Energy Contract query

Torque79

Hi all,

I hope you are well. 

My energy contract is due for renewal and rather than been put on the expensive generic monthly rolling tariff, I have always shopped around and signed up to the cheapest contract tariff. 

However given the current situation re COVID-19/Coronavirus and possibility of job loss should I be concerned about signing up to a contract (and getting the cheapest tarriff haha).   

If I were to lose my job, my focus would be the mortgage and reducing all other costs and in terms of energy that would involve e.g. using less energy or moving back in with the parents (government rules permitting) to reduce costs. 

So my questions are in a typical energy contract…

1)      Can I reduce the monthly payment e.g. from an agreed £60 to e,g, £40 without the company agreeing to it as I know I will be using less energy and my new monthly payment should cover the usage?

2)      If I were to move back into parents can the monthly payment be reduced drastically to e.g. £10 a month to cover the daily standing charges for fuels and I can review this if I need the boiler on in the colder months? 

3)      If I pay the exit fee will I just revert to the generic monthly rolling tariff and thus only pay the standing charge for fuels if there is no usage? 

Any advice would be great. 

Stay safe. 

regards,

Torque79 

PS: for anyone who is responding to my questions THANKS and my questions also applys to "Telephone / Broadband contracts" as well - can I deal with those in the same manner as I have outlined above?  

matelodave

The contract is between you and the supplier - non of us can second guess what a supplier might be prepared to accept. It would be up to you to try and negotiate a contract variation. Some suppliers can be a more flexible than others but in the end it's what they will agree and accept.
Hopefully most suppliers would or should be a bit flexible at this time and I think that the government are encouraging them to be so, but if you break or default on any of the terms of your contract without their agreement or knowledge then you risk having to pay any penalties for so doing. Even worse is the possibly getting any default info put onto your records with credit reference agencies. Something which is best avoided as it can affect your credit rating for a long time in the future.

The same goes for any contract.

MWT

As a general rule with all providers that offer a flat rate DD per month you are not contracting for that payment, the amount is always variable according to your estimated consumption. The fixed rate tariffs are about fixing the cost per unit, not fixing the monthly amount.

So if you have a significant drop in usage you should be able to reduce the payment, but the degree to which you can do that without their agreement varies hugely between suppliers.

I would suggest that you look for those suppliers who will allow you to pay each month for exactly what you have used that month so the amounts you pay will always reflect actual usage not a fraction of your annual estimated usage.

Also look for providers that have no exit fees so you can change tariffs if a better one comes along without penalty.

Octopus for example would meet those requirements.

Re your #3, no, not necessarily, how you pay has little to do with being in or out of contract with most providers, it just affects how much your energy costs. If you want the option to just pay for what you use then make sure the supplier offers that type of billing as they do not all do that.

Re the phone and broadband contracts, that is also a no, broadband in particular does not tend to have usage related payments these days it tends to be a flat rate per month regardless of how much or little you are using and early termination is often not cheap, so if you are reaching the end of a fixed period broadband contract it may be to your advantage to just let it roll on for now without going into another fixed period. It may be a little more expensive but you would have the flexibility to cancel at any point.

Phone is different again and you need to look at what you have in place now as you may be using a package with inclusive calls that would not be any cheaper even if you were not using the phone.

Torque79

MWT said:

As a general rule with all providers that offer a flat rate DD per month you are not contracting for that payment, the amount is always variable according to your estimated consumption. The fixed rate tariffs are about fixing the cost per unit, not fixing the monthly amount.

So if you have a significant drop in usage you should be able to reduce the payment, but the degree to which you can do that without their agreement varies hugely between suppliers.

I would suggest that you look for those suppliers who will allow you to pay each month for exactly what you have used that month so the amounts you pay will always reflect actual usage not a fraction of your annual estimated usage.

Also look for providers that have no exit fees so you can change tariffs if a better one comes along without penalty.

Octopus for example would meet those requirements.

Re your #3, no, not necessarily, how you pay has little to do with being in or out of contract with most providers, it just affects how much your energy costs. If you want the option to just pay for what you use then make sure the supplier offers that type of billing as they do not all do that.

Re the phone and broadband contracts, that is also a no, broadband in particular does not tend to have usage related payments these days it tends to be a flat rate per month regardless of how much or little you are using and early termination is often not cheap, so if you are reaching the end of a fixed period broadband contract it may be to your advantage to just let it roll on for now without going into another fixed period. It may be a little more expensive but you would have the flexibility to cancel at any point.

Phone is different again and you need to look at what you have in place now as you may be using a package with inclusive calls that would not be any cheaper even if you were not using the phone.

Hi, Thank you for your response. 

As a general rule with all providers that offer a flat rate DD per month you are not contracting for that payment, the amount is always variable according to your estimated consumption. The fixed rate tariffs are about fixing the cost per unit, not fixing the monthly amount.
Brillant thank you, that was what I was unsure about.  

