Energy - Totally confused

Tigsmom

I have only switched energy suppliers twice in decades and not noticed any benefit in doing so. Therefore we are currently on the standard tariff and nervous about prices going up like everyone else. We pay for what we use so no direct debit as when we did have direct debit our money sat in the suppliers bank account for a year until we could claim it back so now we save it in a savings account and take what we need from it each month. We have just been offered a fix as follows- current annual usage has £829 electric £1621, fix offered gas £1603 electric £2913 which seems ridiculously high. I know bills are set to rise a lot but will this be a good deal? We can’t really afford it and have already bought warm clothing and blankets in preparation. If we pay for the fix, which is only available if we go onto direct debit, and are paying for far more than we’re using, do we just lose that money? I don’t really understand how it all works. 

elsien

You need to ignore the monthly figures and do your own sums from the actual usage. Do you have meter readings from about a year ago and now?
What are the unit rates on the fix they are offering you? 

Fixed rates aren’t a fixed monthly amount. It means the unit rates and standing charge are fixed and won’t change over the tarrif. Your monthly bill will still go up and down depending on how much energy you use. It’s not a “use all you like and still only pay x” thing. 

Effectively you will be paying more now in the hope that when the variable rates go up in October, your deal will be better that the variable rate increase. Which depends very much on usage, the fixed rate you’re being offered, and any fees to get out of the fixed deal you want to at any point. 

Most fixed rates at the moment are above the guesses for the October price rise. But they are just that - guesses. No-one can say for sure.

But if you put up your readings and current tariff, people can help you to think it through. 

Saga

elsien said:

You need to ignore the monthly figures and do your own sums from the actual usage. Do you have meter readings from about a year ago and now?
What are the unit rates on the fix they are offering you? 

Fixed rates aren’t a fixed monthly amount. It means the unit rates and standing charge are fixed and won’t change over the tarrif. Your monthly bill will still go up and down depending on how much energy you use. It’s not a “use all you like and still only pay x” thing. 

Effectively you will be paying more now in the hope that when the variable rates go up in October, your deal will be better that the variable rate increase. Which depends very much on usage, the fixed rate you’re being offered, and any fees to get out of the fixed deal you want to at any point. 

Most fixed rates at the moment are above the guesses for the October price rise. But they are just that - guesses. No-one can say for sure.

But if you put up your readings and current tariff, people can help you to think it through. 

Regarding the increases, where Cornwall Insight forecast a 70% increase for typical use in October, does this mean 70% on both unit rate and standing charge, or just increase in unit rate to give an overall increase of 70%, or something in between?

The_Fat_Controller

@saga it means the AVERAGE dual fuel user will see that overall increase in their bills.

The change in gas and electricity unit rates will not necessarily be equal.

Standing charges will most probably stay at their current levels.

You need to do your own sums when the new rates are announced to get your individual bad news.

Saga

The_Fat_Controller said:

@saga it means the AVERAGE dual fuel user will see that overall increase in their bills.

The change in gas and electricity unit rates will not necessarily be equal.

Standing charges will most probably stay at their current levels.

You need to do your own sums when the new rates are announced to get your individual bad news.

By which time the current fix 'offers' will be replaced with even worse ones 😂🤣.

Tigsmom

I’m not naive enough to expect to pay a fixed direct debit and be able to use what I like! My point is we hardly have the heating on in winter anyway so if I pay double what I’m paying now, as they’re asking what happens if I don’t use that much energy? Do I get a refund? That’s what happened last time I fixed and to be frank I need that money to live off now not sitting in their account until the end of their financial year. 

elsien

You can negotiate a lower direct debit or you can have a variable direct debit which only pays what you use.
Otherwise, yes if you’re in credit you will get the money back at some point but not automatically each month. Companies are encouraging people to build up more of a buffer, in part because a some people are in for a shock when they come off their current fixed, but also because of a possible further Jan increase.
I would still suggest you look very carefully at your specific usage before going for the fix. 

(And we have had posts from people who do think that a fix is just that - same payment regardless of usage- hence the check.) 

[Deleted User]

Tigsmom said:

I’m not naive enough to expect to pay a fixed direct debit and be able to use what I like! My point is we hardly have the heating on in winter anyway so if I pay double what I’m paying now, as they’re asking what happens if I don’t use that much energy? Do I get a refund? That’s what happened last time I fixed and to be frank I need that money to live off now not sitting in their account until the end of their financial year. 

Your credit balance is 100% protected by Ofgem. Any credit balance should be taken into account when your DD payment plan is reviewed - usually at the 6 month point. If you are unhappy about the supplier having any of your money on account then most suppliers will agree to a variable DD where you pay the full amount when a statement is raised. Some suppliers charge more if you do this by removing the DD discount built into the standing charge.

The_Fat_Controller

@Tigsmom you will never actually pay for more than you use, however if your DD is not set to match your usage you will build up a credit balance and if that exceeds the criteria set by your supplier it will be refunded, not lost.

You are probably overpaying by up to 7% but not using a DD !

What was your ACTUAL usage in kWh for both gas and electricity over the last year ?

Who is your supplier and what is the name of the fix on offer ?

Robin9

@Tigsmom   Your present annual costs of £829 and £1621  suggest you are a very high user of both electricity and gas.  There should be plenty of room to cut your costs -  details of please of your property, heating etc .

QrizB

Tigsmom said:

We have just been offered a fix as follows- current annual usage has £829 electric £1621, fix offered gas £1603 electric £2913 which seems ridiculously high.

On ther current SVT:

• an £829/yr gas bill would mean you're using about 10,000 kWh/yr
• a £1621/yr electric bill would mean you're using about 5,200 kWh/yr

Your gas consumption is a little lower than the average household, bot your electricity use is getting on for twice the average.

From October, using the current Cornwall Insight estimates, your SVT bills will be roughlt:

• gas: £1550/yr
• electricity: £2600/yr

You'll probably be slightly better off sticking with the SVT rather than taking the fix, but anything you can do to reduce your energy use is going to help.