Energy price cap freeze on a fixed tariff

Mstty

YellowStarling said:

The added complication is those that don't benefit directly from any discount will still be contributing to its funding over the next X years.

A bit like every other government payout that not everyone gets. It's just into the big pot we all pay back.

Society is better for those benefits and this benefit regardless.

For the record we won't get any discount until month 19 of the scheme when our current fix ends. 

Petriix

YellowStarling said:

The added complication is those that don't benefit directly from any discount will still be contributing to its funding over the next X years.

Exactly. It's so poorly targeted that rich people with bigger houses and more profligate energy consumption will benefit far more than the poor people who will be trying their best to minimise usage. And it shifts the burden onto the tax payer.

Ironically a Universal Basic Income would likely cost a similar amount. But, with a commensurate adaptation of the tax system, would have the opposite effect. 

What we really need is to fix the broken energy market by decoupling the price of electricity from the price of gas. All UK gas should be capped on the wholesale market and exports limited. 

Ultimately we need a rapid transition away from gas altogether. 

Spies

deano2099 said:

Spies said:

Still rubbish that people who had the foresight to take a fixed rate early on are out of pocket now. 

It wasn't really foresight, they got it wrong. It's like gambling on the odds-on favourite and then complaining you're out of pocket when one of the longshots wins.
I'm also surprised that people are so quick to potentially make the same mistake again. It's been stated that this cap is for two years, but there's no guarantee there, a changing political climate could easily see it scrapped. It's just as guaranteed as "no more handouts" or whatever Truss said in the leadership race that gave people the confidence to fix in the first place.
If you're on a fix with more than a few months left at close to the cap, I'd argue that staying on it may well be wise. A contract is worth much more than a government promise.

Not even close to being the same, nobody could have called the government intervention, its more like adding a new horse into the race at the last minute and making it odds on favourite.

Either way I'm not that bothered as my usage has been subsidised by my solar, I haven't even paid for electric since March.

deano2099

Spies said:

deano2099 said:

Spies said:

Still rubbish that people who had the foresight to take a fixed rate early on are out of pocket now. 

It wasn't really foresight, they got it wrong. It's like gambling on the odds-on favourite and then complaining you're out of pocket when one of the longshots wins.
I'm also surprised that people are so quick to potentially make the same mistake again. It's been stated that this cap is for two years, but there's no guarantee there, a changing political climate could easily see it scrapped. It's just as guaranteed as "no more handouts" or whatever Truss said in the leadership race that gave people the confidence to fix in the first place.
If you're on a fix with more than a few months left at close to the cap, I'd argue that staying on it may well be wise. A contract is worth much more than a government promise.

Not even close to being the same, nobody could have called the government intervention, its more like adding a new horse into the race at the last minute and making it odds on favourite.

Either way I'm not that bothered as my usage has been subsidised by my solar, I haven't even paid for electric since March.

Go back on this board a few months and people were literally calling it. I didn't predict it or think it would happen either, but I very much challenge the notion that no-one saw it coming as there were people predicting it right here.

deano2099

Ultrasonic said:

deano2099 said:

It wasn't really foresight, they got it wrong. 

I disagree with that. I decided to fix on 27 February just after Russia invading Ukraine, correctly predicting that energy prices would go up dramatically. What you could argue I didn't predict was things getting so bad that the government felt obliged to intervene. I'm not looking for any sort of prize here but I don't think the quoted comment is a universally fair characterisation.

Fair enough - you predicted part of it right but not the next bit, sure. Your horse was leading the whole way then had a freak accident and fell at the final jump. It was ahead all along, it was clearly the fastest horse, you were "right" to back it, in a way. But it didn't win.
It's a ridiculous situation in the first place that we're all essentially compelled to make our own bets on energy prices (choosing a fix is no more an active decision than not choosing a fix for someone engaged with the system). There's no way to opt out of the gamble altogether. And that's what it is, it's a gamble. As a more engaged customer, you can use your knowledge advantage to tip the needle a bit and most times you'll come out ahead. But occasionally something weird will happen and you won't. That's not "unfair" it's just the result of a system that forces us to place bets and creates winners and losers.
The good news is that as someone engaged with the market, you've likely already saved more money than the vast majority of people by making good decisions in the years leading up to this, and you'll continue to do so in the years following it. You'll get the best deal 9 times out of 10. And occasionally you won't. Better than person than one getting it right 1 time in 10. No-one will get it right every time.

spot1034

deano2099 said:

Spies said:

Still rubbish that people who had the foresight to take a fixed rate early on are out of pocket now. 

It wasn't really foresight, they got it wrong. It's like gambling on the odds-on favourite and then complaining you're out of pocket when one of the longshots wins.
I'm also surprised that people are so quick to potentially make the same mistake again. It's been stated that this cap is for two years, but there's no guarantee there, a changing political climate could easily see it scrapped. It's just as guaranteed as "no more handouts" or whatever Truss said in the leadership race that gave people the confidence to fix in the first place.
If you're on a fix with more than a few months left at close to the cap, I'd argue that staying on it may well be wise. A contract is worth much more than a government promise.

