I didn't fix and I don't regret it - see my spreadsheet for proof

agentcain

BUFF said:

agentcain said:

I never really understood the benefit vs cost of fixing. 

Surely when you commit to a contract of X length, the price should be lower compared to a day by day basis one. Take comms for example. You have no-contract SIMs costing £££ and then you have the option for a contract for ££ but 12-24 months.

If you're committed to stay with an energy supplier for X months, under penalty, then surely this supplier should be able to source cheaper energy for you as a broker for this period. Instead, they offer you a fixed increased cost with the argument being "you have the certainty of cost against the variable rate and for that we charge you more"
One would argue that they are doing this against the future capped rate, so the offered fix is actually lower. And yet, the comms providers don't know how much their obligations in the future will be. They offer you a better deal now, given what we know now.

What? Why? How? You should be awarded for allowing your supplier to better plan its future, not the other way around.

& this is how it worked for years.

& then we had a global pandemic for a couple of years & then a war involving a major energy supplier - this totally disrupted the market in terms of demand & supply & threw all previous forecasts into disarray. 
Now, because of the cap which was originally brought in to stop suppliers overcharging, we are in the unusual position of SVT being cheaper than fixed because the suppliers are legally hamstrung from passing on the current full costs on those rates. Without the cap our variable rates would be higher.

How did it work for years?
As far as I can remember, the fixed rate was always higher than the variable one at the moment of offer. No?

agentcain

Ultrasonic said:

agentcain said:

I never really understood the benefit vs cost of fixing. 

Surely when you commit to a contract of X length, the price should be lower compared to a day by day basis one. Take comms for example. You have no-contract SIMs costing £££ and then you have the option for a contract for ££ but 12-24 months.

If you're committed to stay with an energy supplier for X months, under penalty, then surely this supplier should be able to source cheaper energy for you as a broker for this period. Instead, they offer you a fixed increased cost with the argument being "you have the certainty of cost against the variable rate and for that we charge you more"
One would argue that they are doing this against the future capped rate, so the offered fix is actually lower. And yet, the comms providers don't know how much their obligations in the future will be. They offer you a better deal now, given what we know now.

What? Why? How? You should be awarded for allowing your supplier to better plan its future, not the other way around.

At the point anyone takes out a fix they are doing so in the judgement that it WILL be cheaper than not committing to a long term contract. You also can't simply judge whether this will be true or not based just on current prices when a fix is agreed to.

Why is this a judgement though and not a commitment? 
As a customer, I'm being locked into a contract to pay the agreed rate with penalty if willing to end the contract. This is where my obligation ends. What does the supplier offer other than a rate it pulls out of thin air (i.e. its predictions and power purchase contracts) and making the customer wish the variable rate goes up so they don't lose?

bristolleedsfan

agentcain said:

BUFF said:

agentcain said:

I never really understood the benefit vs cost of fixing. 

Surely when you commit to a contract of X length, the price should be lower compared to a day by day basis one. Take comms for example. You have no-contract SIMs costing £££ and then you have the option for a contract for ££ but 12-24 months.

If you're committed to stay with an energy supplier for X months, under penalty, then surely this supplier should be able to source cheaper energy for you as a broker for this period. Instead, they offer you a fixed increased cost with the argument being "you have the certainty of cost against the variable rate and for that we charge you more"
One would argue that they are doing this against the future capped rate, so the offered fix is actually lower. And yet, the comms providers don't know how much their obligations in the future will be. They offer you a better deal now, given what we know now.

What? Why? How? You should be awarded for allowing your supplier to better plan its future, not the other way around.

& this is how it worked for years.

& then we had a global pandemic for a couple of years & then a war involving a major energy supplier - this totally disrupted the market in terms of demand & supply & threw all previous forecasts into disarray. 
Now, because of the cap which was originally brought in to stop suppliers overcharging, we are in the unusual position of SVT being cheaper than fixed because the suppliers are legally hamstrung from passing on the current full costs on those rates. Without the cap our variable rates would be higher.

