Frightening Price Inflation Implied by ScotPower 3yr Fix

NittyGritty

Sledgehead wrote: »

The spreadsheet values turned up for Scottish Power's fixes make alarming reading. Comparing their 1 and 3 year fixes* produced the following first year costs:

first year of 1 year May 2016 fix : £1409
first year of 3 year Aug 2018 fix : £1828

For three years, it's obvious what the 3 year fix will cost: £1828 + £1828 + £1828 = £5484

But what about the 1 year? The 3 year total cost will depend on how prices move after the 1 year fix has ended (as we'll have to buy a new 1 year fix at that point).

If I inflate prices from the original 1 year price (£1409) by a fixed rate R%, I can arrive at a total cost of around the same figure:

£1409 + (£1409 * (1 + R)) + (£1409 * (1+ R) (1 + R))
= £1409 + £1796 + £2290 = ~£5484

But what R do I have to use to make this work?

27.5%

Yep, twenty-seven and one half percentage points of inflation between EACH yearly fix.

Throw in the very real threat of Red Ed price fixes and either I've made some silly mistake or only idiots are accepting this offer!

.... Or do Scottish Power know something I don't - yikes!

___________________________________________________________

*Just so as you know, I'm working off :

Elec Usage : 4722 kWh/yr
Gas Usage : 19704 kWh/yr

ScotPwr Tarriffs:
1yr May 16 Fix Elec Standing Charge / day = 20.55p
1yr May 16 Fix Gas Standing Charge / day = 20.55p
1yr May 16 Fix Elec Unit Charge / kWh = 10.862p
1yr May 16 Fix Elec Unit Charge / kWh = 3.146p

3yr Aug 18 Fix Elec Standing Charge / day = 29.04p
3yr Aug 18 Fix Gas Standing Charge / day = 29.04p
3yr Aug 18 Fix Elec Unit Charge / kWh = 13.822p
3yr Aug 18 Fix Elec Unit Charge / kWh = 4.068p

long fixes seemed a good idea few years ago, but now as things stand I wouldn't even touch them, unless something drastic changes in the short term.

Pincher

Cardew wrote: »

There might be need to chase payment when(if) the customer uses more energy than the £4,500 'allowance'.


Unless you installed pre-pay meters loaded with £4,500 credit;)

That's right, a customer that pays £4,500 in advance must a flight risk: if you are a bail bondsman.