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

username

I think part of the problem is we do not actively encourage people to look at the numbers.

I mentioned this on another thread but it seems to have got deleted, but it really frustrates me when they bang on about 'typical' usage, the costs etc - it can't be beyond OFGEM's capabilities to write a calculator for their website so people can calculate, and decide using hard numbers whether it is worth fixing to staying in an SVR?

The view seems to have always been presented that staying on the SVR is somehow a good thing, an objective person would say look at all the options on the table and make your decision from the data rathjer rather than purely do X.

littleteapot

Another part of the problem is that because energy has been relatively cheap for the majority of people for decades now, people are not used to having to think about it. The way the 'price cap' is presented since it's inception has also given the illusion that the government will protect people from high bills, again negating the need to actually think about energy consumption. As a result of this many people now have grown up without the need to understand, calculate, and manage their energy usage.

Going back to my grandparents - they were acutely aware of their consumption, with grandma saying things like "ooh it's been so cold this week I've had to have the (electric fire) on 2 bars rather than 1. I hope we'll have enough to pay the bill without digging into our savings". In those days (as recent as the mid 80's) my parents and grandparents had to toddle off to the Electricity Board Shop to pay the bill each month (or maybe quarter - I don't remember as I was very young at the time!).

As frustrating as it is, people now need to learn these basic skills again.

brewerdave

Just re-read the last 15 pages of this thread - it's a sad reflection on us as a species that in times of crisis that we have taken to tearing verbal lumps off each other because of our differing views on solutions to this almost intractable problem.
For my part ,I apologise for suggesting that those who hadn't fixed their prices, were lazy or had their heads stuck in the sand by sticking to the SVR.
If ever a thread needed closure by the mods. ,it's this one !!

EssexHebridean

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.

"Tell me you weren't swift enough to get a decent fix deal without telling me you weren't swift enough to get a decent fix deal..."  

Possibly one of the resentful, bitter and demonstrably hard-of-understanding posts I've ever seen on here...

The_Green_Hornet

A new proposal to add to this pointless discussion:

Green party calls for nationalisation of big five energy firms

Greens also want energy price cap rolled back to last autumn’s level, part-funded by taxes on rich people

https://www.theguardian.com/politics/2022/aug/17/green-party-calls-for-nationalisation-of-big-five-energy-firms

sienew

agentcain said:

sienew said:

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.

[Text removed by Forum Team]

Or you were spreading false/misinformation both on how fixes work and how calculating the cap works. Both of your statements were totally false.

savers_united said:

sienew said:

savers_united said:

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.

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. 

I think you are significantly over-estimating how good the fixes that most people are on actually are. Reading lots of energy posts here I'd say most of the fixes are at or at least close to the expected October price cap. Mine for example is roughly at the expected October price cap and was slightly above the expected price cap when I was offered it but hopefully will be cheaper than the variable come January. Those that have the "cheaper deals" (mostly those who got a fix in April) have often been paying more than the price cap for 6 months in the hopes that they'll save in October when the price rises again. So in reality almost nobody is laughing to the bank on a fixed deal like you seem to think.

I don't think you can take a forum like this to represent the 6mil, when the media and Martin was pushing the SVT most people did not fix when offered, its not uncommon for people to be taking 2-3 year fixes, those only a year ago would have been alot lower than the April 22 cap, so still quids in even with the proposed freeze.

Someone who did fix the last few months will have paid more initially but still in a good position having secured a fix likely to be below October increase and certainly below January increase, also the past few months would have seen minimal gas use.

So they sort of have a foot in both camps, if the freeze is implemented they can choose to opt for the SVT and pay less than they would have on their Fix, if its not implemented then they still have their fix that I'd likely going to work out cheaper, so this whole debate is a bit of a non starter as it just feels that those who fixed somehow just don't want to lose anything either way. The fact they have the option to stay on a fix should the freeze not go ahead is the price they pay for that security I guess. 

I don't have any exact figures but I'd say those on 2-3 year fixes are a very small number. 2-3 year fixes have always been much more uncommon and more expensive than 1 year, there certainly hasn't been any good open market 2-3 year fixes available in the last 11 months and those available before were always well above current market rates and recently have been well above the next predicted price cap. If I was to guess I'd say 95%+ are on variable tariffs or 1 year fixes. (most of which seem to be ending in September reading these boards which is when the last good deal was offered).

