Dual Fuel Variable Tariff Is Mainly Currently Lower Than Any Fix I Can Find

DeeMM

I posted the below earlier today as a comment in a post 'Energy costs increases - worth fixing now for 2 years?'  and thought it may be worth just putting it out there as a post on its own. 
My fixed tariff with Shell ends today and at the moment the unit rates for each fuel are less on the flexible/variable tariff than they are on the fixed ones they are offering me.  That will no doubt  change on 1 October and then I will have to look at which fixed tariff/supplier to move to but at the moment the variable/flexible is the cheaper option.  It's a minefield to me all this energy checking business!  Confusing when you're always told to fix, fix, fix but then find that [at the moment anyway] the flexible/variable tariff is cheaper!
I've done the comparisons too and none of those seem to be offering anything much less than the variable one I'll be automatically moved to at midnight tonight. 

t1redmonkey

I think this is quite normal.  Same with mortgages.  Fixed are usually a bit higher than variable because you pay extra for the security knowing your monthly payments won't change for the duration of the contract (or at least the unit rates you pay when it comes to gas/electricity).

[Deleted User]

I've always found mostly variable tariffs amongst the cheapest deals compared to fixed, I don't think that is any different now than it ever has been and probably will be the same while prices are rising.

... well until the variable tariff inevitable increases, I've never yet signed up to a variable tariff that has decreased, it is just a matter of when it will increase and by how much.

If they haven't already, I expect a lot of the variable tariffs will be increasing over the next month or so, but then again a lot of the fixed deals have already increased - tough time to be choosing.

There is no exact right or wrong answer, it is a bit of a gamble choosing variable or fixed. For the last few years, variable has worked out good for me as I'm happy to swap suppliers as often as needed to chase a deal, but for the first time ever I've signed a fixed deal last night but I'm will still be monitoring the deals and if a better one comes along I'll happily be paying my exit fees and terminate early if it works out cheaper.

I don't think anybody can give you a correct answer - up to you what you choose - certainty of price for a period of time or a gamble in the market prices?

Either way be fully prepared to swap and change as the market changes.

DeeMM

Responding to t1redmonkey:  [suppose I should have responded via 'quote' oops!]

Really?  I had no idea. I thought it would be higher because of always hearing you should 'fix' things so assumed that the fixed rates would be the lower ones.  I see what you're saying now. Hmmmm 
I've obviously got the wrong end of the stick !!  It's since coming back to live in England. I  just find the whole energy market one big complex arena of bewilderment ......lol. I understand re competition etc etc but it really does perplex me with all the different providers, rates, average use projections etc etc.  Then you have the unit and standing charges to look at on top of that too! All so different to how it was when I left.   
I was overseas for 20 odd years where we had one provider for electricity and had to order gas bottles for the cooking and hot water. Luckily the electricity wasn't expensive so we just got sent a bill every month and paid it.    Aaahhh the simplicity.  

t1redmonkey

DeeMM said:

Responding to t1redmonkey:  [suppose I should have responded via 'quote' oops!]

Really?  I had no idea. I thought it would be higher because of always hearing you should 'fix' things so assumed that the fixed rates would be the lower ones.  I see what you're saying now. Hmmmm 
I've obviously got the wrong end of the stick !!  It's since coming back to live in England. I  just find the whole energy market one big complex arena of bewilderment ......lol. I understand re competition etc etc but it really does perplex me with all the different providers, rates, average use projections etc etc.  Then you have the unit and standing charges to look at on top of that too! All so different to how it was when I left.   
I was overseas for 20 odd years where we had one provider for electricity and had to order gas bottles for the cooking and hot water. Luckily the electricity wasn't expensive so we just got sent a bill every month and paid it.    Aaahhh the simplicity.  

Yes it can be a bit confusing.  Fixed usually starts off as more expensive as the variable plans when you're looking around, but then if you fast forward a few months, the variable rates in the future may be more expensive than the fixed rates you could've secured a few months before.  So it's basically a 'crystal ball' thing. 

A lot of people may not want to stress about the uncertainty of being on a variable rate, or if there are widespread reports that gas/electric prices will increase in the coming months, then it's also a good idea to go fixed.  Obviously the downside is you can fix into a deal with high exit fees, but then gas/elec prices plummet a few months after and you don't have the means to take advantage of that (unless you pay the exit fees).

[Deleted User]

t1redmonkey said:

DeeMM said:

Responding to t1redmonkey:  [suppose I should have responded via 'quote' oops!]

Really?  I had no idea. I thought it would be higher because of always hearing you should 'fix' things so assumed that the fixed rates would be the lower ones.  I see what you're saying now. Hmmmm 
I've obviously got the wrong end of the stick !!  It's since coming back to live in England. I  just find the whole energy market one big complex arena of bewilderment ......lol. I understand re competition etc etc but it really does perplex me with all the different providers, rates, average use projections etc etc.  Then you have the unit and standing charges to look at on top of that too! All so different to how it was when I left.   
I was overseas for 20 odd years where we had one provider for electricity and had to order gas bottles for the cooking and hot water. Luckily the electricity wasn't expensive so we just got sent a bill every month and paid it.    Aaahhh the simplicity.  

Yes it can be a bit confusing.  Fixed usually starts off as more expensive as the variable plans when you're looking around, but then if you fast forward a few months, the variable rates in the future may be more expensive than the fixed rates you could've secured a few months before.  So it's basically a 'crystal ball' thing. 

A lot of people may not want to stress about the uncertainty of being on a variable rate, or if there are widespread reports that gas/electric prices will increase in the coming months, then it's also a good idea to go fixed.  Obviously the downside is you can fix into a deal with high exit fees, but then gas/elec prices plummet a few months after and you don't have the means to take advantage of that (unless you pay the exit fees).

For most suppliers, the Ofgem Cap has become both a floor and a ceiling as far a variable tariffs are concerned. It follows that if a supplier has set its variable tariff at the Cap limit on the 1st October then to all intents and purposes the variable tariff is fixed until the 31st March next year.

I have chosen a 2 year fix for gas with a £30 exit fee knowing that the market predicts that gas prices will fall in the Spring of 2022. Based on my past gas consumption, if I end up paying the £30 exit fee in late March, I will still be over a £100 better off that I would have been on most variable tariffs.

That said, the great unknown is whether the Government will use any fall in the wholesale gas price to add green taxes to the gas bill. It is a neat way of doing it: average wholesale cost falls by £50 per year so add £50 in green taxes to gas which results in no change in the Cap. The Government has to reduce the cost difference between gas and electricity to make heat pumps more attractive.

sharpei65

Also with Shell and have the same dilemma! I am thinking to stick to the variable rate for a couple of months but to keep an eye on things and if there are rumblings of further increases then I will quickly jump on a fixed rate.
That said I have found a fixed term for 12 months for the same yearly projected costs and no exit fees with Avro....

DeeMM

sharpei65 said:

Also with Shell and have the same dilemma! I am thinking to stick to the variable rate for a couple of months but to keep an eye on things and if there are rumblings of further increases then I will quickly jump on a fixed rate.
That said I have found a fixed term for 12 months for the same yearly projected costs and no exit fees with Avro....

Sorry - meant to respond to this much earlier but was going to say that's exactly my thinking and it's good to know someone else is thinking the same!!