Lockin 'till 2020

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wymondham
wymondham Posts: 6,354 Forumite
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in Energy
Hi All, I'm up to change my tariff this month and thinking about fixing until 2020 with First Utility (with them now)..... crystal ball time... on balance good to fix for longer or no no????

thanks!!!

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  • System
    System Posts: 178,094 Community Admin
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    wymondham wrote: »
    Hi All, I'm up to change my tariff this month and thinking about fixing until 2020 with First Utility (with them now)..... crystal ball time... on balance good to fix for longer or no no????

    thanks!!!

    You need to do the sums. Long fixes cost more so a judgement has to be made about future increases. FWiW, gas prices have fallen back slightly and if the wholesale cost of electricity doubled, the increase on your bill would only be 16%. The reason that electricity has risen so much recently is down to a massive increase in social and economic costs (climate change, smart meters etc). I cannot see this proportion of the bill increasing at the rate it has done over the past 5 years.
  • System
    System Posts: 178,094 Community Admin
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    I have just done the sums and a 3 year fix wouldn't work for me. The additional cost is £324 based on FU's cheapest one year fix of £840. It follows that at the end of year one, I will have overpaid by £108. If, say, energy prices rise by 10% a year for the next two years, then the cost in year 2 of a one year fix would be £924 and £1017 in year 3. It follows that for the 3 year fix to work, the price differences of £84 (year 2) and £177 (year 3) have to come to more than £300 - which they don't. It follows that the price rises in years 2 and 3 will have to be about 13% each year to break even. Personally, I doubt that this will happen.

    Another factor to bear in mind, is that if you use more energy than predicted then you will pay more on a 3 year rather than a one year fix which makes the maths more suspect. I will ignore any cashback benefits which others might wish to factor in.

    FWiW, even the cheapest FU one year fix would cost me £12 a month more than the cheapest one year fix available on the market today.
  • Pincher
    Pincher Posts: 6,552 Forumite
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    http://www.nasdaq.com/markets/crude-oil.aspx

    USD48. ;)

    All I need is a short term fall in oil futures, which will result in a cheap one year fix. Once I'm fixed, the oil price can go where it wants to.

    I am fixed until June 2017, so I can wait three months for this cheap deal.
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