Fixed Price

macman

NittyGritty wrote: »

think its safe to say prices are on the rise each year, and just because SSE made official satatment of just 8.2% that does not mean a unit price increase of that amount on you tariif, it could be a lot higher, maybe double the 8.2% in some cases, so it would make a longer fix even more tempting in my eyes, rather than fix each year
as by the time it comes to move after a year to a new tariff, your going to pay an increased price again, so its a double whammy each year, as each new tariff is another price hike

lets take SSE figure of 8.2% putting an extra £100+ on your bills, now lets say for some people whos figure is more around 15% in true unit price increases, (and yes the proof is on this thread from last year) some were even 20+% increase in real terms,
which adds even more over the year in new bills, your suddenly looking at £150-£200, now long term fixes don't look that bad at all, you just have to do your maths and if you want peace of mind of knowing NO increases for 4 years. an example my current night rate is 5.7p for electric,now id hate to think what it would be in 2017, most suppliers are already in the 7p range pushing 8p now in some areas/tariffs

Which was entirely my point. A 4 year fix is an insurance policy. It is not necessarily a cheaper deal over the full term.

[Deleted User]

Bluebirdman_of_Alcathays wrote: »

The fixed price is an insurance policy against future price rises. If you fix and Armageddon breaks out in the Middle East, you win. If the fracking revolution transpires, and prices go flatter than a witches t!t, you lose.

If any of us could guarantee what would happen, we would all choose accordingly. Alas, life isn't like that

I'm well aware that nobody has a crystal ball, but you can rest assured that the energy industry puts a lot more resource into analysing the market than the average punter. That begs the question what are the suppliers trying to achieve if the market behaves as they forecast? Are they trying to offer a discount to fixed customers, or are they trying to charge a premium for peace of mind (like the extended appliance guarantee racket)?

The answer to that question may lie in comparing tariffs in retrospect, hence my question at the top of the thread.

Cardew

jack_pott wrote: »

The answer to that question may lie in comparing tariffs in retrospect, hence my question at the top of the thread.

Spot on - those who take the 2017 tariff will know in 2017(or possibly before) if it was a wise decision.

Historically long fixes worked out well for the consumer, but there was never a 15% 'premium' to be paid. The early BG long fixes were roughly at the(then) standard tariff rate.

Macman in post#4 IMO is absolutely correct in his analysis.

However nobody seems to have mentioned Labour's pledge to freeze energy prices for 20? months if elected, and it is certain that the coalition will propose some counter-measure.

There is also growing pressure to move the 'social' and 'green' levies(currently over £100 on the average bill) from customer's bills to general taxation. Could there be a gesture in that direction?

I am not arguing against going for the 2017 fix, but it is far from a 'no-brainer' IMO.

MillicentBystander

It's a real conundrum because it's not just a case of saying 'it's 15% more than the cheapest variable at the moment but prices will have gone up by more than 15% in 4 years times so I'm quids in' because that doesn't include in the equation the amount you have effectively been overpaying until the fixed price equated with the cheapest variable price. Life is never simple sigh. But a 4 year fix could stretch over the period when fracking really has started (let's not kid ourselves here, no matter what the protests may be it's going to happen) and if the US is anything to go by gas prices will (should but this is the UK remember!!) plummet. Decisions decisions...

[Deleted User]

I've just spent an hour or two putting 23 years of gas bills through Excel, it's quite interesting. The exact answers depend on how you separate the effect of price rise from variations in consumption and what period you look at, but gas has been going up about 13% PA since 2007. You can see the big drop on the graph when gas was deregulated in the late 90s!

Cardew

jack_pott wrote: »

I've just spent an hour or two putting 23 years of gas bills through Excel, it's quite interesting. The exact answers depend on how you separate the effect of price rise from variations in consumption and what period you look at, but gas has been going up about 13% PA since 2007. You can see the big drop on the graph when gas was deregulated in the late 90s!

I came across a chart some while ago, going back longer than your 23 years, and as you say the drop after gas was deregulated was really marked - more than I had realised.

As a matter of interest in 2005 I joined BG fixed to April 2010 tariff and paid 3.032p/kWh (tier1) and 2.113p/kWh tier 2(including VAT and not including discounts) right up to April 2010.

So for the UK average of 16,500 gas pa it would have cost £390pa(before discounts) The cheapest big 6 tariff now will be £750 before discounts.

Admittedly the BG tariff was well below the market rate in 2010, but prices for myself have almost doubled in 3.5 years.

[Deleted User]

Cardew wrote: »

I came across a chart some while ago, going back longer than your 23 years, and as you say the drop after gas was deregulated was really marked - more than I had realised.

As a matter of interest in 2005 I joined BG fixed to April 2010 tariff and paid 3.032p/kWh (tier1) and 2.113p/kWh tier 2(including VAT and not including discounts) right up to April 2010.

So for the UK average of 16,500 gas pa it would have cost £390pa(before discounts) The cheapest big 6 tariff now will be £750 before discounts.

Admittedly the BG tariff was well below the market rate in 2010, but prices for myself have almost doubled in 3.5 years.

Just adjusted my spreadsheet for 16.5MWh PA, and I get an average of £375 for the years '05 to '10. So near the same as to make no difference. That doesn't surprise me.