Why does the Cheap Energy Club recommend variable rate over fixed rate?

JeanDePierre

The Cheap Energy Club price comparison tells me that GB Energy Supply offers the cheapest rates for my gas and Electricity usage. Its fixed rate and its variable rate deals are exactly the same price at the moment.

The Cheap Energy Club recommends the Variable Rate deal as its "Top Pick". But surely, as there is no exit fee, I should go for a Fixed Rate: if the charges are raised, then I benefit by being on the lower fixed rate, and if the charges fall, I can switch to the lower rate?

What am I missing?

System

Hi. Welcome to the forum. Comparison sites just use simple maths to calculate the cheapest tariff for your projected usage. It just so happens that GBEnergy has a standard variable tariff that is as cheap as its fixed deals. I am with GBEnergy for electricity on its Premium Variable tariff with no exit fees. In the event that GBEnergy decides to raise the cost of each unit by 100% it has to inform its customers who can then switch without penalty.

Fixed tariffs are good if (a) energy prices are rising and/or (b) the supplier's standard variable tariff costs more than the supplier's fixed tariffs. At the present time, energy prices are pretty stable/falling and, as I said, GBEnergy's standard variable tariff is unusually a best deal.

To complicate matters further, most fixed tariffs now have exit fees of up to £60. At the end of the day, the decision - whatever the recommendation - is yours. I use GBEnergy for my electricity and I have a fixed deal with Zog for gas. Neither tariff has any exit fees and together they cost me less that Martin's cheaper than the cheapest deal.

Should a cheaper deal appear, then I will just switch.

JeanDePierre

Thanks for your response, but I would have hoped that a comparison site such as MSE's would take into account the fact that, all things being equal (as they are in this case), if there is no early-exit fee, a fixed rate always has an advantage over the variable rate, for the reasons I gave. Even if the trend at present is that prices are falling, that could completely change tomorrow due to some major geo-political/economic event. Having a fixed rate protects you from such uncertainty.

System

If global uncertainty is a factor in your thinking, then choose a fixed price deal but it will not change the comparison table listing. Comparison sites have to comply with The Ofgem Confidence Code when presenting comparisons and savings - sadly, Martin Lewis' thinking doesn't come into it. That said, there is nothing to stop him expressing a view elsewhere which he frequently has done. It is also worth remembering that energy prices lag the price of oil by up to 2 years.

phillw

The top pick is an editorial comment, it isn't just based on savings therefore the top picks aren't always the cheapest. For extra insanity there is a "top picks (full reviews)" button which displays a completely different set of tarrifs to the ones with a "top pick" when you press the "all tarrifs" button.

Maybe the fixed rate changed after the comment was written, maybe the chance it could fall was seen as an advantage when it was written as everyone was predicting prices would continue to drop.