Benefit of a 2 year fix

jimmy_g

I'm looking at various fixes via the MSE Cheap Energy Club.  I can get some which fix at, give or take, the current price cap for 12 months.

But, I can get 24 months fixed with Outfox The Market for an estimated £63 extra per year, with £200 exit fees.

So, I would pay £63 more in the next 12 months than I need to.  But, in 12 months' time, is it not likely that I'll be having to fix at rates which are at least the level of the October 2024 price cap?

My current usage costs around £1583.  With the new price cap, it would be £1780.

So, come October 2025, if I went for a 12 month fix now, would I not be paying at least £1780, when I need to move to another tariff?

If that's the case, paying the extra £63 for the next 12 months (and in the 12 months following that) seems like it would be worth it.  

Am I missing something?  Please help - I've been thinking about this for too long!

spot1034

Nobody knows where prices might be in a year from now. Given all the issues that drive them, it has been surprising that wholesale prices have actually come down significantly since a sharp rise in the first half of August. When, at that time, it was possible to fix at the same level as the present (July) price cap, and those deals were quickly pulled after a sharp increase in costs, who would have predicted that there would be a second chance to fix at those levels before the end of the July price cap period, but that is what has happened. 

I would suggest that this morning's news from the Middle East will not be good for prices, but what do I know? There are all sorts of factors which affect this, including how cold our winter will be which, if it is harsh, could lead to higher costs next spring and summer.  I'd also suggest (without wishing to alarm anyone) that Outfox the Market don't have the greatest reputation and apart from any administrative issues that individual customers may encounter, they might be vulnerable if there are challenges to suppliers of the sort that led to so many small companies going bust a couple of years ago.

A two year fix might be a real winner, but it's equally possible that you could find yourself locked into a deal which looks expensive by this time next year. The decision is yours.

PeterGr

Although there is a suggestion that the rates in 2024 - 2025 are going to be similar to the October 2024 price cap. You can't be certain what the charges for October 2025 - September 2026 are going to be.

If you take a 24 month fix, all you have is the certainty that the rates in your fixed contract will be applied until September 2025, unless you switch and take the £200 exit fees.

MP1995

The benefit of a long term 2-3 year fix is certainty and there were certainly some here that had great 3 year fixes come to an end just this year and they missed all the energy crisis issues. That said they may have been paying more for their energy for the first 3-6 months of that fix for that certainty and protection.

It's subjective and only you can really decide however with everything going on jn the world right now?

Scot_39

My sisters last 2 year fix was somewhat luckily pre crisis Feb 2021 to Feb 2023.

But wasn't the first - and I used to fix my parents on low "fixed" income - state pensions  under poa on similar.

It had around a 3-5% price premium vs 21 SVT - inflation at time just 2% - but was done for certainty not savings.

When it ended in Mar 23 - her electric SC and rates literally doubled.  So we'll worth the premium paid.

But hopefully that was a one off extreme on unit rates.

The problem now is that the risk of peaks and troughs - e.g. Jan 24 tk July dropped over £300 - makes people wary of fixing - when rates reflect closer to this winters rates.

So those looking for savings are put off longer term or any commitments - like only fixing on no exit fee basis.

However with billions - £10bn plus per annum forecast investment in national grid to 2035 and beyond - who knows where the SC might be in 2-3 years time.

As the major increase in electric SC in last 2 years has been a shift of just over £100 from unit to sc for network costs  - and tgen there is charity pressure to revert that change  - at least for some.

Netexporter

The way I look at it is that a fix is like the SVT plus an insurance premium against price spikes caused by world events.

If you actually want to save money then get a smart meter and use a suitable TOU tariff to fir with you consumption patterns.

Lorian

Octopus 15m with no exit fees is worth a look. Currently would fix till the end of December 2025.

Netexporter

Lorian said:

Octopus 15m with no exit fees is worth a look. Currently would fix till the end of December 2025.

I certainly wouldn't sign up for for anything with £200 early exit fees.

northernstar007

exactly what i took the 15mths for gas and agile for electric as i can shift my useage from octopus and getting my family on it on mon

phillw

Netexporter said:
I certainly wouldn't sign up for for anything with £200 early exit fees.

Yes, this was my thinking. I got caught before on a fix that seemed good at the time, but with an exit fee. Switching energy providers is basically gambling. Sometimes you win, sometimes you lose. Fortunately my energy use is generally low anyway, unless I can fix at pre Ukraine invasion prices then it's not worth losing sleep over 

I've been with outfox the market before and the only issue I had is they kept taking direct debits after I had switched away, even though I was in credit when I left. That didn't take any effort to sort out

I'm not usually worried about providers going under as I went through Iresa and Yorkshire energy in quick succession. The only annoyance is you lose a cheap tariff and also the chance to switch to one that doesn't go under.

I just switched to octopus 15m fixed, if Russia and Israel decide to stop fighting next year then I'll just switch back to price cap

jimmy_g

Thanks for your thoughts, everyone.  I am aware of mixed experiences with Outfox The Market, but plenty seem to have had a trouble-free experience.  

The Octopus 15m fixed is estimated as costing me £54 extra over the 12 months, so not much different to the extra I would be paying to Outfox The Market in that time for the 2yr fix.  But, as commented above, I'd be free to switch to something else at that point if I went with Octopus.  Which brings us back to the question of where the world might be then.......

Blimey.  Right, I'm off for a long walk to ponder it all some more.  Thanks again, folks.