Does this sound sensible to fix?

victor2

pochase said:

Tailender_Investor said:

Yes the fix is 18% more expensive than my current rate. 

But I think due to the nature of my split usage with electric heating as I use more in the winter the price only needs to increase 8% to breakeven. 

You are very near the correct number, just one error with it. You seem to be calculating the increase based on the fixed rate, but you need to calculate based on SVT. So it will be more like the 18% plus the 8% = 26%

Based on your figures you will pay £64.08 more in the first 6 months (1200KWh * 5.34p). 5.34 is the difference between fix and SVT.

This £64.08 you need to make up in the second half of the year, where you are using 3000KWh, so divide 64.08 by 3000, and you know the new SVT needs to be 2.14p more expensive than your fixed rate.

Now add the 5.34 to the 2.14 = 7.48p, and you know by what the SVT needs to increase by to break even.

7.48p increase of the 29.24p current SVT to the new SVT of 36.72 needed to break even  works out to an 25.58% increase of the electricity rate.

You seem to be ignoring the standing charges in your calculations, which perhaps accounts for the discrepancy. Threw my "fag packet" away but do recall I assumed the Current price cap rates are 29.24 per kWh and 37.91p standing charge in the OP were after the April increase, but the standing charge does look a bit low. I also assumed the "summer" period was 182 days and "winter" was 183.

I was surprised at the 8% result, but would have to do more solid analysis to back it up.

pochase

victor2 said:

pochase said:

Tailender_Investor said:

Yes the fix is 18% more expensive than my current rate. 

But I think due to the nature of my split usage with electric heating as I use more in the winter the price only needs to increase 8% to breakeven. 

You are very near the correct number, just one error with it. You seem to be calculating the increase based on the fixed rate, but you need to calculate based on SVT. So it will be more like the 18% plus the 8% = 26%

Based on your figures you will pay £64.08 more in the first 6 months (1200KWh * 5.34p). 5.34 is the difference between fix and SVT.

This £64.08 you need to make up in the second half of the year, where you are using 3000KWh, so divide 64.08 by 3000, and you know the new SVT needs to be 2.14p more expensive than your fixed rate.

Now add the 5.34 to the 2.14 = 7.48p, and you know by what the SVT needs to increase by to break even.

7.48p increase of the 29.24p current SVT to the new SVT of 36.72 needed to break even  works out to an 25.58% increase of the electricity rate.

You seem to be ignoring the standing charges in your calculations, which perhaps accounts for the discrepancy. Threw my "fag packet" away but do recall I assumed the Current price cap rates are 29.24 per kWh and 37.91p standing charge in the OP were after the April increase, but the standing charge does look a bit low. I also assumed the "summer" period was 182 days and "winter" was 183.

I was surprised at the 8% result, but would have to do more solid analysis to back it up.

It is correct that I did not take the standing charge into account, but it will make the required increase not better it will make it worse.

The standing charge is 20£ more per year on the fix rate. I think we agree that it is unlikely that the SC on the SVT will be increased, at leats if there is an increase it will be minor.

So instead of 64.08£ I need to add the £20, so 84£ higher payments need to be made up in the second half of the year. 

This increases the amount the SVT rate needs to be higher than the fix  from 2.14p to 2.8p, or a rate of 37.38p. So an increase of 8.14p, which is 27.9% is required before break even.

victor2

Apologies OP, my calculations were flawed.

A more detailed analysis:

SVR is 37.91p/day standing charge and 29.24p/kWh, after April 2022 increase(?)

Fix offered is 43.49p/day standing charge and 34.58p/kWh

Low usage period is from 1-Apr to 30-Sep (183 days), when 1200kWh is used (200 x 6)

High usage period is from 1-Oct to 28-Feb-23 (182 days), when 3000kWh (500 x 6) is used

Apr-Sep cost on SVR is  ((183*37.91)+(1200*29.24))/100 = £420.26

Oct-Feb cost on SVR plus 30% is ((182*37.91)+(3000*29.24))*1.3/100 = £1230.06

12 month cost on SVR is therefore £1650.32

On fixed rate for 12 months the cost will be £1610.73    ((365*43.39)+(4200*34.58))/100

Fixed rate will be £39.59 cheaper over 12 months IF the increase to the SVR in October comes to a net 30% increase

The break even point is if the net effect to the SVR is a 25.8% increase in October

Tailender_Investor

Put a quick excel sheet today, guess I should have done that to start with.  

To roughly break even I'd an increase of the current SVR kwh rate by around 27/28% if the standing charge increases 5% (which i've assumed it will).  Naturally the standing charge doesn't have a massive impact to be honest, only a few quid.

Currently the predictions are for a 25-30% increase in the cap if we look into the crystal ball.  So at that current fix rate and price cap prediction I'd probably be better just staying on the price cap.  On the other hand who knows what will happen with crazy Putin and what's going on in Ukraine, if they increase sanctions or Putin decides to turn off the energy taps then prices could spike again, so fixing now would basically lock in the current price cap predictions.