When is a Fixed Deal NOT a Fixed Deal?

IanSE

My mother in law took out a 1 year fixed duel energy deal with EDF in March paying £135 per month. This week she was contacted by EDF to inform her that her monthly payments were not covering her usage and that she was already £142 in arrears. They advised that she could carry on paying at the agreed rate but that it was likely by the time the term ended in March 2023, she would be considerably in arrears and could have to then pay £500 per month to clear these arrears. Now I’ve either totally misunderstood the way fixed deals work - that is you pay an agreed sum and that’s ALL you pay for the duration of the contract and if these payments don’t cover your usage then tough, the company have to bore the extra cost incurred - or I’m completely wrong. If the latter, surely this defeats the whole point of a fixed deal if they can then turn around at the end of it and say “ sorry we need more money for the last 12 months” Am I being thick here….advise would be appreciated. Ian 

daveyjp

Its the standing charge and unit price which is fixed.

The monthly charge is estimated useage for gas and electricity multiplied by the sc and unit charge divided by 12.

Use more than the estimate, you pay more.

LindsayT

Yes, you are completely wrong. The fix is pence per kWh unit and pence per day standing charge.

MSE_James

What is fixed is the cost per unit for the duration of the fix. It's not an 'all you can eat' deal. 

TheMilkmansDad

You've totally misunderstood.

The fix is the tariff not the DD.

The monthly DD is a contribution to your bill, if you use more than estimated you pay more - use less, pay less.

pochase

There is no all you can eat deal for energy.

You pay more when you use more, and less when you use less. The only fixed part is the price for standing charge per and unit rates per KWh.

If she would not have the fixed rates, her cost per KWh would go up in October and January by a lot, probably doubling what it costs now.

That said to be in debt at the end of summer is a big problem, she must be using quite a bit of energy. Maybe she was not trying to save energy because she thought it is "free"?

Snwps

So many people I'm speaking to lately about utilities have this same idea and are shocked when I explain how this works. You're not on your own in thinking this but I worry how many people are only now coming to realise due to the increase in costs that its not, as you say, 'all you can eat'

I've been stressing about how I can reduce my usage to save money and they explain they're safe as they're on a fix. In principle if your annual usage is correct when calculating the DD at the start of the deal and you dont go over or under on this annual usage then yes you're DD will remain the same. But this is very rarely the case. Especially when taking out a new deal, if you use the 'General averages' of 2900kwh or electicity and 12000kwh of gas, then you realise much later on that you're a heavy user then your in for problems, then have to repay what you've underpaid plus pay any price increases once your deal ends. 

Chrysalis

This is what I warned about, so many people think these fixed deals are all you can eat fixed DD payments.

macman

And not helped by the price cap being presented as an actual maximum, rather than a maximum on average usage.

[Deleted User]

Hi,

the fixed deal is on price, not on usage, suggest to MiL to try cut down usage.

QrizB

IanSE said:

.Now I’ve either totally misunderstood the way fixed deals work - that is you pay an agreed sum and that’s ALL you pay for the duration of the contract and if these payments don’t cover your usage then tough, the company have to bore the extra cost incurred - or I’m completely wrong.

Hopefully you understand now!

Any other questions?