I decided to switch there appeared to be a premium of about 6% for fixed/capped so if all the suppliers end up with rises of 15-20% then I am quids in.