Energy supplier

Maxyb54

I changed my energy supplier last year and they saved me nearly £200. My question is that the same supplier is now offering me to lock into a new 2 year deal to fix the price in case the costs of energy goes up. So does anybody have a clue as to which way prices are going towards over the next 2 years and if so roughly by how much?

I currently pay around £57 per month which includes tax and leaves me a little more in credit each month which I like just in case I have a heavy month of usage, the new 2 year deal will be £68 per month which I worked out to be an extra £132 per year to pay out!

So is it likely that this extra £132 is worth going for against the cost any potential price rises which could potentially cost me even more than that?

Anybody know how price rises are likely to go?

Thanks.

Blackbeard_of_Perranporth

Maxyb54 wrote: »

Anybody know how price rises are likely to go?

Thanks.

No, but if you feel the deal is right, then take it!
Note my SP deal for two years given in Oct 2016 is still the best, but runs out in Dec. I am sitting on the fence at the moment, it could blow either way!

JJ_Egan

Same question that was asked this time last year .
As above take the deal if you think its good .

System

Maxyb54 wrote: »

I changed my energy supplier last year and they saved me nearly £200. My question is that the same supplier is now offering me to lock into a new 2 year deal to fix the price in case the costs of energy goes up. So does anybody have a clue as to which way prices are going towards over the next 2 years and if so roughly by how much?

I currently pay around £57 per month which includes tax and leaves me a little more in credit each month which I like just in case I have a heavy month of usage, the new 2 year deal will be £68 per month which I worked out to be an extra £132 per year to pay out!

So is it likely that this extra £132 is worth going for against the cost any potential price rises which could potentially cost me even more than that?

Anybody know how price rises are likely to go?

Thanks.

Before locking yourself in to a 2 year deal, you need to do your own sums. The maths go something like this:

Let us assume that the 1 year fix for electricity will cost £400 and the 2 year fix costs £425. It follows that you will pay an extra £25 in Year 1 on a 2 year fix, and again in Year 2. The question then is 'will the cost of my energy increase to more than £450 in Year 2 if I go for a 1 Year fix'? If it doesn't, then the 2 year fix will cost me more than 2 by 1 year fixes.

Bear in mind that the wholesale price of energy now accounts for less than 40p in every £. So it follows that the wholesale element of your £400 by 1 year fix accounts for £160 of the bill. Assuming all the other costs remain the same ( and this is not a given), then a £50 increase in year 2 would equate to a (50/160) *100 or 31% increase in the wholesale cost of the energy. Is this likely?

Other factors to consider, Ofgem has just announced a 6% increase in the prepayment tariff cap. This tells me that it is worth fixing as suppliers will feel an element of protection if they raise their other tariffs by 6%. Finally, suppliers will never set a 2 Year tariff that they think is going to lose them money.

So what would I do? First, I would look at the market as a whole including single suppliers. Secondly, I would look to see the cost/percentage difference between 1 and 2 year fixes. Thirdly, I would look at suppliers who are now offering friends and family referral discounts which are not shown on PCWs.

Over the past 14 months, this has taken me from Iresa (not a good decision) to Powershop and then on to Bulb, and now to Octopus for electricity. However, my gas is fixed for 2 years with Zog as the cost difference between a one and two year fix was minimal.