Assumptions made when evaluating fixed rate deals

Staffordian11

I'm interested in how those who look at fixing their energy costs decide how good a deal is, especially where only 2 year fixes are on offer.

Clearly some of the calculation is abstract and cannot be quantified, such as the peace of mind which come from knowing rates cannot change for the two years, and equally, I realise that no-one can yet forecast with any accuracy where prices will be on October 22, let alone beyond then.

So how do you decide if a fixed rate deal is better than simply remaining on the capped rate?

My back of a fag packet spreadsheet calculation currently makes the following assumptions, and I'd be interested if others use more or less optimistic numbers and assumptions. Note, I have month by month usage history so have a pretty good idea of how many units of gas and electricity I will use during the various charging periods.

1. I assume standing charges will not change
2. I'm assuming gas and electricity changes will be similar - I know this is unlikely, but I can't begin to guess by how much they might differ
3. I'm assuming a 33% increase in October 22, no further increase in Jan 23, a 10% fall in April 23 then unchanged from then forward

I know this is all finger in the air stuff, but without making some assumptions, I just cannot begin to decide whether a fix on offer is worth taking.

All comments and suggestions welcome!

Thanks

Mstty

1. Standing charges may in fact decrease but again nothing confirmed as yet but they are talking about removing the cost of SOLR.

2. Any increase in Oct 22 will hit gas ahrder is the general thinking 60/40 (gas/elec)

3. More like 42-46% increase Oct 22, 2% increase Jan 23 and then it's wet finger in the air for the next 15 months of any 2 year deal.

And to complicate it further all the above is either unconfirmed/best guess or total rollocks

pochase

Staffordian11 said:

I'm interested in how those who look at fixing their energy costs decide how good a deal is, especially where only 2 year fixes are on offer.

Clearly some of the calculation is abstract and cannot be quantified, such as the peace of mind which come from knowing rates cannot change for the two years, and equally, I realise that no-one can yet forecast with any accuracy where prices will be on October 22, let alone beyond then.

So how do you decide if a fixed rate deal is better than simply remaining on the capped rate?

My back of a fag packet spreadsheet calculation currently makes the following assumptions, and I'd be interested if others use more or less optimistic numbers and assumptions. Note, I have month by month usage history so have a pretty good idea of how many units of gas and electricity I will use during the various charging periods.

1. I assume standing charges will not change
2. I'm assuming gas and electricity changes will be similar - I know this is unlikely, but I can't begin to guess by how much they might differ
3. I'm assuming a 33% increase in October 22, no further increase in Jan 23, a 10% fall in April 23 then unchanged from then forward

I know this is all finger in the air stuff, but without making some assumptions, I just cannot begin to decide whether a fix on offer is worth taking.

All comments and suggestions welcome!

Thanks

1. yes that is the prediction most have
2. nope, not at all, at the moment it looks like 60% gas, 45% electricity. Based on the latest Cornwall-Insights prediction from 1st of June
3 Ofgem prediction is more 45%, with Cornwall-Insights going a bit higher. Small increase in January

ClaireBear83Sx

My current fixed rate ends mid August.  I have every intention of fixing my rate with my current supplier for 1 if not 2 years even though it means for at least August-October, I will be paying more than the current unfixed rates.  The way I look at it is that I would rather have the peace of mind knowing what I am paying every month, even if I pay a little extra for a short time, than being stung in October.  If - and I mean "IF" there is some insane moment where everything drops back to a normal and reasonable rate, I will work out how much I would save compared to paying the £30 exit fee each and decide what to do then.

pochase

If it just would be £60 exit fees. Unfortunately £300 exit fee for both fuels seems to be not unusual now.