I'd say the analogy is closer to picking any horse in a race using whatever your preferred method of selection is from studying the form to making your selection blindfolded, going to the trouble of putting on your bet, taking all the risks of what might happen in any race, and then finding out that someone else who had no interest in it at all has been told the result and been allowed to put a bet on retrospectively.

Ultrasonic

Petriix said:

And it shifts the burden onto the tax payer.

This may be a naive hope but it's possible this won't be the case. I would like to see the cost ultimately recouped at least in part by higher unit prices in the future (or second choice VAT on energy) such that higher users who will benefit more over the next couple of years will in turn pay back more in the long run.

sienew

MuckChucker said:

sienew said:

MWT said:

Spies said:

Still rubbish that people who had the foresight to take a fixed rate early on are out of pocket now. 

They were always going to be 'out of pocket' for the period up to October if they took a fix above the current cap, and if their fix is above the new cap they are going to see a reduction down to that cap so they still gain.

Nothing there to be unhappy about unless you really wanted the prices to be higher...

It was always a gamble and I'm happy to have fixed in the spring so I had peace of mind all summer that nothing bad was heading my way in October, paying a few pounds extra for that was well worth it...

The issue I see with this is that I think it will strongly discourage people fixing in future and encourages an attitude that people don't need personal responsibility/action because the government will save them (as they have).

Hang on, this is a complete anomaly of a situation. The government have to step in here. The alternative is deaths, business closures, unemployment, crime increases....

Normal time personal responsibility does not factor here. All current fixes will end at some point and who knows what kind of market faces those customers then.

I'm not saying that it's not an unusual situation. I just can't see many people choosing to fix again in the next 5 years because the entire point of a fix (protection against large price increases) is now pretty much null and void because if there are large increases the govt steps in anyway. Many who chose a fix are now worse off so we are now in a situation where it's better to ride the waves and demand the govt help when it gets too bumpy.

deano2099

spot1034 said:

deano2099 said:

Spies said:

Still rubbish that people who had the foresight to take a fixed rate early on are out of pocket now. 

It wasn't really foresight, they got it wrong. It's like gambling on the odds-on favourite and then complaining you're out of pocket when one of the longshots wins.
I'm also surprised that people are so quick to potentially make the same mistake again. It's been stated that this cap is for two years, but there's no guarantee there, a changing political climate could easily see it scrapped. It's just as guaranteed as "no more handouts" or whatever Truss said in the leadership race that gave people the confidence to fix in the first place.
If you're on a fix with more than a few months left at close to the cap, I'd argue that staying on it may well be wise. A contract is worth much more than a government promise.

I'd say the analogy is closer to picking any horse in a race using whatever your preferred method of selection is from studying the form to making your selection blindfolded, going to the trouble of putting on your bet, taking all the risks of what might happen in any race, and then finding out that someone else who had no interest in it at all has been told the result and been allowed to put a bet on retrospectively.

That's because you're seeing fixing as a bet and not fixing as "not betting". That's not the case. There's no opt out mode, indeed many folks are on fixes now because they always accept whatever fix they get offered when their old one expires. 
You always have to make a bet one way or the other if you want energy. No-one gets to bet retrospectively. Opting for the SVT is as much placing a bet as opting for a fix is. Yes, it's also the default if someone does nothing but those people are still in the game. The only people choosing not to bet are those going off-grid.

Chrysalis

sienew said:

I'm not saying that it's not an unusual situation. I just can't see many people choosing to fix again in the next 5 years because the entire point of a fix (protection against large price increases) is now pretty much null and void because if there are large increases the govt steps in anyway. Many who chose a fix are now worse off so we are now in a situation where it's better to ride the waves and demand the govt help when it gets too bumpy.

It was predictable there would be government intervention in my eyes, the situation was simply unsustainable, and its what I said on here months ago.  No EPG would mean absolutely disastrous consequence's a population getting used to not been compliant on bills and debt, record levels of poverty, large hit to economy as spending power plummets.

The unknown part was the size of the intervention and when it would happen.  Ironically this intervention was bigger then I expected, Liz Truss didnt hint at anything at all before the 5th Sept but when I fixed it was at the back of my mind there would be a potential blocker on the Ofgem cap.

The thing is though,  there is no guarantees in life other than death, I have met a lot of incredibly risk averse people. Taking a fix was a punt.  It also took price increases of nearly 300% for the government to intervene directly and they still only took it down to around 220% of normal levels.  So its not necessarily the death nail of the old market returning, what decides that is if prices fall to sane levels again, because make no mistake the EPG level is still unaffordable for many, its nowhere near as low as things need to get, but its at least averted a complete catastrophe.

Are people really suggesting they rather have a cap of £3549 and be able to fix above £2500 instead of a cap ar £2500?  As that makes no sense to me.