Advice for a thickie

ambler

I have been trying to find answers in the archives here without any luck
I am looking for comments on Fixed Tariffs because I have a question.
My supplier offers me a tariff fixed for two years but in order to get that tariff I have to accept a unit price that is considerably higher than the unit price I am currently paying. I fail to see where the saving is? Can someone explain to me in words of one syllable or less?

Thanks

elsien

There may or may not be a saving, you don't know yet. When you fix, you are betting that energy prices will rise over the period you have fixed for at which point ideally your tariff will then be cheaper then the variable tariffs which will be getting more expensive.

If prices don't go up, or don't go up by as much as you thought, your fix will end up costing you more than the variable tariffs.

It depends a) which way you think energy prices will go and b) if you would prefer fixed energy costs so you can plan a budget. It's an individual judgment according to your priorities.

Cardew

Many of the companies introduced fixed rate tariffs about 10 years ago. Until recently prices kept increasing and so fixed tariffs generally were good for the customer. In late 2005 BG introduced a fixed tariff that ran until April 2010 and it turned out to be a great deal.

However some of the later fixed tariffs had a large premium and turned out to be a poor deal.

The consensus amongst the 'experts' seems to be that prices are not likely to rise much in the next few years. Low oil prices, fracking and the Governments declared intention to stop the stupidly high subsidies for renewable energy will all help.

So personally I would not pay any premium for a fixed deal at the moment, but as said above it is simply a gamble.

dogshome

Considerably higher? - How much higher by percentage?

If you sign up for this deal now, you will be paying that much more for every Kwh you use today, and will continue to to so until industry prices have risen to the point that they meet the cost of this 2 year fix tariff.

There are plenty of One Year fixes around at the moment - Look at these and then judge if all the extra money you will be paying now, is a safe bet because prices rises in Year 2 only, will exceed your extra costs for the next 12 months

ambler

Thanks for the replies everyone! Much appreciated. It is as I thought, the energy companies are not giving anything away - just asking you to gamble with them.

Not being a gambler I will stick with what I have got!

Thanks

Rubidium

ambler wrote: »

I have been trying to find answers in the archives here without any luck
I am looking for comments on Fixed Tariffs because I have a question.
My supplier offers me a tariff fixed for two years but in order to get that tariff I have to accept a unit price that is considerably higher than the unit price I am currently paying. I fail to see where the saving is? Can someone explain to me in words of one syllable or less?

Thanks

The point that you are missing is that there are likely to be many more competitive tariffs available from other suppliers if you could be bothered to switch.

ambler wrote: »

Not being a gambler I will stick with what I have got!

Thanks

Your loss!

macman

If you are still on Standard tariff, then almost any other option will be cheaper, including a short term fix. The longer the fix, the higher the risk if you get it wrong. But a one year fix is invariably the way to go at present. It's essentially an insurance policy-for which a premium is payable.