Should I ditch my fix?

MoneySavingTart

I'm currently 1/3 through an 18 month fix with GNE
The energy saving club says I can save £165 by switching to a variable tariff. OK £50 of that will go to pay the GNE exit penalty but that still leaves me £115 better off.
My thinking is that if the OFGEM cap calculation is showing the cap will fall on 1st Oct then this must mean the wholesale price trend is downwards? and so staying for another 12 month with GNE fix is bound to cost me more?

If energy prices are dollar rated then have we had the worst of the exchange rate hit due to B**x*t?

What does the team think?

PennineAcute

Do the maths yourself, first. You know the new units price and standing charge, so plug those figures into the calculator to check you are saving what they say you are saving.

Coming up to the word you mentioned, all I can say is that markets to not like instability. The closer we get to the end of October, the more unstable we could be.

I do not like variable tariffs at the best of times, but I would definitely not go for one at the moment.

PixelPound

You can work it out yourself if you know your usage, the unit rate and the standing charge.

It could be a variable deal is better - a fixed deal is based on what the supplier will think the wholesale rate is predicted to be over the year whereas a variable rate is on the recent/current wholesale rate - vastly over simplified, but it means that it isn't a surprise that variable rates can be cheaper.

The question is will prices go up and by how much can they go up by before you will be paying more over the year for the supply. Once you know that you can then decide whether its worth the risk to ditch the fix.

Fuel prices normally go up and if it was 5% or 10% it might be cheaper to go with the variable, but will Brexit mean a weaker pound and so push prices up further. If so by how much and when. Don't forget the suppliers of fixed rate will have factored in increases too, but have they been assuming a bigger increase than will happen so the variable makes sense, or underestimate and the price goes far higher?

MoneySavingTart

Thanks for your replies. Normally I would go for the cheapest fix. Although we have only had the cap as extra data for a short while, it is or at least should be, an educated, professional view of where the market is heading. The reduction in the cap for October has made me wonder how best to interpret it.
So far I have not found a simple explanation of the algorithm used to calculate the cap although ML did make a reference to "knowing the formula" on TV a couple of weeks back before the public announcement.

JJ_Egan

How much do i pay per unit and standing charge and how much will a new deal cost . First question second question is do i pay exit fees now or on a new fix .

MoneySavingTart

JJ_Egan wrote: »

How much do i pay per unit and standing charge and how much will a new deal cost . First question second question is do i pay exit fees now or on a new fix .

I presume you mean I should be asking myself these questions?
Yes I can do the sums and corroborate the potential savings but the nub of my uncertainty is really how to use the extra data provided by the cap calculations.

FelineFunk

MoneySavingTart wrote: »

I'm currently 1/3 through an 18 month fix with GNE
The energy saving club says I can save £165 by switching to a variable tariff. OK £50 of that will go to pay the GNE exit penalty but that still leaves me £115 better off.
My thinking is that if the OFGEM cap calculation is showing the cap will fall on 1st Oct then this must mean the wholesale price trend is downwards? and so staying for another 12 month with GNE fix is bound to cost me more?

If energy prices are dollar rated then have we had the worst of the exchange rate hit due to B**x*t?

What does the team think?

So if I understand you correctly, you are 6 months into an 18 month contract, and you are paying £165 per year more than necessary.

Prices have not significantly changed over the last 6 months, so what was your thinking when you agreed to the 18 month fix 6 months ago, obviously aware you were paying quite a premium for doing so?

Has anything changed now to alter that decision making process you employed 6 months ago?

FelineFunk

MoneySavingTart wrote: »

Thanks for your replies. Normally I would go for the cheapest fix. ...

But you obviously did not do so 6 months ago.
Why not?
Why are you now willing to consider a variable tariff?

MoneySavingTart

FelineFunk wrote: »

So if I understand you correctly, you are 6 months into an 18 month contract, and you are paying £165 per year more than necessary.

Prices have not significantly changed over the last 6 months, so what was your thinking when you agreed to the 18 month fix 6 months ago, obviously aware you were paying quite a premium for doing so?

Has anything changed now to alter that decision making process you employed 6 months ago?

At the time it was one of the better fixes around. In the six months there have been several lower prices around but little savings once the exit penalty has been taken into account so it seems to me that prices have been changing albeit gradually.

MoneySavingTart

FelineFunk wrote: »

But you obviously did not do so 6 months ago.
Why not?
Why are you now willing to consider a variable tariff?

I did go for (one of ) cheapest fix at the time.

I would consider a variable tariff if the market price is falling which is possible what a falling cap is suggesting.

I feel we have got so used to a market that either is flat or rising and now maybe it is time to reconsider.

GunJack

It also depends on which supply area you're in as to how the prices change...standing charges aren't consistent across the whole country.

As to fixed/variable, most of the tariffs coming up that are cheaper than my current one are variable but would I go with those companies? No, so it's not ONLY down to out & out costs...