I would suggest that you look for those suppliers who will allow you to pay each month for exactly what you have used that month so the amounts you pay will always reflect actual usage not a fraction of your annual estimated usage.
Great advise there.  
My only concern is that it is hard to gage what I used e.g. June 2019 vs June 2020.  Because in June 2019 i was not concerned about money and like most people we take things for granted too much e.g. you fill the kettle 25% full to make 1 cup but you do not nessarily go back within 5 minutes of pressing boil and 25 minutes elapse so you boil the kettle again - wasted entergy, wasted money! 
June 2020 penny pinching mode is invoked so I'd fill the cup up with water and pour that in the kettle and boil.  I normally have a bath every day, no more only a quick shower.  I would normally put the central heating on when I want, no more at all unless the inside temperature reaches emmm e.g. 10 degrees .  So you can see that bills will drastically change.  
All this said I will look for a company that bases it the same period last year rather than just as an annual usage as the climate is getting better and heating will be on less.  thank you.  



Also look for providers that have no exit fees so you can change tariffs if a better one comes along without penalty. Octopus for example would meet those requirements.

Never thought that way. I have just gone with the cheapest at the time and stuck till contract renewal point but I can see the advnatage is going with not necessarily the cheapest as of now as the typical exit fee is £30 per fuel.  So I could be with company X for a few months and leave without any exit fee to company Y with cheaper standing charge / unit rates again without an exit fee and so on.  

Re your #3, no, not necessarily, how you pay has little to do with being in or out of contract with most providers, it just affects how much your energy costs. If you want the option to just pay for what you use then make sure the supplier offers that type of billing as they do not all do that.
I do not see me exiting a contract to go on the variable,I was more curious to what would happen.  

Re the phone and broadband contracts, that is also a no, broadband in particular does not tend to have usage related payments these days it tends to be a flat rate per month regardless of how much or little you are using 
Probably a good thing as my usage was always high with streaming but now that I am in the house all the time usage is extremly high.  

and early termination is often not cheap, so if you are reaching the end of a fixed period broadband contract it may be to your advantage to just let it roll on for now without going into another fixed period. It may be a little more expensive but you would have the flexibility to cancel at any point. 
Yes I think it would be to my advantage.  Less contracts equals less risk of defaulting on the mortgage.  

Phone is different again and you need to look at what you have in place now as you may be using a package with inclusive calls that would not be any cheaper even if you were not using the phone.  
I have evening and weekend calls, which I have asked at each contract and yet when do I ever use the landline.  I have always got that as an incase I use the landline!  I will contact my provider to see if I can get that taken off the bill now.  
As for my mobile phone contract that is up mid June and I am switching to Giff Gaff monthly rolling.  I was always going to do this as my current smart phone is more than sufficient, I will run the phone into the ground.  

thank you again for your advise. It has helped me see more clearly what I feel I need to do.  

Torque79

matelodave said:

The contract is between you and the supplier - non of us can second guess what a supplier might be prepared to accept. It would be up to you to try and negotiate a contract variation. Some suppliers can be a more flexible than others but in the end it's what they will agree and accept.
Hopefully most suppliers would or should be a bit flexible at this time and I think that the government are encouraging them to be so, but if you break or default on any of the terms of your contract without their agreement or knowledge then you risk having to pay any penalties for so doing. Even worse is the possibly getting any default info put onto your records with credit reference agencies. Something which is best avoided as it can affect your credit rating for a long time in the future.

The same goes for any contract.

Hi , Thank you for your response.  I was not expecting the "Buyer Beware" response haha.  
Funny though the current energy supplier pushed me on a smart meter a few months after I joined them.  So I referred them to the contract with the wording of "may" and not "must" and turned the tables on them.  You have actually reminded me that following my conversation with them they sent an email "exempting me from the exit fee" so I could have jumped ship months ago haha. 

MWT has advised the energy contract is fixing in on an agreed standing charge and unit rate over a period of time.  Therefore the only cost you definately owe the energy company is the standard charge per day per fuel and then if you use any fuel.  This is what I wanted to know because it means you can be very strategic on usage.  

thanks. 

MWT

Torque79 said:

MWT has advised the energy contract is fixing in on an agreed standing charge and unit rate over a period of time.  Therefore the only cost you definately owe the energy company is the standard charge per day per fuel and then if you use any fuel.  This is what I wanted to know because it means you can be very strategic on usage. 

You really do want to look for a supplier that will put you on a variable direct debit, so they will only charge you for exactly what you used during the month. With the 'fixed' direct debits they will be estimating and trying to make sure you have enough paid in advance to carry you through the more expensive winter periods.

That will make it difficult to just pay for what you have used each month.

The downside is that you will have to pay more when you use more, but the monthly payments are entirely within your control, if you don't use it you won't have to pay for it...

Torque79

MWT said:

You really do want to look for a supplier that will put you on a variable direct debit, so they will only charge you for exactly what you used during the month. With the 'fixed' direct debits they will be estimating and trying to make sure you have enough paid in advance to carry you through the more expensive winter periods.

That will make it difficult to just pay for what you have used each month.

The downside is that you will have to pay more when you use more, but the monthly payments are entirely within your control, if you don't use it you won't have to pay for it...

Thanks. I will check this out.  
Monthly payments in ones control is what is needed in the next few months, it could be the determining factor to whether a person sinks or swims financially because too many times things are based on what the computer says rather than applying human logic.  
e.g. been asked to clear "interest free" loans to get a mortage deal.  By spending savings on clearing this "interest free" loans it will put the person at risk re savings for situations just like what we are encountering now.  Depending on the out-standing balance it could considerable times (years) to save up the money that a person has had to payout in full against the monthly payments that were been made.  
Sure one would still have these loans out-standing today but they would be less and a person would be more in control of their financial circumstances by having more savings, human logic needs to be applied.