Energy price cap freeze on a fixed tariff

deano2099

sienew said:

Deleted_User said:

Trynsave2 said:

Why should those who attempted to take responsible, positive action be penalised whilst those who sat on their laurels are rewarded? That is this country all over. I'm not saying that those on the SVR have doomed themselves by inaction and should be left to suffer, but I am saying that it shouldn't be tough luck, you caved and you lost, to all those of us who listened to the warnings and fixed.

1. Fixed vs variable decision has always been the same for the last couple of decades, both are a gamble in terms of whether they work out best in the long term. 

The issue I see is they have made the right choice, energy prices have continued to rise but now the goal posts have been moved. Government intervention on this level is unprecedented and it's actually a dangerous precedent for people to avoid a fix i future in the hopes that the govt with a magic money tree will somehow come bail them out.

I guess the fundamental question is if our government doing something is intrinsically different to Putin cutting off oil to Europe. Both are unprecedented actions of governments, both very difficult to foresee, but yes there's also the argument that one is internal and one is external and they're different. I genuinely can't make my mind up on it.

jak22

All the media talk is for bills frozen at the current April level. Assuming it's a done as discount from the cap - which will still be in place presumably - then yes it's possible energy companies could freeze at the October level - but if you were in charge would you want to have to spend every TV interview explaining why?

Those on fixed will be paying for this subsidy for years too - but without getting any benefit.

The £400 may be left in place - presumably for everyone and not just for those on fixed. 

Exit fees might be waived but like fixed unit rates it's part of a contract so there's no guarantee - especially if there's continued silence about fixed customers in the media coverage.

si_74

I have taken a look at what a potential cap freeze means to me personally. As someone who fixed in June at above the April rate, but much lower than the October rate that means I am on the 'wrong' side of a potential cap freeze. But as per my earlier posts I am not complaining about this, preferring to take the view that these are unprecedented times that need to be looked at from a wider perspective than my own self interest.

If the cap goes ahead in October then the fix I am on means that I will be paying over £1900 less than at the capped rate. (based on a full 12 months at that capped level, so potentially much more if the cap gets higher again in January and April 2023).

If the cap is frozen at April 2022 levels and i move to this then I am will be paying £800 less per year than my fixed rate. Assuming I have to pay the full exit fee then this drops to £500 less in year one. 

Sure, if the cap is frozen, I could have saved more by doing nothing but I have had 3 months of peace of mind knowing what my bills will be. If I had to make the same decision again with the same information in front of me I wouldn't do anything differently.

jak22

I suspect the October cap stays as that's an Ofgem thing - but might not rise in the future so much - if wholesale prices are capped.

So the scheme might be a discount from the cap - a min of zero - and max enough to bring bills down to the current April level

As mentioned on another thread it could be set £400 above April if they keep the £400 for everyone - so it still ends up at April prices - but just a little harder to explain on TV

That level would likely keep the most people happy - fixed or variable.

The_Green_Hornet

The mood music in the media now is that the £100 billion pound cost of the freeze won't be reclaimed through future energy bills but will just be added to the UK debt pile and paid for through general taxation.

superbigal

I suggest that the debt will be repaid.  Energy costs will come down in years 3-10 from now as the markets are changed and method of how you value electricity generation are made "real", and in effect  prices will be vastly below what the potential new (for now subsidised) Cap becomes.  
For simplicity I suspect us paying 10 years at a Cap of £2000 =  £20,000
Real Costs in year 1 £4,000, Year 2 £4,500,  Year 3 £3,000,   Year 4 £2000,  Year 5-10 £1000    Total £19,500
Job done
All my speculation of course.

PeteHl

It looks to me like we on the higher gambled fixed tariff will be supplementing the energy companies' profits in two ways. The govt will pay the energy companies the difference above the current price cap, which they keep even though we are already paying higher. If the govt merely loan the money, we will along with everyone else have to pay it back.

sienew

deano2099 said:

Trynsave2 said:

What has changed is possible third party interference. If the new PM wades in to the rescue where are the consequences for those who chose not to fix? The 'I can't reduce my usage or pay more or plan ahead' brigade who now demand the Govt splash the cash, our tax paying cash, they don't have? How many hours/years have I watched Martin on the TV telling people to switch energy companies to save money? Do they ever listen? Nope. Were they jolted into taking action over energy cap predictions? Nope. Have many just sat back, expecting to be rescued? Yep.

Genuine question: were any of these fixes available indefinitely? My experience was of anything good not lasting that long. Could the energy companies have realistically hedged enough to offer fixes to 90% of the population had they just "stopped being lazy and taken action." Or were we always going to end up with the same proportion of people on fixes vs SVT?

Deals were constantly changing but that's because the predictions were also increasing. There were quite a lot of deals that were at/around the expected predictions available pretty much all the time and a few weeks later they seemed like amazing deals because the prediction had risen again (at which point they are pulled and replaced with a more expensive deal and the process repeated itself).

jimexbox

Lead article on telegraph online...

Energy will be capped at around £2500, with the £400 rebate bringing down the bills to around £2100.

tpeppers

The guardian now reporting it will likely be frozen at £2500. The news is constantly changing. Let's not rush to conclusions before the official announcement is made.