Energy price cap dropping in July 2023 8 March at 10:34AM in Energy 9 replies 598 views

l.c.elliott

With the energy price cap dropping in July and therefore people on the variable rate will pay less, what happens to those on a fix, if their fix actually turns out more expensive than those on variable? We fixed on a 2 Yr fix in April 2022 and pay £201 a month

Mstty

What are your fix rate SC and kWh prices that's the important bit to work out first. Then how much you might or might not save July 2023-2024 versus exit charges.

Bearing in mind these are predictions not fact at this point.

Mstty

Are your fixed rates lower or higher than these rough predictions?

Bear in mind I already thing these are incorrect as the standing changes are 53p for electricity per day and 29p for gas each day on average from 1st April 2023.

pochase

If the cap is lower than your fix you have two choices, pay the higher unit rates, or exit the fixed tariff. You might need to pay an exit fee to do the later.

That is the same as it has always worked, a fixed tariff is a commitment from both sides.

Scot_39

pochase said:

If the cap is lower than your fix you have two choices, pay the higher unit rates, or exit the fixed tariff. You might need to pay an exit fee to do the later.

That is the same as it has always worked, a fixed tariff is a commitment from both sides.

Exactly.

Why enter a fix if you don't understand the risks and rewards.

Yes Ukraine has made the potential swings larger - but the rules remain.

It's almost like some people (and some businesses) - more of them - now expect to benefit regardless.

First Covid, and now Cost of living aid, seems only to be encouraging it.

EssexHebridean

The Fix you were talking about was the EDF one at 33.XXp/kWh electric and 9.XXp/kWh gas - and £300 exit fees - was that the one you committed to in the end? If so then it has at least saved you money through this winter, even if only a little as it turned out. As you rightly say though, the issue will be if unit rates do drop in July, it may well be that your fix will end up being higher than the then SVR unit rates so you are going to need to do some sums to work out nearer the time if the changed rates combined with your expected use through next winter mean paying the exit fees will be worthwhile.

Ultimately, if you end up paying slightly more, remind yourself of the reasons you took the fix - which I presume included for certainty, and because you could afford the amount being charged. Presumably the latter hasn't changed, and you have at least had the benefit of the former through some very stressful times for many people not on fixes. 

diystarter7

Hi OP

The suppliers may start introducing new fixed rates etc as I'm predicting as is the media that the prices will fall further as they have been low for months but the public is not getting the benefits.

So wait and see and see what is on offer


We are variables, and will stay like that until July's announcement

Thnaks

EssexHebridean

The OP is already on a fix...

l.c.elliott said:

<snip> We fixed on a 2 Yr fix in April 2022 and pay £201 a month

Scot_39

The predictions just that - so perhaps those on a higher fix may lose a bit in July, but by next Oct or Jan the wholesale price could be higher again.

So the old rule of fixing - for stability and avoiding future rises - may again kick in.

If the rates diverge by more than the exit fee - jump if want to loose the fix and pay it.

If you can find another fix - maybe take that - but don't expect the system to operate as it was before 30 plus suppliers collapsed - in part due to unsustainable fix pricing.

The originally fixes from the big 6 often contained an initial - sometimes significant premium - to offset the potential future saving.


A bad winter in Europe - EDF in France having another bad summer- so importing not exporting etc to us and RofEurope easily can shift uk and wider European power balance - and so even gas reserves and prices - dramatically.  We have c8GW of interconnects now - 20% of winter demand.

With at least 1 more being authorised ( despite iirc govt court attempts to block)

We were importing - and exporting on some of the interconnects yesterday when prices hit  £1950 c 6:30pm - £1.95/kWh wholesale - not retail - as wind dropped off c430pm

Uk own energy security is still inadequate on a windless evening or night - and our exposure to gas prices - still c3x summer 21 - is far from over.

The fact we had to use c2GW from 2 coal stations - scheduled for closure last year - a clear warning of the precarious situation we find ourselves in.

The luckily this time brief price spike yesterday evening the result of decades of govt failure.

si_74

EssexHebridean said:

The Fix you were talking about was the EDF one at 33.XXp/kWh electric and 9.XXp/kWh gas - and £300 exit fees - was that the one you committed to in the end? If so then it has at least saved you money through this winter, even if only a little as it turned out. As you rightly say though, the issue will be if unit rates do drop in July, it may well be that your fix will end up being higher than the then SVR unit rates so you are going to need to do some sums to work out nearer the time if the changed rates combined with your expected use through next winter mean paying the exit fees will be worthwhile.

Ultimately, if you end up paying slightly more, remind yourself of the reasons you took the fix - which I presume included for certainty, and because you could afford the amount being charged. Presumably the latter hasn't changed, and you have at least had the benefit of the former through some very stressful times for many people not on fixes. 

Absolutely spot on. I am on a similar fix to the OP, but the June version. I may well end up paying more than the SVR from July on, or elect to pay the exit charges to get out of it. I would not change my decision to fix though, it removed all the stress and allowed me to budget for what was coming.