Energy price cap freeze on a fixed tariff

maisie_cat

We signed up to a BG fix in May, to get some certainty really, although we would have preferred to not be worse off than if we'd have stayed with SVR.
Our energy bills are 17% according to a fuel poverty calculator and we are using our savings to get by every month.
Saving and not having a holiday for 14 years has not paid off, but we prefer to have some emergency money, and let's face it, the current situation is what that's for.
In hindsight we'd have been better spending it all but it is what it is, hindsight being the wonder that it is.

GingerTim

Martin's view at https://blog.moneysavingexpert.com/2022/09/martin-lewis--energy-price-freeze-rumours---what-it-means-for-yo/?_ga=2.95939288.538801011.1647962982-1764912342.1647962982&_gl=1*33r1sc*_ga*MTc2NDkxMjM0Mi4xNjQ3OTYyOTgy*_ga_X74CWQS9F0*MTY2MjQ4MzMzNC40OS4xLjE2NjI0OTE0MTYuNTUuMC4w

What happens to those who have fixed tariffs? Up to 15% of households are on fixed tariffs, many have locked in at higher prices, as they are risk averse and wanted to protect their bills. So what happens? Will they automatically be put on the price freeze?

If they are not automatically moved, will they be allowed to switch to the price freeze? If so and their tariff has early exit penalties (some of which can be £300+), will they still be charged? (Hopefully not, especially as it’d likely be an internal tariff change and exit penalties are often wiped for those).

This will need sorting out as a priority so those who've tried to protect themselves don't miss out. I would of course be lobbying for that and hope there's a chance some policymakers may just be reading this now to ensure it is addressed.

If you fixed within the last 14 days, do check when the cooling off period ends, as on Thursday when we hopefully know what’s actually happening you may want to cancel.

PS: The political risk of policy shift has always been there (it's one I included in my Should I fix guide) though this is perhaps a more radical turn than many expected. The 'should I fix' call has never been easy. That's one reason when explaining the level it's worth considering at, I've always described as 'crystal ball gazing' with no way to know if it's the right call.

Some who have made the call to fix recently may feel frustrated by this. Yet ultimately remember, you made the call based on the information available at the time, that's all you can do, it was a good decision for you based on what you knew, even if the outcome doesn't turn out to be the best.

Ultrasonic

Where for me the 'people who fixed took a chance and should be prepared to live with the consequences' argument breaks down is this. The point of a government intervention on energy bills is to help everyone with the high prices. There is no political or moral logic to only trying to help those who hadn't transferred to a fixed tariff.

northernstar007

why cant the gov buy x yrs of electric and gas direct instead of going through the wholesaler

[Deleted User]

northernstar007 said:

why cant the gov buy x yrs of electric and gas direct instead of going through the wholesaler

They can, but they can't buy it any cheaper than the existing suppliers can.  All they are doing is either spreading the cost out over many years, or funding it from general taxation / borrowing rather than customers paying for it.

northernstar007

tell u what most of our gas is from norway, they must be laffing all the way to the bank

[Deleted User]

Ultrasonic said:

The point of a government intervention on energy bills is to help everyone with the high prices. There is no political or moral logic to only trying to help those who hadn't transferred to a fixed tariff.

I'm with you on that, which is why I'd be more in favour of additional help by targeted (or widespread if you wish) cash help regardless of someone's tariff.  Triple the winter fuel allowance, or remove VAT from fuel, or introduce the "Liz's magic energy fund payment", or however you want.

Deciding that fixes aren't fixed, or that contract clauses no longer exist, pretty much means that the terms of a fix or contract could never be trusted again.  Why would you ever fix if it could suddenly be changed, or sign a contract if it could just be ignored?

QrizB

Deleted_User said:

Ultrasonic said:

The point of a government intervention on energy bills is to help everyone with the high prices. There is no political or moral logic to only trying to help those who hadn't transferred to a fixed tariff.

I'm with you on that, which is why I'd be more in favour of additional help by targeted (or widespread if you wish) cash help regardless of someone's tariff.  Triple the winter fuel allowance, or remove VAT from fuel, or introduce the "Liz's magic energy fund payment", or however you want.

I gave this a bit of thought earlier in the year, and I agree blanket handouts don't seem to make much sense.

Between pension credit, child benefit, and all the various means-tested working-age benefits the government has a direct money pipe to the hardest-up section of the population. It wouldn't be difficult to enhance these (in a similar way to the UC increase during the earlier stages of the pandemic), and to raise the qualifying thresholds proportionately.

The challenge then becomes the encouraging people who don't currently qualify for these benefits (but will do at the increased threasholds) to apply for them, and getting the DWP bureaucracy to bring them into payment promptly.

[Deleted User]

Martin also makes this point, using himself as the example who doesn't really need the same amount of help with energy bills as other might, but who would benefit just as much from a proposed freeze.

spot1034

GingerTim said:

Martin's view at https://blog.moneysavingexpert.com/2022/09/martin-lewis--energy-price-freeze-rumours---what-it-means-for-yo/?_ga=2.95939288.538801011.1647962982-1764912342.1647962982&_gl=1*33r1sc*_ga*MTc2NDkxMjM0Mi4xNjQ3OTYyOTgy*_ga_X74CWQS9F0*MTY2MjQ4MzMzNC40OS4xLjE2NjI0OTE0MTYuNTUuMC4w

What happens to those who have fixed tariffs? Up to 15% of households are on fixed tariffs, many have locked in at higher prices, as they are risk averse and wanted to protect their bills. So what happens? Will they automatically be put on the price freeze?

If they are not automatically moved, will they be allowed to switch to the price freeze? If so and their tariff has early exit penalties (some of which can be £300+), will they still be charged? (Hopefully not, especially as it’d likely be an internal tariff change and exit penalties are often wiped for those).

This will need sorting out as a priority so those who've tried to protect themselves don't miss out. I would of course be lobbying for that and hope there's a chance some policymakers may just be reading this now to ensure it is addressed.

If you fixed within the last 14 days, do check when the cooling off period ends, as on Thursday when we hopefully know what’s actually happening you may want to cancel.

PS: The political risk of policy shift has always been there (it's one I included in my Should I fix guide) though this is perhaps a more radical turn than many expected. The 'should I fix' call has never been easy. That's one reason when explaining the level it's worth considering at, I've always described as 'crystal ball gazing' with no way to know if it's the right call.

Some who have made the call to fix recently may feel frustrated by this. Yet ultimately remember, you made the call based on the information available at the time, that's all you can do, it was a good decision for you based on what you knew, even if the outcome doesn't turn out to be the best.

The problem Martin doesn't quite address is that there are still nearly four weeks to go and even if it becomes clear on Thursday that those who are on fixes will be transferred to the new capped rate, it will mean continuing to overpay for the rest of this month. I won't want to do that and I suspect most others won't either, which means that huge numbers of people on fixes - well at least the ones that don't have exit fees, so E.On Next, British Gas, maybe some others - will all be calling their suppliers on Thursday afternoon and over the next couple of days wanting to get on to the SVT immediately. I hope they've got plenty of staff on!