How did it work for years?
As far as I can remember, the fixed rate was always higher than the variable one at the moment of offer. No?

Historically, two different types of variable rate tariffs.
1. Competitive variable rate tariffs which tended to be cheaper than fixed rates at outset whilst not guaranteed to remain so.
2. Default variable rate tariffs typically fixed rates ending consumer neither chose a new fixed rate  or switched supplier,- most expensive tariff

agentcain

bristolleedsfan said:

agentcain said:

BUFF said:

agentcain said:

I never really understood the benefit vs cost of fixing. 

Surely when you commit to a contract of X length, the price should be lower compared to a day by day basis one. Take comms for example. You have no-contract SIMs costing £££ and then you have the option for a contract for ££ but 12-24 months.

If you're committed to stay with an energy supplier for X months, under penalty, then surely this supplier should be able to source cheaper energy for you as a broker for this period. Instead, they offer you a fixed increased cost with the argument being "you have the certainty of cost against the variable rate and for that we charge you more"
One would argue that they are doing this against the future capped rate, so the offered fix is actually lower. And yet, the comms providers don't know how much their obligations in the future will be. They offer you a better deal now, given what we know now.

What? Why? How? You should be awarded for allowing your supplier to better plan its future, not the other way around.

& this is how it worked for years.

& then we had a global pandemic for a couple of years & then a war involving a major energy supplier - this totally disrupted the market in terms of demand & supply & threw all previous forecasts into disarray. 
Now, because of the cap which was originally brought in to stop suppliers overcharging, we are in the unusual position of SVT being cheaper than fixed because the suppliers are legally hamstrung from passing on the current full costs on those rates. Without the cap our variable rates would be higher.

How did it work for years?
As far as I can remember, the fixed rate was always higher than the variable one at the moment of offer. No?

Historically, two different types of variable rate tariffs.
1. Competitive variable rate tariffs which tended to be cheaper than fixed rates at outset whilst not guaranteed to remain so.
2. Default variable rate tariffs typically fixed rates ending consumer neither chose a new fixed rate  or switched supplier,- most expensive tariff

I agree. So by example, Bulb was one of those suppliers who offered only a variable rate tariff, competitive at the time when I personally decided to join them. At a later point, someone else offered a more competitive pricing, so I joined them and they went bust together with Bulb. However, in both of those cases, the rates were much better than the fixed rates from big suppliers, when they shouldn't. And that's something no one is really looking into, including the ofgem.

That's why I don't think energy suppliers offer any benefit as they fail to do proper planning, cost prediction and energy hedging to the benefit of those who choose to fix their custom with them longtime. 

Ally_E.

I have been thinking about Octopus possibly not offering good enough fixes. Did some research and other fixes are not much better. Now with the new predictions from Cornwall Insights out, I crunched the numbers again. I stand by my choice of not fixing and will keep updating this thread with regular comparisons of my usage vs the fixes that were available from Oct 2021.

Just did the calculations and the current Octopus fix is 47% more than the April 22 cap. As Martin says, not worth switching if above 35%.


And here's a comparison of Octopus SVR (with 42% increase in Oct) vs Eon fix. Still over £400 better off. I'm willing to hedge my bets for now.

Ultrasonic

agentcain said:

Ultrasonic said:

agentcain said:

I never really understood the benefit vs cost of fixing. 

Surely when you commit to a contract of X length, the price should be lower compared to a day by day basis one. Take comms for example. You have no-contract SIMs costing £££ and then you have the option for a contract for ££ but 12-24 months.

If you're committed to stay with an energy supplier for X months, under penalty, then surely this supplier should be able to source cheaper energy for you as a broker for this period. Instead, they offer you a fixed increased cost with the argument being "you have the certainty of cost against the variable rate and for that we charge you more"
One would argue that they are doing this against the future capped rate, so the offered fix is actually lower. And yet, the comms providers don't know how much their obligations in the future will be. They offer you a better deal now, given what we know now.

