My ponderings on fixing before my fix ends

NoDetail2Small

Hi, Just thought I'd share some ponderings about when to renew my fix given the upward trends in prices, and the unknowable potential for them to keep going up (or down). My current elec-only fix stops at end-Sept, and I've been monitoring the fixes that would have been available to me over the last few weeks if I had changed to a new fix early.

Without going into all the units consumed, exact tariffs etc, in mid-Aug the best fix was about £40pm more than my existing fix (based on usage for a typical winter month), now at mid-Sept the best fix is now £66pm more than my existing fix. (I've removed the effect from the change in VAT).

So the break even point for getting a new fix now compared to if I had changed mid-Aug, is sometime in January due to the extra time staying on my current much cheaper rates. It will be a bit sooner if the fixes go up again. If I let the new fix run a full year, and with much lower usage in spring/summer, then the extra cost of a fix now will be around £70 more for the year compared to if I had fixed mid-Aug.

So I am ok with the decision to "wait and see" and not fix early PROVIDING I go for a fix with no exit fees, so I can switch later IF the rates do drop.

Just sharing in case it helps anybody else trying to figure out this dilemma.

stripling

https://forums.moneysavingexpert.com/discussion/6683601/my-ponderings-on-fixing-before-my-fix-ends

You aren't actually checking the markets or the news. If I was you, I'd jump on a fix asap. Read Martin's comments on the 2 price cap rises. Fixes are based on suppliers hedging long term which is why they are 'fixed' and often have exit charges. I've locked in an 18 month fix and I'm glad I did.

Stevie1

@stripling where are these comments from Martin? I looked and can't seem to find them. I'm aware of the ITV show on Tues covered it, but where is the written analysis?

QrizB

https://forums.moneysavingexpert.com/discussion/comment/82139648#Comment_82139648

Not actually written by Saintly Martin, but the MSE article on future cap rises is here:

https://www.moneysavingexpert.com/utilities/energy-price-cap-prediction/

Here's the current table (it's updated weekly):

NoDetail2Small

@stripling I was trying to understand the trade-off between "jumping on a new fix asap" which was the prevailing message I had been hearing, and just waiting and staying on my current cheap deal that bit longer. The conclusion for my particular situation, with the tariffs on offer, was that it would take until January where my "wait a bit longer" approach would start being more expensive, but only then having a couple of months of high usage before spring summer low usage, and only coming out at me paying £70 more over the whole year.

Nobody can second guess the market or the geo-political events that make things go one way or another, but what I concluded is that fretting about when to fix even if tariffs are expected to keep going up may not be as bad a it seems. Sure saving £70 is better than not, but I was surprised it came out so small even if I stayed on the new fix for a year.

The light-bulb moment for me was the importance of a tariff with no or low exit fees and proactively monitor what tariffs are available, and move if fixes do start to get cheaper, which could be sooner or it could be later - nobody knows. Maybe obvious to those who more aggressively monitor and swap their tariffs.

NoDetail2Small

BTW - my figures are not based on the prevailing price caps rates - which as we know are decoupled from the available fix rates at any given time, energy suppliers hedging prices, etc. I was using the best fixed rate tariffs I could see for my needs.

NoDetail2Small

BTW#2 - of the fixes I was looking at, some had significant exit penalties and others none at all. I now know what is the most important for me.

stripling

@NoDetail2Small Yeah, I get where you are coming from and maybe you have better finances than me too, I can't afford anything more than the best I can get.

I had to make the same decisions as you earlier this year. I still had 4 months of a fix to run which had an exit fee. I lobbied for a better fix with my same energy co and argued against the exit fee because the new fix was a tiny bit higher than the old one. In other words I paid a wee bit more for 4 months but was locked in at a good price until next summer.

I have work that both keeps me very informed of geopolitical events far beyond anything in mainstream media and as part of that I follow/subscribe to various energy traders/analysts. Energy prices are not coming down for the next 9 months/1year even in the unlikely event that Trump rolls over and says: "I give up"!

Life is too short to stress about my energy bill every time some maniac decides to bomb a Houthi. And the longer this endures the more grateful I am that I risked it for a biscuit and jumped from one fix to another. No doubt I'll be back stressing over things when my fix is nearing its end next summer. But these 18 months of knowing exactly what my costs are, are great (and a tiddly bit smug in a 'phew' sort of way).

NedS

If energy prices over winter are a concern, and you can get a reasonable fix now, I'd lock that in for this winter.

Natural gas prices have doubled in the last 3 months, and up three fold on where they were at the start of last winter. I don't see how suppliers can absorb such input costs without passing on substantial price rises to customers - the January price cap could rise significantly and those estimated figures of 25% increases do not seem unrealistic if natural gas prices remain high and/or supply constraints worsen.

We have just fixed for 12 months on Octopus' Cosy tariff, locking in a cheap rate of 14.9p/kWh which will reduce to 14.2p in October once the VAT is removed. This is less than we were paying last winter which seems a no-brainer given natural gas prices are currently three times higher due to the supply constraints in the middle east. There are no exit fees, so if prices miraculously remain low or fall, we can always switch to a lower variable rate.

I'm just really glad we replaced our old oil boiler with an ASHP. Given heating oil is currently £1.26/L (equivalent to 12.2p/kWh), the ASHP is working out around a quarter of the cost to run than the old oil boiler.

NoDetail2Small

https://forums.moneysavingexpert.com/discussion/comment/82140352#Comment_82140352

Totally get your view that things are unlikely to reverse in global energy markets, and could get worse. Even if hostilities stop, damaged infrastructure takes a long time to replace, and re-building reserves during high consumption winter period not so easy, and hostile groups have been emboldened about how easy it is to disrupt.

My current fix is just about end, so I will be switching soon anyway, especially given the responses here - thanks.

NoDetail2Small

Thanks Similarly, my current tariff is an TOU EV one with lower rate for all overnight usage, and in winter we have some heating provided by overnight storage heaters, so that works out best for us. But the bulk of our heating is also with an oil-fired CH boiler, and very aware of stupidly high prices. Thankfully we filled up in July when there was a dip in prices - more luck that judgement on that though. An ASHP is something we are will be looking at at some point, but a quick win for us may be use a timer on elec immersion heater for hot water rather than oil boiler.