Are fixed tarrifs a scam?

Lolly1626

Do energy companies intentionally offer unrealistic fixed tarrifs knowing they will increase your payments over time?

I told my supplier that I live in a 3 bed mid terrace with 1 bathroom. They said based on that information, I would be charged around 85 a month for gas and electric with their fixed rate deals at the moment.

My boiler wasn't working when I originally signed up so I knew the payments would be more than I was actually using as I wasn't using gas for my heating. However, my payments increased to 103 a month despite only using gas to heat my water.

Now my boiler is repaired, I have the heating on for around 4 to 5 hours a day on a timer. My latest bill (and the first full month use of my heating) has now shot up to 200.

Surely my original quote would have taken into consideration that people use their heating? So now I'm thinking this is a luring tactic to get people to sign up.

This isn't the first energy company to do this and I find it so frustrating! Am I missing something? 

booneruk

Lolly1626 said:

This isn't the first energy company to do this and I find it so frustrating! Am I missing something? 

I think so I'm afraid. The part of your bill that should be fixed is the price per unit. It's not an all you can eat scenario - you use more energy and your bill increases based on the price per unit .

They would have estimated your usage from your property / family size or figures you entered from a previous bill.

Ayr_Rage

No, they are not a scam, most confusion is due to a lack of understanding on the part of the customer.

The initial estimated monthly DD is just a guestimate based on size and type of the property.

It does factor in heating, but over a year, everyone will have bigger bills in winter!

Once actual usage is factored in then the DD is adjusted accordingly.
   
One customer in that house could be happy heating their living room to 18 C for a few hours when they are home from work and another, like me, has it at 22.5 C all day every day as I am retired.

With both of us on the same fixed tariff we'd pay vastly different sums but still have the certainty that the cost per kWh is not changing until the tariff ends.

However, if you don't want to be chasing your tail with DD changes, do as I do and pay by Whole Amount Monthly DD, then you'll only pay in arrears for the energy you have actually used.

 

QrizB

I think Betteridge's Law applies here 

https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines

Lolly1626 said:

Do energy companies intentionally offer unrealistic fixed tarrifs knowing they will increase your payments over time?

No they don't.

Lolly1626 said:

I told my supplier that I live in a 3 bed mid terrace with 1 bathroom. They said based on that information, I would be charged around 85 a month for gas and electric with their fixed rate deals at the moment.

The energy company took your figures, annualised the cost then divided it out across the year.

Lolly1626 said:

Surely my original quote would have taken into consideration that people use their heating?

No, as above the quote will have been based on the figures you provided.

Do you recall what those figures were? Which energy company are you with, and what tariff?

Lolly1626 said:

This isn't the first energy company to do this and I find it so frustrating! Am I missing something? 

Your're missing that a fixed tariff isn't a fixed bill. If you use more energy than you told the energy company you would, your DDs will increase to cover excess future use plus whatever arrears you've built up.

saajan_12

Lolly1626 said:

Do energy companies intentionally offer unrealistic fixed tarrifs knowing they will increase your payments over time?

I told my supplier that I live in a 3 bed mid terrace with 1 bathroom. They said based on that information, I would be charged around 85 a month for gas and electric with their fixed rate deals at the moment.

My boiler wasn't working when I originally signed up so I knew the payments would be more than I was actually using as I wasn't using gas for my heating. However, my payments increased to 103 a month despite only using gas to heat my water.

Now my boiler is repaired, I have the heating on for around 4 to 5 hours a day on a timer. My latest bill (and the first full month use of my heating) has now shot up to 200.

Surely my original quote would have taken into consideration that people use their heating? So now I'm thinking this is a luring tactic to get people to sign up.

This isn't the first energy company to do this and I find it so frustrating! Am I missing something? 

What's fixed is the price per unit of gas / elec, not the total amount. Any estimates on the monthly bill are just that, and would have been equally under/over estimated if it was a variable tarriff. 

So the question is what was the estimate based on - the number of bed/bathooms and property type is very little to go on - two similar properties could have different levels of insulation, different patterns of who's heating the house during the working day, run the oven/washer/dryer at different frequencies, etc etc. You could have gotten a better estimate from the actual units used from your prior company's bills. 

An analogy is someone telling you supermarket A is better because their family of 4 spends £80 there, while you're spending £100 at supermarket B. Then you complaining because you switched and your total came to £120 at supermarket A. The reason being you bought more items, each of which were actually cheaper at B. 

Strummer22

booneruk said:

Lolly1626 said:

This isn't the first energy company to do this and I find it so frustrating! Am I missing something? 

It's not an all you can eat scenario - you use more energy and your bill increases based on the price per unit .

WHAT!? Erm, excuse me, I just have to go and turn off the fan heaters and air conditioning... 

oldagetraveller1

"Do energy companies intentionally offer unrealistic fixed tarrifs knowing they will increase your payments over time?"

I doubt it, but Eon have just reduced my monthly DD by a whopping £8 because the consumption is less than first estimated.

I'm on a fixed tariff until July this year.

molerat

Give the supplier a rubbish consumption figure, or in the case of the OP no figure at all, and they will give a rubbish monthly DD amount or in the OP's case a guess.  Strangely when I give a supplier my pretty accurate consumption figures they come up with a pretty accurate monthly DD amount.  Funny that !

daveyjp

My fixed tarriff payments went down.  Why?  Because I used less energy than they anticipated.

kingstreet

Did you have no previous consumption figures? Just moved in?

WiserMiser

If dozy Ofgem were any good they'd have standardised on 'Equal' Direct Debits to end this predictable and widespread confusion.

There's no such thing as a 'Fixed' DD: sooner or later the amount taken will have to change (except in the unlikely event that the estimated usage was absolutely correct).  Similarly, it will have to change if it's a variable tariff, e.g. Ofgem change the Price Cap every three months.