When will the 'advice ' change?

BW1990

At the moment everyone is advised to go on to their supplier's energy price cap tariff when their current fixed term contracts come to an end. This is on the basis current available 'fixed for x months' tariffs are significantly above the current price cap. 

Makes sense. 

However, we KNOW the new price cap in April is going to be astronomical. As we near this date, are the fixes available also going to be more astronomical than they are now? At what point do we cut our losses and jump on to a fixed tariff whilst they are cheap relative to the fixed tariff prices which may be available in April?

Is there any hope that prices will come down over the coming months, and fixed tariffs will be below the current price cap come April?

Ectophile

I'm inclined to wait until the end of Winter, once things start to warm up.  The lower I can keep the price for Winter, the better.

savers_united

It would really be crystal ball stuff as no one knows what the market will look like come April and the cap review. 

However we do know. 

The next cap review will be based on current prices, so yes it's only going one way and that is up as prices now are alot more than what they were during the 6 months prior to the October review.

However a mild winter in Europe and / or China would allow storage capacity to be refilled, this will make things easier by April as the worst of winter should be behind us. This could mean that wholesale prices start to ease back from their Winter highs.
Mitigation in Europe and high winds will also reduce our need to generate electricity from Gas, in combination with the above this could really put downward pressure on the wholesale prices during the warmer months next year so a cheaper fix may well be possible, but at the same time if the opposite to the above happen then prices could remain high or even go higher.

It's just to early to call, need to get through this winter first.

Keep an open mind, stick with the cap for now and review it around March. 

[Deleted User]

If I understand it, the cap goes up then the fixed rates will be going up higher. For me now coming from Avro to a variable on Octopus, I hope the fixed now, is not going to be lower than the capped next April.

I think.

bristolleedsfan

half_empty said:

If I understand it, the cap goes up then the fixed rates will be going up higher. For me now coming from Avro to a variable on Octopus, I hope the fixed now, is not going to be lower than the capped next April.

I think.

Fixed rates get set based on market conditions which includes Wholesale prices and a suppliers interest in attracting new customers which sometimes are at a loss/barely breaking even, historically SVR default tariff has been more expensive than fixed rates hence energy cap designed to protect those who are unable/unwilling to help themselves by switching to a cheaper tariff.

At present time several suppliers have hiked new fixed rates to eye watering levels partly due to very high wholesale prices also little appetite to attract new customers  due to higher risk than normal of bad debts.

Being as people use most fuel during winter months with very little gas being used during warmer months, main interest I think should be what rates are leading up to Winter 2022. I would suggest most fixed rates currently are higher than what energy capped rates will be from 1 April 2022 - 30 September 2022

spot1034

The cap is based on historic prices - the present cap was set in August based on prices during the spring and summer, which were on the increase but nowhere near the level we have got to now. So the next review in the early part of the new year year will almost certainly lead to a further sharp rise announced probably in February, coming into force in April.

In contrast to that, fixed rates tend to look ahead in that suppliers buy in advance (or they should if they're running their business responsibly!) and offer a fixed rate based on what they know they will be paying. It is entirely possible that, as the factors which are keeping  wholesale prices high at present ease - possibly quite rapidly -  wholesale prices next spring and summer will enable suppliers to secure good deals which will mean lower fixed deals at a time when the cap is still at the very high level set in April. 

That's the theory behind the advice to sit tight on the present cap and review again in a few months. 

QrizB

BW1990 said:

Is there any hope that prices will come down over the coming months, and fixed tariffs will be below the current price cap come April?

If my sums here are right (and I hope they aren't) the April cap will be around 8.5p/kWh for gas and 36p/kWh for electricity.

Some current fixes are cheaper than this, although not all (BG, for example, is currently offering me a 12-month fix at 9.3p and 32.7p).

However most people use much more energy during the winter than they do during the summer (I might not be typical but I use 3/4 of my gas and electricity from October to March) so staying on the variable might work out cheaper even if the rates for the summer months are horrendous.

bristolleedsfan

QrizB said:

BW1990 said:

Is there any hope that prices will come down over the coming months, and fixed tariffs will be below the current price cap come April?

If my sums here are right (and I hope they aren't) the April cap will be around 8.5p/kWh for gas and 36p/kWh for electricity.

Cornwall Insight 3 weeks ago predicted April 1st cap level of about £1660

Your figures would equate to a cap level in my region of approx £ 2186

https://www.theguardian.com/money/2021/oct/07/uk-energy-bills-could-rise-30-in-2022-warn-analysts

I would suggest that Octopus Energy tracker rates ( ignoring products own capped levels) are the best guide to what April 1st capped rates might be being they are based on current wholesale prices with a profit ,standing charge a lot lower than current energy cap standing charge

https://energy.guylipman.com/sm/gastracker
https://energy.guylipman.com/sm/electracker

MWT

bristolleedsfan said:

I would suggest that Octopus Energy tracker rates are best guide to what April 1st capped rates might be being they are based on current wholesale prices with a profit ,standing charge a lot lower than current energy cap standing charge

https://energy.guylipman.com/sm/gastracker
https://energy.guylipman.com/sm/electracker

Just be aware that Octopus recently capped those rates to protect customers on that tariff

So the highest they will go for now is 30p for electricity and 6p for gas.

Guy's webpage is showing the uncapped prices though so still a good guide...

QrizB

bristolleedsfan said:

QrizB said:

BW1990 said:

Is there any hope that prices will come down over the coming months, and fixed tariffs will be below the current price cap come April?

If my sums here are right (and I hope they aren't) the April cap will be around 8.5p/kWh for gas and 36p/kWh for electricity.

Cornwall Insight 3 weeks ago predicted April 1st cap level of about £1660

Your figures would equate to a cap level in my region of approx £ 2186

https://www.theguardian.com/money/2021/oct/07/uk-energy-bills-could-rise-30-in-2022-warn-analysts

I would suggest that Octopus Energy tracker rates ( ignoring products own capped levels) are the best guide to what April 1st capped rates might be being they are based on current wholesale prices with a profit ,standing charge a lot lower than current energy cap standing charge

OK, going by Guy's data for my region (H), since the start of August the average Tracker price for gas has been 7.22p/kWh and for electricity 27.5p/kWh. For October to date, the averages are 9.21p and 30.7p.

Three more months like October and the whole-period average will be 8.22p and 29.1p. Assuming no change to the SC that would make the April cap £1830 or so.

savers_united

Unless we have an almighty crash in the wholesale market I think it's safe to say that the days of cheap energy are fading fast. Some may still be on a 2 year fix from back in 2019/20 but eventually everyone is going to face having to pay more for their energy.

Even if prices for a duel fuel fix fall back next year to Gas 4p & Elec 20p (basically where the cap is now), it's still alot more than the 2.2p and 13.5p we have been used to in recent years. 

Add to this the SOLR bail outs this year that will also be added to future bills and less choice of suppliers.