Making the most of the fixing rate 14-day cooling off period

Vincero

Hi all,

For a moment, let's assume that the forecast increase in energy costs are proven to be true and that price cap bills may increase by 70-80% in October and then another 20% in January - if your provider is offering a fixed rate which is 50-60% higher, would it be prudent to switch to the 1-2 year fixed tariff from say the 14th August up until 26th?

My thinking is that if:
A) your provider start getting worried as the 26th approaches and begin withdrawing fixed rate offers (I'm not suggesting they get inside information ahead of time about what the rates will be, but I'm sure they find out before the public announcement) you switch whilst it's still available to switch to, allowing either of the following scenarios;

ofgem choose to buckle from government/consumer pressure and fix lower energy rates than forecast you could cancel your rate switch within the 14-day cooling off period and stay on variable rate.
C) ofgem set the rates as bad (or worse) then you just let the tariff change kick in and 'enjoy' being on a lower tariff for a predicted at least 6 months.

Apart from the hassle of dealing with customer services, is this a potentially better way for customers to safeguard a lower overall cost vs. 'the wait and see' approach?

Brie

possible admin charge? 

Vincero

Brie said:

possible admin charge? 

Good point. Maybe for some, but even if it was a token amount of say £15-20, at the current rates that's least of problems.

BUFF

yes, but i wouldn't assume that a fixed rate available today will still be available on Sunday.

does the offered fix have early exit fees?

Vincero

BUFF said:

yes, but i wouldn't assume that a fixed rate available today will still be available on Sunday.

does the offered fix have early exit fees?

Of course they do, but to quote the t&C's

"From the day after signing up with us, you have a 14 day cooling-off period during which you can cancel this contract at no cost."

Exit fees should only apply after that.

Vincero

Out of interest, is something special happening on Sunday? Or is there some other notable date that might impact future tariff availability?

johnjaffer

There are a few things you can do to make the most of the 14-day cooling-off period:
1. Research the market and compare prices - use this time to find the best deal on the item you want to purchase.
2. Read reviews and compare products - take this time to read and compare products to find the best one for you.

BUFF

There are a no of fixes that don't have early exit fees either at all or if you move to another tariff with the existing supplier.

Your b ) solution  only covers  for the unveiled Oct-December 2022 period SVT not being as high as currently is being forecast & below the level of your fix. Having a fix with no early exit fees potentially gives you that escape for the length of your fix.

It's all crystall ball territory & a gamble though.

Vincero

BUFF said:

Your b ) solution  only covers  for the unveiled Oct-December 2022 period SVT not being as high as currently is being forecast & below the level of your fix. Having a fix with no early exit fees potentially gives you that escape for the length of your fix.

It's all crystall ball territory & a gamble though.

Of course, it will be impossible to know what the Jan price capping would be - After a few cold months with bills over 2x as much compared to a year ago maybe ofgem will be forced to adopt a French style state enforced pricing structure which may ultimately put some other suppliers at risk. I think that unlikely though, especially with UK gov still picking up costs from bulb failing.
But if it did happen, if prices fell to half the amount then say a £150 exit fee would be recouped after a few months.

Yep, even the best polished crystal ball is useless right now - all we can really do is go on what UK gov is saying and doing, which is comparatively not a lot in either case. Based on that lack of action and the current desire to not properly price fix the market, I'll go with the assumption that energy companies will charge whatever they can - if the government provide relief it will likely be bill credits, so if you're on variable or fixed you get the same relief.

Mstty

Been mentioned here lots of times before.

No harm in the repetition though.

Chrysalis

There is an optimal timing window for sure, generally speaking as get closer to date where confidence levels of big price hikes are happening then better fixed deals will vanish.  However if fix too early you then over paying what might be a significant amount for a while before the new tariff is profitable over the svr.

I think in this period, the optimal time to switch for octopus customers was probably the final week before agile 2018 and gas tracker v3 were pulled from the market.

Now we moving to 3 month cap increases, this becomes less of an issue as the argument for moving to fixed is a lot stronger even on less favourable deals, e.g. the new agile and gas tracker are now much better than the fixed octopus are offering.