Stay on the SVR until October and then switch to a fixed rate? Yes or No?

jefferson89

Hey Guys,  

Not sure if anyone has asked this, but with the October 2022 Price rise on energy, would it not be better to stay on the SVR for the next few months and then switch to a fixed just before October (as long as that fix is approx only 40% - 45%).  My question is, if so why have people fixed already?

I have been with British Gas since Oct 2021 due to Pure Energy going bust.  I decided to be on quarterly / 3 monthly billing as British Gas we terrible in switching me, providing my credit and general over all service. So i decided its better for me to pay them when I need just in case of further issues rather than them take the money on their time + deal with issues (although i know i pay more for non direct debit).

Currently my usage is approx £78 per month since 2021, but if i fixed to their new Jul 23v3 now, i would be paying £141 a month?  Or am i missing something big and obvious here?

Thanks

GingerTim

Just bear in mind that as we get closer to the announcement of the October cap that the fixes available are only going to get more expensive.

EssexHebridean

An easy way of saving immediately would be to switch to variable DD - so you only pay the amount of each bill - this does demand a good degree of budgeting though to ensure that more money is set aside during the summer months to offset the higher amounts the DD will be in the colder weather. You then gain the advantage of getting the Direct Debit rates, without the risk of BG trying to artificially increase a DD to an extent higher than you feel it should be. 

jefferson89

GingerTim said:

Just bear in mind that as we get closer to the announcement of the October cap that the fixes available are only going to get more expensive.

Yes i would have expected this, here have been my offers from British Gas:

- in May 25th 2022: Fixed 'Exclusive Jul 23v1' at yearly cost of £1706.44 / £142.20 per month
- May 27th 2022: Exclusive Jul 23v2 for £1737.84 yearly / £144.82 per month. 
-June 22nd 2022: Fixed Jul 23v3 for £1,680.87 yearly and £140.07 per month.

So with me I have actually seen a price drop, but i would agree they will only get more expensive until October, but for the next 3 months (until end of September) if i were to stay on the SVR, I would be saving £61 per month (my current £79 per month SVR rate - the £140 per month fixed rate) x3 months = £183.  So this saving of £183 for the next 3 months would be surely worth the fixed rate yearly rises i have been experiencing / offered as they have been no higher than £31 for the year?

pochase

When did you get the last offer?

After the latest prediction 3 days ago a few of the cheaper fixes were immediately withdrawn by the suppliers.

The nearer you get to October the more expensive the offers will get. There will be a time when you just have missed the opportunity (or not if all predictions proof to be wrong).

What you are asking is a bit why can't complete the lottery ticket once I know the winning numbers.

Alnat1

Have they given the same estimate annual energy use on all 3 fix offers? It sounds like they may be using different figures for the last offer for it to come out at a lower amount.

It's best to work out from actual readings how much you have used over the last year and do a bit of maths yourself with their fixed offer prices.

jefferson89

pochase said:

When did you get the last offer?

After the latest prediction 3 days ago a few of the cheaper fixes were immediately withdrawn by the suppliers.

The nearer you get to October the more expensive the offers will get. There will be a time when you just have missed the opportunity (or not if all predictions proof to be wrong).

What you are asking is a bit why can't complete the lottery ticket once I know the winning numbers.

Yes i do fully understand what your saying.  What I have just done is run my numbers via Cheap Energy Club, as i assume it will be more accurate.  So my Annual Gas usage = 8000kwh and Electric Annual = 1976kwh.  Based off  cheap energy club my yearly costs via the tariffs offered should approx be:

- May 25th 2022: 'Exclusive Jul 23v1' at yearly cost of £1843 / approx £153.58 per month.
- May 27th 2022: Exclusive Jul 23v2 for £1877 yearly / approx £156.42 per month (increase of £34 on previous tariff)
-June 22nd 2022: Fixed Jul 23v3 for £1,904 yearly / 158.67 per month (further increase again of £27).

So in total my increase in tariff offers have been £61 as of June 22nd 2022.  So does my theory still stand? because if i change to the new BG Fixed Jul 23v3 i will be paying £158.67 per month, which is = £476.01 over 3 months.  Where as stay on the SVR and pay £79 x 3month = £237.  So i would be £239 better off in the 3 months , if tariffs were to stay the same.  Now yes £61 in tariff increases has already happened, making it £239 SVR saving - £61 tariff increases = £178.  But as long as the fixed tariff increases don't rise a further total £178 in 3 months, i am still better off no?  The wiggle room seems healthy if my calculations are correct since it has been £61 of increases in 2 months.  Maybe i could get a further 2 months at the least?

jefferson89

EssexHebridean said:

An easy way of saving immediately would be to switch to variable DD - so you only pay the amount of each bill - this does demand a good degree of budgeting though to ensure that more money is set aside during the summer months to offset the higher amounts the DD will be in the colder weather. You then gain the advantage of getting the Direct Debit rates, without the risk of BG trying to artificially increase a DD to an extent higher than you feel it should be. 

Thanks for this piece of information.  In setting up a Variable DD, is this something you do directly with your bank or does British gas have this as an option via your account if you choose to set up a direct debit?

fergie_

Based on the latest Cornwall figures (helpful that they break down the split between gas and electric), I make it gas will go up ANOTHER 67% and electric ANOTHER 38% (give or take).

The reality is that the only way to 'save' money is to reduce consumption (if possible). The problem with the fixes is that they are very close to the expected increases (funny that) so if you fix now you have surety, but you also have 3 months extra at a HIGHER rate.

Forecasts suggest prices falling back next year so the fixing risk is that you then have £50-£200 penalties to leave the fix if they do.

What we really need is competition in the market again and prices that aren't based on the current speculative system.

pochase

fergie_ said:

Based on the latest Cornwall figures (helpful that they break down the split between gas and electric), I make it gas will go up ANOTHER 67% and electric ANOTHER 38% (give or take).

The reality is that the only way to 'save' money is to reduce consumption (if possible). The problem with the fixes is that they are very close to the expected increases (funny that) so if you fix now you have surety, but you also have 3 months extra at a HIGHER rate.

Forecasts suggest prices falling back next year so the fixing risk is that you then have £50-£200 penalties to leave the fix if they do.

What we really need is competition in the market again and prices that aren't based on the current speculative system.

I assume you are calculating with the whole amounts? 

As the standing charges are expected to stay the same deduct them from April cap and their prediction, and the increase will be a scary 71% for gas and over 50% for electricity unit rates.

fergie_

pochase said

I assume you are calculating with the whole amounts? 

As the standing charges are expected to stay the same deduct them from April cap and their prediction, and the increase will be a scary 71% for gas and over 50% for electricity unit rates.

Correct, inclusive of standing charges.

As a higher user, I'd prefer the SC to increase by more and the unit rate by less, but I appreciate lower users don't see it that way.