Energy price cap freeze on a fixed tariff

jak22

If you have no exit fees or a cooling off period there's nothing to worry about but if you took out a fix earlier this year paying above April cap and with exit fees and expecting to get the same £400 support from next month then to be ignored in all the media discussions about new schemes and to see 'tough luck' type posts here isn't great. Peace of mind is all well and good and one of the reasons to take out a fix but it wont compensate for losing the £400. 

[Deleted User]

brewerdave said:

dunstonh said:

You do not buy a fixed price tariff to get the best price.  You buy it to give you the certainty of amount.  Sometimes it will end up being the best option. Sometimes it will not.

But the difference here ,is that a price cap freeze by HMG overruling OFGEM at almost the last moment, would be effectively retrospective legislation. Wouldn't expect to get the difference back from date of fix til the point of "cap freeze" but would expect exit fees to be waived. . 

HMG and Ofgem are one and the same. Ofgem is a non-Ministerial Department that sits within BEIS.

si_74

jamtheman80 said:

si_74 said:

I fixed in June/July - £300 exit fee, over the current cap, but well below the October one.

I have had several months of peace of mind. It was a gamble taking it, I knew this at the time and was happy to take that gamble as it was the best decision for me at that time. I had full sight of the risk it may turn out to be a decision that would cost me.

Do I want everyone else to be paying excruciatingly high energy prices and not be able to afford to turn their gas on just so that i can be proved to have made the 'right' decision'?.....no I do not!

I have my doubts that freezing the cap will happen, it is an eye wateringly expensive option and gives support to those that really don't need it as well as those that do. However, if this is the route the government go then the detail will be interesting, is it a flat freeze of the cap or limited to numbers of kwn used? How long is the commitment for, will it cover the January and April cap announcements as well?

Once this is known I will open up my spreadsheet and do some working out. If it is better for me to pay the £300 to get out of the fix then it means not so many people are going to get into huge energy debt, or not so many people will be sitting in cold homes. This thought will be good enough for me rather than looking inwardly at my situation and complaining. A reality check of where we are and a view of the bigger picture is required by some I think.

The point is you shouldn't have had to gamble with an essential commodity this way, with this amount of money and nor should anyone else in less favourable financial circumstances than yourself. If the government is prepared to (gamble?) chuck tens if not hundreds of billions of pounds sticking tape over the infrastructure cracks it helped create then that help should extend to those who felt compelled to enter these ludicrous contracts out of desperation. 

Yes I understand that, and I possibly have more sympathy for that perspective for the more recent fixes that are very high in price. Some of the unit rates being thrown around on fixes recently have been unbelievable. 

But as for not gambling on a commodity then that's what anyone that has ever taken a fix has done. You take a fix because you think it is the best deal out there at that time. Sometimes it will be, sometimes it won't. Agreed that the stakes are much higher now than at normal times.

My point isn't that those that have taken a fix (including me) have made their bed so they should lie in it. It is that this situation has larger significance than everyone looking after their own interests.

These contracts can be labelled ludicrous easily with hindsight....IF the price cap is frozen. Until then they may turn out to be good decisions.

sienew

MWT said:

brewerdave said:

dunstonh said:

You do not buy a fixed price tariff to get the best price.  You buy it to give you the certainty of amount.  Sometimes it will end up being the best option. Sometimes it will not.

But the difference here ,is that a price cap freeze by HMG overruling OFGEM at almost the last moment, would be effectively retrospective legislation. Wouldn't expect to get the difference back from date of fix til the point of "cap freeze" but would expect exit fees to be waived. . 

Not sure how that changes anything though... would you expect the Government to also compensate the suppliers for the expensive hedging they entered into to cover the fixed tariff that you want to leave without penalty... ?

... that is why the exit fees are there...

Still not sure this is going to happen though, and the details are going to be complicated if it does happen...

Actually, in October the suppliers will still be buying the energy at the new October price cap so if people cancel hedged deals that are cheaper (but above the April cap) the energy companies hedging will actually get more money if you cancel. They'll be buying the hedged energy cheap and selling it at the October price cap*.

*we won't pay the October price cap directly though, the difference will be paid to the energy companies using government backed debt that will be repaid by consumers through their bills over he next 10-15 years.

jak22

Thankfully those who are happy making 'tough luck' type posts aren't in any position to influence what goes on. But Martin Lewis is, so he's our only hope of speaking up if the £400 help is removed and high exit fees arent written off. It's not a choice of help variable or help fixed - it can still be help everyone - businesses included.

sienew

jamtheman80 said:

MWT said:

brewerdave said:

dunstonh said:

You do not buy a fixed price tariff to get the best price.  You buy it to give you the certainty of amount.  Sometimes it will end up being the best option. Sometimes it will not.

But the difference here ,is that a price cap freeze by HMG overruling OFGEM at almost the last moment, would be effectively retrospective legislation. Wouldn't expect to get the difference back from date of fix til the point of "cap freeze" but would expect exit fees to be waived. . 

