Opposition proposals to freeze the price cap - fair for people who have fixed?

jrawle

Some people have pointed out that it was always a gamble to fix, compared it to interest rates, etc. However, I don't see it as being the same situation. Anyone who took a fix was taking a gamble that prices might not rise as much as predicted, or could even fall (OK, that doesn't seem likely). Their decision was within the framework that existed that the prices largely tracked the energy market, with a cap that updated every few months. Changing the price cap rules by (presumably) directing a lot of taxpayers' money straight to the energy suppliers is rather moving the goalposts. The price cap is always a case of the government artificially interfering with the market, imposing a legal maximum that companies can charge for certain types of tariffs. The could presumably also legislate to ensure that people could be released from fixed tariffs.

Of course, as some have pointed out it won't happen, as those suggesting it are not in charge. This was only intended as an academic discussion.

[Deleted User]

JIL said:

No idea, but something needs to be done. Its awful the eye watering profits and the man on the street being in such a situation that they are seriously so worried.

What eye-watering profits? The profits are being made by the energy producers (ie; the companies that drill for oil and gas) not the suppliers that you have a contract with. These are international companies that work around the World owned by international shareholders. For example, bp is anything but British. It’s main shareholders are international financial investment houses.

The ‘good news’ is that these companies pay tax on their operations in the UK and its waters. Higher profits mean increased UK tax revenues. These are the taxes that pay for schools; the NHS; defence etc.

Governments have no money in their own right. The money they have comes from the taxes that they impose on businesses and individuals. The concept of a Welfare State doesn’t mean that the State pays for everything. There was considerable pain in the 70s when inflation reached 15%: sadly, I fear the same again.

sienew

This is unlikely and isn't even a very efficient method of giving government support. It encourages wastage and would help the wealthy more than the poor which generally isn't the purpose of such interventions. 

rp1974

If a customer has chosen to fix,that's their decision based on whatever reasoning and should be subject to whatever was agreed at the commencement of the fix,any amount already paid at whatever rate was the choice made.
As any suppliers would be rightly denounced for failing to honour an agreement then a customer bears equal responsibility in sticking to it,without the oft used "not fair" and much wailing and gnashing of teeth,etc.
Having said that it would be a reasonable and fair compromise in allowing such customers to move to the SVT without exit fees.
Not exactly flush with excess cash myself,this being the only time in many years I've not been on a fix having been moved to Eon from Symbio and thusfar chosen to remain on variable before the help was announced in the full knowledge that prices could go markedly either way,time many people took on a little bit of responsibility themselves instead of blaming others for their misfortunes possibly.

[Deleted User]

tc66_2 said:

Am I right in saying that for certain fixes (Eon Next springs to mind), you are able to go back to the variable tariff with no penalties or exit fees?

Yes, with Eon Next I've signed up on v18 commencing 1st October 2022.  If I revert to another deal (or a reversion back to SVT) that they are able to offer then yes, no exit fees.  At least that is my understanding should this unlikely scenario become reality - I'm sure we will all know in early September prior to the next Cap rates kicking in.  It would mean that Ofgem role in the energy regulation business is somewhat neutered (some/many might think this is a good thing)!

Re if it is fair for those that have fixed (and are already paying elevated prices compared to say the current cap), you would probably be better off paying any exit fees and reverting to SVT (were it to stick at the April 2020 level). 

[Deleted User]

jrawle said:

The leader of the opposition is calling for the price cap to be frozen at the current level. A rival opposition politician made a similar call a week or so ago. Obviously this isn't the place to discuss politics. 

I'd be surprised if the Cons implement KS's suggestion just on cost alone.  At least this was something that was not on anyone's radar until this weekend.  An interesting but expensive suggestion for sure.  Why stop at April's price cap?  Why not revert to the October 2021 price cap levels?  Where does the line get drawn?

macman

if you've recently switched to an (expensive) fix, you've not done it just because you thought it was still the cheapest option. You've done it because you wanted certainty of pricing for the next year, or whatever period you've locked into. Even if prices fall, you've still got that certainty. 
What you buy with a fix is essentially an insurance policy.

mark_cycling00

funny.money said:

mark_cycling00 said:

When you got your fix, you never considered how unfair it was on the 80% of the population who are unable to get a fix and will forever be stuck on variable rates?

How do you arrive at 80%?

A website called MoneySavingExpert. My memory wasn't perfect - it's 70%

"The energy price cap limits what firms can charge in England, Scotland and Wales for their default standard variable tariffs. It currently changes every six months, though that'll soon be every three. The vast majority of homes, over 70%, are now on it – pretty much everyone who isn't on a fix."

pochase

mark_cycling00 said:

When you got your fix, you never considered how unfair it was on the 80% of the population who are unable to get a fix and will forever be stuck on variable rates?

Where do you come up with 80% not been able to get on a fix. Almost every single supplier offered fixed rates, only exception I am aware of was Shell. On top of that we had in hindsight an excellent fixed tariff at Green Energy UK, open also to new customers.

So there were maybe 80% who decided not to go onto a fixed tariff, but a fixed tariff was available to 100% of credit customers. The situation might have been slightly different for prepaid, but even if they could get nothing, more than 80% had the possibility to go on a fixed tariff.

sienew

mark_cycling00 said:

When you got your fix, you never considered how unfair it was on the 80% of the population who are unable to get a fix and will forever be stuck on variable rates?

It's not that 80% are unable to get a fix, it's usually that they don't want a fix. In many cases it's just that they don't realise the price increases coming or have their head in the sand (because accepting a fix would accept they will have a fall in living standards come October).