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Consumerist

ohreally wrote: »

Using that logic the supplier can continue to collect regular payments by DD by sending out a bill for fuel used on a quarterly basis, no?

In most cases you get a statement of account either monthly or quarterly but not a "bill" (i.e. demand for payment) until you switch supplier.

Npower seems to be the major exception in that some people have reported on this site that they sometimes don't get any statements from them for years.

koru

In relation to 3-4 year fixes, the Cheap Energy Club currently says that they will only save money if energy costs rise 10% per year. Actually, they will only save you money if energy costs rise by 21% per year. Which might happen, but is a lot less likely than 10% rises.

eg, it says I can get a 1 yr fix with OVO for £1974 (I use more than the average) or the cheapest 3 year fix, which is with EDF for £2420. So, I start by paying 24% extra with the 3 year fix. If I go with OVO and there was a price hike of 21% before my 1 yr fix expires, I'd be paying £2388 in year 2, so I'm still paying less than on the 3 yr fix. If there's another 21% rise before year 3, I'd be paying £2890 in the third year, which is scary high, but on average over the three years I would have paid £2417 per year, same as 3 yr fix.

If prices rise by less than 21% each year with OVO, then I have paid less than the 3 year fix, overall. Check the break even level of price rise before deciding whether to do a long term fix.

victor2

koru wrote: »

In relation to 3-4 year fixes, the Cheap Energy Club currently says that they will only save money if energy costs rise 10% per year. Actually, they will only save you money if energy costs rise by 21% per year. Which might happen, but is a lot less likely than 10% rises.

eg, it says I can get a 1 yr fix with OVO for £1974 (I use more than the average) or the cheapest 3 year fix, which is with EDF for £2420. So, I start by paying 24% extra with the 3 year fix. If I go with OVO and there was a price hike of 21% before my 1 yr fix expires, I'd be paying £2388 in year 2, so I'm still paying less than on the 3 yr fix. If there's another 21% rise before year 3, I'd be paying £2890 in the third year, which is scary high, but on average over the three years I would have paid £2417 per year, same as 3 yr fix.

If prices rise by less than 21% each year with OVO, then I have paid less than the 3 year fix, overall. Check the break even level of price rise before deciding whether to do a long term fix.

It also depends on WHEN in the year a price rise kicks in. Also, there's the "comfort" of knowing how much you'll be paying per kWh during the fixed period. Pretty much impossible to put a value on that.

Consumerist

koru wrote: »

Long term fixes only cheaper than 1 yr fix if prices rise 21% per year

I came to a similar conclusion at the end of last year

<Are longer-term energy fixes really worth it?>

koru

victor2 wrote: »

It also depends on WHEN in the year a price rise kicks in. Also, there's the "comfort" of knowing how much you'll be paying per kWh during the fixed period. Pretty much impossible to put a value on that.

Yes, if you were on a variable rate deal, the prices might rise at the start of winter. Which would change the maths a bit. But if you compare with 1 year fixes (which are cheaper than variable anyway), you know the rises will kick in once every 12 months.

The comfort of knowing you can't pay more than a certain amount is of some value. It is impossible to put a value on it, objectively, because it is a subjective matter, but that doesn't mean the value is infinite. There comes a point where the extra price of the long term fix is not worth it, but of course it is up to each person to judge for themselves where that point lies.

koru

Consumerist wrote: »

I came to a similar conclusion at the end of last year

<Are longer-term energy fixes really worth it?>

Thanks, nice to see some corroboration of the thought process.

I wonder if the implicit price rises of 21% fairly reflect energy futures pricing or there's an element of energy companies exploiting the public's preference for the comfort of long term fixes and the fact that intuition will not tell most people what level of implicit price rise is built into the rate? I had to use a spreadsheet to work out that the break even annual price rise is 21%.

If MSE wants to make the CheapEnergyClub REALLY informative, it could calculate the break even price rise for each long term fix compared with the cheapest one year fix, and then show how that rate compares with historical annual price rises. People could then see how likely it is that price rises will be higher than what is built in to the long term fix.

victor2

koru wrote: »

I wonder if the implicit price rises of 21% fairly reflect energy futures pricing or there's an element of energy companies exploiting the public's preference for the comfort of long term fixes and the fact that intuition will not tell most people what level of implicit price rise is built into the rate? I had to use a spreadsheet to work out that the break even annual price rise is 21%.

If MSE wants to make the CheapEnergyClub REALLY informative, it could calculate the break even price rise for each long term fix compared with the cheapest one year fix, and then show how that rate compares with historical annual price rises. People could then see how likely it is that price rises will be higher than what is built in to the long term fix.

I'm sure your first paragraph is correct on the exploitation thought. It's business after all, and the main objective is to make a profit.

As for CEC becoming really informative, who would read or understand the additional information? It seems to be having "teething" problems anyway, but assuming they are sorted, people only want the cheapest price, would follow CEC then complain bitterly a year later when the anticipated price rises turned out to be wrong...

I have all my costs and usage for the past few years in a spreadsheet. Hadn't thought of calculating break-even points on new tariffs, will now with my current tariff ending soon. Thanks for that idea.
I'm just happy that I'm ahead of the game on current prices when my fixes end.

Consumerist

koru wrote: »

. . .I wonder if the implicit price rises of 21% fairly reflect energy futures pricing or there's an element of energy companies exploiting the public's preference for the comfort of long term fixes and the fact that in tuition will not tell most people what level of implicit price rise is built into the rate? I had to use a spreadsheet to work out that the break even annual price rise is 21%.

I think the problem is a combination of the public preference at the moment for the price certainty of longer-term fixes and the fact that many people don't realise just what it will cost them unless they sit back and think about it. As you say, it's not immediately obvious which is the best deal when comparing fixes of different durations.

I just had a look again at the Co-op fixes I looked at last year and what jumped out at me is that the 2017 fix was 18% pa more expensive than the 2015 fix. So that means paying 54% more over the three years. I would be very surprised if energy prices rose by 54% in three years and even if they did, the rises would be incremental for 1-year fixes.

koru

Consumerist wrote: »

I just had a look again at the Co-op fixes I looked at last year and what jumped out at me is that the 2017 fix was 18% pa more expensive than the 2015 fix. So that means paying 54% more over the three years. I would be very surprised if energy prices rose by 54% in three years and even if they did, the rises would be incremental for 1-year fixes.

I don't think 54% is the comparison. Let's say you can fix for 1 year at £1000 or 3 years at 18% higher, which is £1180. So, over 3 years you will pay £3540 with the 3 year fix. In comparison, on the 1 yr fix you will pay £1000 in year 1. So, the question is whether the price hikes in years 2 and 3 will be enough that you pay £2540 in those 2 years combined.

There are a variety of ways you might end up paying £2540. eg, prices could stay the same in year 2 so you pay £1000 again, and then they jump 54% in year 3, so you pay £1540. That seems improbable for either year.

Or, prices rise 17% both years, so you pay £1170 in year 2 and £1369 in year 3, so over 3 years you have paid £3539, which is the same as the 3 yr fix.

tali

I can't log into energy club - maybe it was password forget(iirc the registration procedure was brutal ) BUT none of the only 3 email addresses i use are recognised
I've done search in those emails - and nothing either is showing for energy club or any savings alerts that i should have received either (i have not deleted them)
And yes i did register as i got £30 cashback for switching to Sainburys