To fix, or not to fix - numbers really close!

NormW

I've just been offered a fix at 35% above the cap and I reckon this is really very borderline.

It would mean I would be paying 35% more from now till Oct. (worked out as +£249)
If Oct cap rises by 50%, 15% less Oct - Dec. (worked out as -£105)
If Jan cap rises by 1%, 16% less Jan - Mar. (worked out as -£112)

So up to Mar 23, I would be -£32 worse off compared to staying on the cap.

So, Apr - Jun 23, I would need to see the cap reduce from the Jan - Mar cap (current +51%) by around 9% before I was worse off. The MSE article still predicts a 10% fall in April.

If any of those rises are less, even by a couple of percent, I won't break even and would be worse off than staying on the cap.

Any chance of some opinions please?

Thanks.

si_74

I would say it depends on the type of personality you are and your circumstances. As you say, what is going to happen is a bit of guesswork.

If you like to have stability and to budget then fixing at a decent rate is understandable. I fixed a couple of weeks ago for two years because i wanted to know what my bills were going to be. I was pretty confident of a good saving in year 1. I wasn't so confident about year 2, but after yesterday price cap prediction update then I am even more comfortable with it.

If I am a bit better off, break even, or even if it costs me a little then que sera sera, I made the best choice with the info available at that time. If prices drop considerably in year 2 then I'll pay the exit fee...it's a decision I'd love to have to make even if it costs me £300!

Astria

My thinking is that the energy companies are also doing there sums and the tariffs offered between now and October will either just about break even or even cost you more so not worth it. The only people who have won are those that took fixes before now. For example, a friend of mine took out a 2 year fix last year so as long as their energy company doesn't go bust they are on the best possible tariff. My fix ends in after the October price increase and I think the amount I'll save by not going onto a fix now will offset the cost of the projected increase.

QrizB

NormW said:

I've just been offered a fix at 35% above the cap and I reckon this is really very borderline.
...
Any chance of some opinions please?

Your energy consumption is not the same every month.

Did you work out your £££ differences based on the actual amount of energy you expect to use in each month, or are you just looking at the monthly DD values? This might change the outcome of your calculations.

Here's a very simple example.

Imagine a year of four quarters, Q1, Q2, Q3 and Q4. In Q1 you use 1000kWh; in Q2 you use 100kWh; in Q3 you use 100kWh; in Q4 you use 1000kWh. And let's say that enerrgy starts at a cost of 10p/kWh.

• Q1: 1000kWh at 10p/kWh = £100
• Q2: 100kWh at 10p/kWh = £10

We get to Q3 and you're offered a fixed-rate tariff at 13.5p (+35%) for the next four quarters.

• Q3: 100kWh at 10p/kWh = £10 or 100kWh at 13.5p/kWh = £13.50

In Q4 (October) the variable rate increases from 10p/kWh to 15p/kWh (+50%)

• Q4: 1000kWh at 10p/kWh = £150 or 1000kWh at 13.5p/kWh = £135

By the end of Q4, you've spent £270 by staying on the variable tariff or £258.50 by taking the fix. You've saved £11.50.

Now we start a new year. In Q1 (January) the variable price stays at 15p/kWh.

• Q1: 1000kWh at 10p/kWh = £150 or 1000kWh at 13.5p/kWh = £135

That's another £15 saving, for a total to date of £26.50

In Q2 (April) the variable rate drops all the way back to 10p/kWh.

• Q2: 100kWh at 10p/kWh = £10 or 100kWh at 13.5p/kWh = £13.50

At the end of Q2 your fixed rate expires. If you'd stayed on the variable rate, you would have spent £430 in total. By taking the fix you've only spent £407, a saving of £23.

If you do the same but using your own expected consumption figures for each fuel, and your anticipated tariff changes, you can work out whether it's worth taking the fix or not.