Not sure how that changes anything though... would you expect the Government to also compensate the suppliers for the expensive hedging they entered into to cover the fixed tariff that you want to leave without penalty... ?

... that is why the exit fees are there...

Still not sure this is going to happen though, and the details are going to be complicated if it does happen...

They will be effectively subsiding them anyway, so yes. Exit fees are justified under normal circumstances, not these ones. Illustrates why public ownership would be better short term solution, though this wont solve the underlaying issue of lack of supply to meet demand. 

Nationalising the suppliers does almost nothing to help people. Nationalising the producers is much more difficult and in many cases (due to them being outside the UK) quite impossible.

The_Green_Hornet

If you fixed your tariff below the October price cap then I believe you did the right thing considering the information known at the time. For me, staying on the SVT and hoping for further government action was the bigger gamble.

Now if the government subsequently changes the rules (and we certainly don't have any details yet as to whether they will or not) then each individual will have to reassess whether to stay on their fix or exit and go on to the SVT.

Either way we all should know shortly and hopefully all these speculation threads can then be closed.

strawb_shortcake

I chose not to fix as I felt the fixed costs were too much of a gamble for me, I wasn't happy to fix early and pay an extra £100 pm above the SVR when I could put that money aside in my account not EON's. 

I also thought with the media's narrative that people simply wouldn't be able to afford their energy costs then something was likely to give. The increases also didn't include the £400, and for me personally the £326 COL payment which will go where intended. 

All of my views and subsequent actions on this was a gamble and remains to be seen whether it pays off or not. 

I don't really see the posts so far as being "I'm alright Jack" We've all had the same information and speculation and chosen to respond differently.
 
Whether the government choose to intervene now or we face the increases next month we are all going to be paying one way or the other.

jamtheman80

si_74 said:

jamtheman80 said:

si_74 said:

I fixed in June/July - £300 exit fee, over the current cap, but well below the October one.

I have had several months of peace of mind. It was a gamble taking it, I knew this at the time and was happy to take that gamble as it was the best decision for me at that time. I had full sight of the risk it may turn out to be a decision that would cost me.

Do I want everyone else to be paying excruciatingly high energy prices and not be able to afford to turn their gas on just so that i can be proved to have made the 'right' decision'?.....no I do not!

I have my doubts that freezing the cap will happen, it is an eye wateringly expensive option and gives support to those that really don't need it as well as those that do. However, if this is the route the government go then the detail will be interesting, is it a flat freeze of the cap or limited to numbers of kwn used? How long is the commitment for, will it cover the January and April cap announcements as well?

Once this is known I will open up my spreadsheet and do some working out. If it is better for me to pay the £300 to get out of the fix then it means not so many people are going to get into huge energy debt, or not so many people will be sitting in cold homes. This thought will be good enough for me rather than looking inwardly at my situation and complaining. A reality check of where we are and a view of the bigger picture is required by some I think.

The point is you shouldn't have had to gamble with an essential commodity this way, with this amount of money and nor should anyone else in less favourable financial circumstances than yourself. If the government is prepared to (gamble?) chuck tens if not hundreds of billions of pounds sticking tape over the infrastructure cracks it helped create then that help should extend to those who felt compelled to enter these ludicrous contracts out of desperation. 

Yes I understand that, and I possibly have more sympathy for that perspective for the more recent fixes that are very high in price. Some of the unit rates being thrown around on fixes recently have been unbelievable. 

But as for not gambling on a commodity then that's what anyone that has ever taken a fix has done. You take a fix because you think it is the best deal out there at that time. Sometimes it will be, sometimes it won't. Agreed that the stakes are much higher now than at normal times.

My point isn't that those that have taken a fix (including me) have made their bed so they should lie in it. It is that this situation has larger significance than everyone looking after their own interests.

These contracts can be labelled ludicrous easily with hindsight....IF the price cap is frozen. Until then they may turn out to be good decisions.

Actually these contracts were easy to label ludicrous in foresight. Nobody should have even considered (as they were, in June, by Martin Lewis) these insane price hikes because even more insane price hikes were on the horizon. Many were compelled by to do out of desperation at the forecasted rises and *that* is the point missed by the callous, im alright, you knew what you were doing types well represented here. My mam cried for days at the fixed rate deal he little option to go for in May because like most of her generation she knew any further rises would rinse her of all the savings she had. 

casjen

The predictions  from companies so beloved by a  certain group of forums members...these were the reasons why people fixed. The media headliners designed to scaremonger were reasons why people fixed. If the government does a u turn on any help then nobody should be penalized and people on fixed deals should also get extra help. Fixing the price cap ( if it happens ) should be based on the oct rates and the current help continued. Then additional help as decided upon should kick in. Anybody who tried to make the most of the situation should not be penalised while the cluless/lazy and  spongers on the gov get extra help.  Of course there is a section of society who cant help them selves and they sholud be treated as such with care