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

agentcain

I sure do hope something like this happens, so that those deemed more "clever" than others, rushing in to lock the "cheap rates" at the expense of those in SVR, get the short end of the stick. Maybe then, they will realize that when it comes to utilities, we should operate to the benefit of all, not just the personal gains. Then, perhaps we will start solving our issues too.

Fair? Eh, its a gamble. No one said that fixing is guaranteed to be better. There's no fairness in gambling, especially over energy.

MattMattMattUK

agentcain said:

I sure do hope something like this happens, so that those deemed more "clever" than others, rushing in to lock the "cheap rates" at the expense of those in SVR, get the short end of the stick. Maybe then, they will realize that when it comes to utilities, we should operate to the benefit of all, not just the personal gains. Then, perhaps we will start solving our issues too.

Fair? Eh, its a gamble. No one said that fixing is guaranteed to be better. There's no fairness in gambling, especially over energy.

Fixes are/were not at the expense of those on SVRs, if you think that then you don't understand the how the system works. 

sienew

agentcain said:

I sure do hope something like this happens, so that those deemed more "clever" than others, rushing in to lock the "cheap rates" at the expense of those in SVR, get the short end of the stick. Maybe then, they will realize that when it comes to utilities, we should operate to the benefit of all, not just the personal gains. Then, perhaps we will start solving our issues too.

Fair? Eh, its a gamble. No one said that fixing is guaranteed to be better. There's no fairness in gambling, especially over energy.

People getting "deals" has zero effect on those who are on a standard variable tariff. They are not doing so at the expense of others. Ofgem's calculation for the price cap doesn't account for, take into consideration and isn't affected by fixed tariffs at all.

agentcain

MattMattMattUK said:

agentcain said:

I sure do hope something like this happens, so that those deemed more "clever" than others, rushing in to lock the "cheap rates" at the expense of those in SVR, get the short end of the stick. Maybe then, they will realize that when it comes to utilities, we should operate to the benefit of all, not just the personal gains. Then, perhaps we will start solving our issues too.

Fair? Eh, its a gamble. No one said that fixing is guaranteed to be better. There's no fairness in gambling, especially over energy.

Fixes are/were not at the expense of those on SVRs, if you think that then you don't understand the how the system works. 

Suppliers were forced to honour fixed deals as much as they were forced to honour the capped rate. The difference is that the capped rate can and did change (now, even more often) as opposed to those fixes, which couldn't until the contract is over. Should the suppliers actually be somewhat capable in their bookkeeping, they could wait out the storm until the inevitable cap raise. 

If the situation becomes even worse and more people fix below the cap, guess what the suppliers will say to the regulator; raise the cap, or we go bust. 

sienew

agentcain said:

MattMattMattUK said:

agentcain said:

I sure do hope something like this happens, so that those deemed more "clever" than others, rushing in to lock the "cheap rates" at the expense of those in SVR, get the short end of the stick. Maybe then, they will realize that when it comes to utilities, we should operate to the benefit of all, not just the personal gains. Then, perhaps we will start solving our issues too.

Fair? Eh, its a gamble. No one said that fixing is guaranteed to be better. There's no fairness in gambling, especially over energy.

Fixes are/were not at the expense of those on SVRs, if you think that then you don't understand the how the system works. 

Suppliers were forced to honour fixed deals as much as they were forced to honour the capped rate. The difference is that the capped rate can and did change (now, even more often) as opposed to those fixes, which couldn't until the contract is over. Should the suppliers actually be somewhat capable in their bookkeeping, they could wait out the storm until the inevitable cap raise. 

If the situation becomes even worse and more people fix below the cap, guess what the suppliers will say to the regulator; raise the cap, or we go bust. 

That is not at all how calculating the cap works.

Nor is it how fixed deals work. Usually energy companies are pre-buying/hedging energy that they have sold as a price fix so ironically if they have good risk management in place the fixes could actually still be some of the most profitable customers for them. 

Please do some basic research on how the energy market works before commenting.

MattMattMattUK

agentcain said:

MattMattMattUK said:

agentcain said:

I sure do hope something like this happens, so that those deemed more "clever" than others, rushing in to lock the "cheap rates" at the expense of those in SVR, get the short end of the stick. Maybe then, they will realize that when it comes to utilities, we should operate to the benefit of all, not just the personal gains. Then, perhaps we will start solving our issues too.

Fair? Eh, its a gamble. No one said that fixing is guaranteed to be better. There's no fairness in gambling, especially over energy.