Although I'm done debating this as honestly I think there is close to 0% chance this policy is implemented.

pochase

littleteapot said:

savers_united said:

Someone who did fix the last few months will have paid more initially but still in a good position having secured a fix likely to be below October increase and certainly below January increase, also the past few months would have seen minimal gas use.

So they sort of have a foot in both camps, if the freeze is implemented they can choose to opt for the SVT and pay less than they would have on their Fix, if its not implemented then they still have their fix that I'd likely going to work out cheaper, so this whole debate is a bit of a non starter as it just feels that those who fixed somehow just don't want to lose anything either way. The fact they have the option to stay on a fix should the freeze not go ahead is the price they pay for that security I guess. 

Agreed, I don't see the any reason for people who took a fix a few months ago to be kicking up a fuss. It's just standard small-minded attitude which seems to be prevalent these days. "Someone else created a problem which caused me to make a decision based on probability rather than facts, which has cost me a little more than I wanted to pay, then someone else moved the goalposts - therefore someone else should pay me for the loss that resulted from my choice.".

As much as I dislike it, it seems that most aspects of life these days seem to boil down to taking a chance on one of two or more undesirable options, rather than there being one obvious sensible choice.

In our case we have two very young children and are on a middling single income (no benefits), therefore I value budgeting certainty above all else. So against popular thinking at the time, I chose to take a 2 year fix at about 20% above the April 2022 SVR, despite the £150 exit fee.

As far as I am concerned, this was a choice of two undesirable options, and I made the decision that I did on the desire for certainty for the next two years. I was aware the cap could go either way in October, so was prepared to pay a little more in the short term to protect us from the worst-case scenario (which as it turns out has become reality) as that worst case would have broken our budget even with all the cutbacks we have since made.

If the rules are changed again, it's no big deal as far as I'm concerned - we've paid a little more over the summer when we don't consume much anyway, and worst case I have to pay a £150 exit fee to revert to the SVR. That's not big money to 'insure' against an increase in annual costs of £2000+, and I certainly wouldn't expect anyone to compensate me for that decision if the rules change. 

Remember - nobody *recommended* that we make a particular choice, not even MSE. They just presented the facts, best and worst case scenarios, so that we could be informed enough to make our own decisions wisely based on those facts as they stood at the time, and our personal priorities.

I agree that the system is totally broken and the situation we are in is ludicrous - but expecting others to compensate us for our personal decisions if they turn out to be sub-optimal as time goes by is entirely selfish and a symptom of how arrogant and entitled our society has become.

Same situation as you are in, I fixed 15% over April SVT, but paid a full month new rate already for March.

Even paying more for 6 months (and I still don't think it will come to this) we will come out as winners when we pay only half the predicted electricity rate. So even if the exit fees are dropped I would not go onto SVT. We should make up what we are losing in the six months in less than two months.

What I have learned out of this thread is that there are some people who seem to have fun seeing people who were looking at the problem and did a responsible thing, might be punished for doing so. Not you or I, but people who took fixed tariffs 50 or 60% over SVT and had to start paying the high cost immediately.

littleteapot

I guess I'm one of the odd ones - I've had 3 successive 2 year fixes from EDF in a row.

Each one has has proven to be cost effective over it's term (this one remains to be seen, but like @sienew I doubt there will be any significant government intervention).

As said, once a debate turns to personal insults the debate is over.

Effician

It's just occurred to me or am i overthinking .

The Starmer plan of almost £30bn is supposed to save the average user £1000 over the  6 months from Oct to April, i presume this is an average of the £1600ish & £2200ish projected  increases in Oct & Jan based on a yearly average use, BUT doesn't the average user consume around 70-75% of their energy over these 6 months.

Does this mean he's missed a trick to say he's saving us more or is he hiding the fact that the funding costs will be considerably higher.

Section62

The_Green_Hornet said:

A new proposal to add to this pointless discussion:

Green party calls for nationalisation of big five energy firms

Greens also want energy price cap rolled back to last autumn’s level, part-funded by taxes on rich people

https://www.theguardian.com/politics/2022/aug/17/green-party-calls-for-nationalisation-of-big-five-energy-firms

The Greens want to save the planet.

I wonder how they square that on the one hand, with subsidising people to use as much energy as they want on the other?  Unless the mention of differential tariffs is more punitive that it first appears.

Also, if they are so concened about cost of living, why they haven't been campaigning for a cap (and taxpayer subsidy) on the cost of road fuels?

Politicians need to make the public understand that increased prices is part of reducing the amount of energy we use.  The two things go together and cannot be separated.