Martin Lewis: Energy price cap to rise by 51% on 1 April - should you fix now?

MWT

QrizB said:

I'm not at all convinced that this government is going to come up with a rescue package. The best I'm hoping for is something similar to the Warm Homes Discount to help the lowest paid.

I’m in much the same frame of mind.

For speed they will piggyback the support on an existing benefit, and they have to let the cap go up far enough to allow the suppliers to survive as well. 

spot1034

QrizB said:

donny-gal said:

It's not the comfort, but the risk of fixing and the. The Government coming up with a "rescue package", and paying over the odds.  DG

I'm not at all convinced that this government is going to come up with a rescue package. The best I'm hoping for is something similar to the Warm Homes Discount to help the lowest paid.

Can you be sure though? I don't agree, I think allowing price hikes of 50% or more will be seen as politically unacceptable, and particularly given the situation the government is in right now. However, I don't know any more than you or anyone else, but given that we're likely to hear more in the first part of February, surely it makes sense to wait and see?

MWT

spot1034 said:

However, I don't know any more than you or anyone else, but given that we're likely to hear more in the first part of February, surely it makes sense to wait and see?

The answer depends on which supplier you use, when your fix is expiring and what their T&Cs are...

For Octopus customers receiving their 45 day notification of their tariff expiring between now and the announcement of the new cap, it is probably wise to take the 'Loyal' fix as it will be set to start upon the expiry of their current tariff.

That means they will know the new cap before the new tariff starts but they will have locked in the rate but still have the option to cancel if they want with no charge.

Sea_Shell

QrizB said:

donny-gal said:

It's not the comfort, but the risk of fixing and the. The Government coming up with a "rescue package", and paying over the odds.  DG

I'm not at all convinced that this government is going to come up with a rescue package. The best I'm hoping for is something similar to the Warm Homes Discount to help the lowest paid.

The problem is the definition of "lowest paid" (as always with these things).

There will be many, many families not currently claiming any benefits, but are "just about managing".   They may soon not be able to manage any more!   

Some of the people commenting over on Martin Lewis' FB account seem to be genuinely petrified as to what's coming!!

The knock on to both physical and mental health here cannot be underestimated, and could affect some families far more than even Covid has!!!   

If they go by peoples PAYE records, for example, we're classified as "non taxpayers", so may be considered on Low (no) pay, but if any benefit was truly means tested, then we shouldn't get any assistance.  We expect to have to "suck it up", rightly. 

But if you go down that rabbit hole you then get into the realms of "should anyone with a SkyQ subscription get help?" etc. etc.




Also on the subject of actual billing and DD's.    Our DD is £65 per month, for a fix ending Mid April (accurate usage/billing)

At which point will our supplier look ahead to the coming 12 months and want to up that DD to nearer £156 (what it would be under the proposed April cap)

Will they, say, in February calculate 3 months on the old tariff and add 9 months on the new cap, and then divide by 12.   In other words to start paying for the increased cap prices before you're even on it!!??

MWT

Sea_Shell said:

The problem is the definition of "lowest paid" (as always with these things).

There will be many, many families not currently claiming any benefits, but are "just about managing".   They may soon not be able to manage any more!  

All very true, but I don't think there is a perfect solution, we have to either help everyone and accept people that don't need it will benefit, or target the help and accept that some who do need it will not get it.

The price support scheme being proposed to government by the industry would be an example of the former.

Anything like that though is going to cause a levelling of the price but extend the higher price over a longer period due to the need to repay the intervention payments, so it doesn't actually reduce the cost increase it just spreads it over time.

Targetted intervention could be more effective for the most vulnerable cases but will inevitably fail to protect many on the margins.

Maybe the answer is to do both, but with the amounts already paid to cover covid etc. it is hard to see how this expenditure is going to be covered...

s101

Anything like that though is going to cause a levelling of the price but extend the higher price over a longer period due to the need to repay the intervention payments, so it doesn't actually reduce the cost increase it just spreads it over time.

One issue with fixed rates is that they don't take into account what measures the government might take to alleviate the pressures. One thing being floated is that providers spread the increases over a longer period. So, if you go on the fixed rate you may find you end up paying inflated prices in the short term and still have to pick up the cost of increases in the long term when your fixed rate expires.

Sea_Shell

Ever get the feeling we're all screwed which ever way you slice and dice it!!!!

Availability of "cheap" energy at the flick of a switch has been taken for granted it would seem.

Welcome to the New Normal.

MWT

s101 said:

One issue with fixed rates is that they don't take into account what measures the government might take to alleviate the pressures. One thing being floated is that providers spread the increases over a longer period. So, if you go on the fixed rate you may find you end up paying inflated prices in the short term and still have to pick up the cost of increases in the long term when your fixed rate expires.

Which is why it is important to look at the exit costs, if any, that apply to a fixed tariff.

It is all a balance of risk right now, but once the cap is announced things will rapidly solidify around that price limit so it is still worth considering current fixes at or near the projected cap, especially if they do not have exit fees...

Swipe

Sea_Shell said:

Ever get the feeling we're all screwed which ever way you slice and dice it!!!!

Availability of "cheap" energy at the flick of a switch has been taken for granted it would seem.

Welcome to the New Normal.

Exactly, time to change the mindset from central heating to single room heating. My grandparents generation seemed to cope just fine with a coal fire in a couple of rooms.

Sea_Shell

Swipe said:

Sea_Shell said:

Ever get the feeling we're all screwed which ever way you slice and dice it!!!!

Availability of "cheap" energy at the flick of a switch has been taken for granted it would seem.

Welcome to the New Normal.

Exactly, time to change the mindset from central heating to single room heating. My grandparents generation seemed to cope just fine with a coal fire in a couple of rooms.

They just had to cope with high levels of Bronchitis and Pneumonia instead.