Fixes are/were not at the expense of those on SVRs, if you think that then you don't understand the how the system works. 

Suppliers were forced to honour fixed deals as much as they were forced to honour the capped rate. The difference is that the capped rate can and did change (now, even more often) as opposed to those fixes, which couldn't until the contract is over. Should the suppliers actually be somewhat capable in their bookkeeping, they could wait out the storm until the inevitable cap raise. 

If the situation becomes even worse and more people fix below the cap, guess what the suppliers will say to the regulator; raise the cap, or we go bust. 

Almost all of the supply for fixes is hedged, the energy companies buy futures based on the number of contracts and predicted usage of those contracts.

The vast majority of SVR energy is not hedged, suppliers were forced to buy energy on the markets at a higher rate than they could sell if for because of the cap on the SVR.

jrawle

agentcain said:

I sure do hope something like this happens, so that those deemed more "clever" than others, rushing in to lock the "cheap rates" at the expense of those in SVR, get the short end of the stick. Maybe then, they will realize that when it comes to utilities, we should operate to the benefit of all, not just the personal gains. Then, perhaps we will start solving our issues too.

Fair? Eh, its a gamble. No one said that fixing is guaranteed to be better. There's no fairness in gambling, especially over energy.

Staying on the SVR was equally a gamble, at least among those you call "clever", i.e. those who make an effort to look after their financial affairs, rather than expect others to provide handouts.

If you want a gambling analogy, imagine putting £100 on a horse, losing, but then the bookmaker saying you need to pay an additional £100 because he's changed the rules in the meantime. Oh, and there was no way to avoid betting on the race in the first place (unless you happened to be "off grid").

wittynamegoeshere

There's a real chance that those with fixed tariffs may not end up paying MORE than those on the capped rate.  E.g. if the capped rate involves an uncapped supplier and/or there are exit penalties to pay.

I'm not looking to do better than everyone else, but a government "help" policy ending up directly costing people money would be pretty unusual.

Nobody took out a capped rate just for fun or for a bit of a silly gamble.  It was a calculated risk against the predicted rise, which was supposedly set in stone according to a formula.  We were choosing a less terrible alternative when faced with a horrendous projected rise.

If the wholesale rate had dropped then I would have no grounds for complaint.  If the entire rulebook is to be torn up and thrown away then that's different.

Chrysalis

savers_united said:

This tiered approach is Interesting, but would you trust them to get it right. 
Essential use at a lower rate who would determine that? larger properties in colder parts of the country I.e Scotland would need alot more essential units than a flat in the south or even a similar sized property. 
You only get buy in if people believe its fair, as more switch to EVs is it fair they would be hit with higher charges, then you need to consider time of use, surely someone using majority of their electric overnight should not be treated the same as those using it at peak time when demand is already high.

Lots to think about, but with smart meters I think we would need more than a simple tier system so that people who use energy for the right reasons and at the right times don't feel unfairly treated. 

This would only apply to SVR remember, all other tariffs I assume would be unchanged including Octopus Go which is extremely favourable to EV owners.

savers_united

wittynamegoeshere said:

There's a real chance that those with fixed tariffs may not end up paying MORE than those on the capped rate.  E.g. if the capped rate involves an uncapped supplier and/or there are exit penalties to pay.

I'm not looking to do better than everyone else, but a government "help" policy ending up directly costing people money would be pretty unusual.

Nobody took out a capped rate just for fun or for a bit of a silly gamble.  It was a calculated risk against the predicted rise, which was supposedly set in stone according to a formula.  We were choosing a less terrible alternative when faced with a horrendous projected rise.

If the wholesale rate had dropped then I would have no grounds for complaint.  If the entire rulebook is to be torn up and thrown away then that's different.

If they do freeze the cap or offer something very similar but put a Tory stamp on it, what would it mean for you. Worst case I guess a few months of paying a higher rate whilst on the fix compared to the April SVT rate and if applicable exit fees if you wanted to switch to a SVT. 

There are approx 6 mil households on a tariff other than the SVT, that leaves 22mil on the SVT. From the 6mil there is likely a high percentage who would not want to switch to the SVT as their fix is a 12mth or more in and below even a freeze to the cap, others on longer term fixes may be happy to ride it out for those 6 months of the freeze to gain over the longer term. 

Then you have those with no exit fees. 

So we are looking at quite small numbers in the grand scheme who will want to switch and have to pay a fee, and even then fees for some may be only £40-£60.

So the impact is quite minimal overall.