Energy price cap freeze on a fixed tariff

CSH1

I fixed in June with BG and the terms were £75 per fuel for exit fees or you could move to another BG tariff without exit fees but I don't think this meant the capped SVR tariff only other fixed rates with exit fees or else you could just move to the capped SVR and not pay any exit fees as there aren't any on that tariff so you could just leave BG.  I think a lot of people took these BG fixes as I remember a lot of thread activity on here at the time.  I'm expecting to have to pay the £150 to go onto the capped SVR unless it is included in any government plans to get rid of exit charges.

George_Am

GEUK from the other hand has no exit fees, so it should be an easier move. I got a fix in early August which is lower than October cap (~25% per fuel), so I am not sure that I'll need to move anyway...

Let's wait and see...

jak22

The mysteries are
1 - whether the subsidy to energy suppliers to reduce (variable capped) bills will be made big enough to keep prices at April cap or whether that's too expensive and it has to be a smaller discount but still bigger than and replacing the £400 
and 2 - for how long its for - as fixed might still be worth it after 6 months
Making this sort of deal with suppliers help stop it being seen as the opposition's idea and replaces what the previous administration came up with.
The extra to also write off exit fees wouldn't be much more in comparison - hopefully that'll be in the small print somewhere.

Trynsave2

I understand why others have said that no-one put a gun to the head of those of us who entered fixed contracts, but the economy and the media did place a massive ticking time bomb into one hand and a pen in the other. Would we have contemplated paying higher fixed prices if all the advice wasn't that rates were only going in one direction fast? Did we attempt to assess the worsening situation and make mitigation plans whilst others either on hearing the same news either chose to ignore the messages or decided that it was the job of UK PLC to ride in on a white horse with saddle bags full of cash to distribute between them. 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.

[Deleted User]

If there wasn't the suggestion of a freeze, would you also be suggesting that there should be something done in the other direction?

I think it's likely that the £400 will stay for all and if there is any freeze it will come with a waiving of exit fees for fixed tariffs.  However, this will be due to expected public perception rather than any moral obligation.

People listened to warnings, predictions and advice and made a free choice to fix.  Choices should have consequences.

jak22

If the scheme is a loan then the whether its applied to reduce the unit rate or as a cash amount and by how much and its duration could be up to each energy company as they're going to have be able to pay it back eventually. That cash still has to be found by the govt initially so its not really very likely the govt will add £400 per person as well - and anyway it was a scheme of the previous administration.

A unit price subsidy wont apply to fixed contracts but - as long as someone with influence stands up and mentions it - maybe there could be a cash amount for fixed deals over the April cap given that the £400 had been promised and was a factor when people chose a fix. 

sienew

jak22 said:

If the scheme is a loan then the whether its applied to reduce the unit rate or as a cash amount and by how much and its duration could be up to each energy company as they're going to have be able to pay it back eventually. That cash still has to be found by the govt initially so its not really very likely the govt will add £400 per person as well - and anyway it was a scheme of the previous administration.

A unit price subsidy wont apply to fixed contracts but - as long as someone with influence stands up and mentions it - maybe there could be a cash amount for fixed deals over the April cap given that the £400 had been promised and was a factor when people chose a fix. 

I think people are under estimating how much energy companies might want people to come out of fixed contracts.

The cap is £1,971 now. The price will increase to £3,549 in October, an estimated £5,387 in January, £6,616 in April and £5,897 by July. 

Let's say someone has a fix at £3,0000 which is just below the October cap. The energy company (should) have hedged and bought that energy for below that figure. If you stay in contract, they will sell that energy to you and maybe a fairly small profit.

Now if they let you out of that fix... they can sell the energy to you for £1,971 but in reality are selling it at the new price cap as the govt are giving them the rest. Energy they have bought hedged at £3,000 they will be able to get well in excess of £5k between your payment and the govt loan and you would be happy about it because you are paying less than £2k.

TheGardener

What if they find a midpoint? Somewhere between October and 2023's best guesses - and the basis of most of the recent fixes available? That way those on a fix wouldn't be paying much more and those on the SVRs would end up on whatever those on the fix would pay. 
If we are to believe that a reduction in consumption is the only way to avoid power shortages in the winter (as in Macron's recent threats to the French consumers)  then does the government need to make sure prices are high enough to keep the public switching off their teenager's gaming PC's and checking their loft insulation? 

sienew

TheGardener said:

What if they find a midpoint? Somewhere between October and 2023's best guesses - and the basis of most of the recent fixes available? That way those on a fix wouldn't be paying much more and those on the SVRs would end up on whatever those on the fix would pay. 
If we are to believe that a reduction in consumption is the only way to avoid power shortages in the winter (as in Macron's recent threats to the French consumers)  then does the government need to make sure prices are high enough to keep the public switching off their teenager's gaming PC's and checking their loft insulation? 

Yes. I think the October price cap would do that even if the additional £400 went ahead. It'd still be slightly more so motivate people to cut usage while at the same time making it FAR more affordable than without the freeze. I could see that as being a compromise they go for.

Chrysalis

Martin's own opinion on if he thinks a fixed deal is good or not I seen on a recent itv clip was if its below 2x the current cap level.  (The pre October cap level).

I would agree with that.  Bear in mind we only have one month left now before the circa 1.8x cost increase.