What? Why? How? You should be awarded for allowing your supplier to better plan its future, not the other way around.

At the point anyone takes out a fix they are doing so in the judgement that it WILL be cheaper than not committing to a long term contract. You also can't simply judge whether this will be true or not based just on current prices when a fix is agreed to.

Why is this a judgement though and not a commitment? 
As a customer, I'm being locked into a contract to pay the agreed rate with penalty if willing to end the contract. This is where my obligation ends. What does the supplier offer other than a rate it pulls out of thin air (i.e. its predictions and power purchase contracts) and making the customer wish the variable rate goes up so they don't lose?

Sorry, only just seen this reply 

It's a judgement as the customer doesn't know what will happen to the variable rate (by definition). The company is making an offer that the customer chooses whether to accept or not. There is zero obligation for a company to make a guarantee for a fix to be cheaper than a variable rate. Note also that the customer is getting a guarantee that the price won't change from that agreed, so for many the appeal is the guarantee that prices won't go higher during the term.

Ultrasonic

Ally_E. said:

I have been thinking about Octopus possibly not offering good enough fixes. Did some research and other fixes are not much better. Now with the new predictions from Cornwall Insights out, I crunched the numbers again. I stand by my choice of not fixing and will keep updating this thread with regular comparisons of my usage vs the fixes that were available from Oct 2021.

Just did the calculations and the current Octopus fix is 47% more than the April 22 cap. As Martin says, not worth switching if above 35%.


And here's a comparison of Octopus SVR (with 42% increase in Oct) vs Eon fix. Still over £400 better off. I'm willing to hedge my bets for now.

Do bear in mind that your comparisons are specific to your usage. I took out a fix at the end of February that on current predictions is likely to work out cheaper overall for me some time in October or November (depending if cashback for switching comes through or not).

bristolleedsfan

Ally_E. said:

I have been thinking about Octopus possibly not offering good enough fixes. Did some research and other fixes are not much better. 

I stand by my choice of not fixing and will keep updating this thread with regular comparisons of my usage vs the fixes that were available from Oct 2021.

https://forums.moneysavingexpert.com/discussion/6309895/octopus-energy-bonkers-cheap-24-month-fixed-electricity-rate-no-exit-fees-now-withdrawn/p1

Ultrasonic

bristolleedsfan said:

Ally_E. said:

I have been thinking about Octopus possibly not offering good enough fixes. Did some research and other fixes are not much better. 

I stand by my choice of not fixing and will keep updating this thread with regular comparisons of my usage vs the fixes that were available from Oct 2021.

https://forums.moneysavingexpert.com/discussion/6309895/octopus-energy-bonkers-cheap-24-month-fixed-electricity-rate-no-exit-fees-now-withdrawn/p1

That's definitely looking like a good option to have taken up now!

Ally_E.

Ultrasonic said:

Ally_E. said:

I have been thinking about Octopus possibly not offering good enough fixes. Did some research and other fixes are not much better. Now with the new predictions from Cornwall Insights out, I crunched the numbers again. I stand by my choice of not fixing and will keep updating this thread with regular comparisons of my usage vs the fixes that were available from Oct 2021.

Just did the calculations and the current Octopus fix is 47% more than the April 22 cap. As Martin says, not worth switching if above 35%.


And here's a comparison of Octopus SVR (with 42% increase in Oct) vs Eon fix. Still over £400 better off. I'm willing to hedge my bets for now.

Do bear in mind that your comparisons are specific to your usage. I took out a fix at the end of February that on current predictions is likely to work out cheaper overall for me some time in October or November (depending if cashback for switching comes through or not).

Yes, I think that's key here. With my usage, which there will be a good amount of people in similar situation, it really portrays the situation in a different way.