Price cap increases- To fix or not to fix?

You will usually find there is a  very short window before suppliers pull tariff if wholesale prices go into orbit due to a dramatic world event.

So you may still be able to catch that sort of risk if you are lucky and quick.

We are now down to wholesale gas prices well below even the start of the Ukraine conflict. It is not yet clear how low they will go though. As you see gas prices were on the way up  in 2021 well before the Ukraine issues were even envisaged.

Unless OFGEM change the rules, then the Standing Charges are definitely going up this year, the charge increase is already baked in due to the previous ofgem change to move some network costs, both transmission and distribution, to Standing Charges. In hindsight perhaps not the best move.

As is stands, unit prices are still going down on 1st April unless we see another spike in the next few weeks. Much of the unit price for 1st April is already baked in and we haven't had another blip yet since the last Cornwall Insight estimate. This is the wholesale price today, the lowest in nearly 4 months. The lower prices over the last few weeks bake in lower costs in the price cap up till 15th Feb. Any change after the 15th Feb doesn’t impact the 1st April cap, it simply feeds into the next cap. As we get closer to the 15th Feb, any blip makes less of a difference to the 1st April cap.

Relatively mild weather and relatively full storage seems to be keeping prices low for now at least...

Obviously nothing is guaranteed and fixed price contracts give piece of mind.

This is from Octopus:

"The energy we're buying right now for the next few months, is coming in as the among the cheapest it's been for the last few years, so of course there are so many problems in the world, but certainly in the short term energy prices look like they're actually going to be coming down and stabilising."

https://www.bbc.co.uk/news/business-68013741

And this is the wholesale price today

The quote was after.

The fall has been dramatic looking over a longer period that Octopus mention.

Of course we may well get blips and fixed price contracts give piece of mind. Fixed price contracts are good for lots of people.

As Octopus say they have already bought the supply for the next few months now.

The miss match between some of the headlines and the reality of prices is interesting. The red sea hasn't caused a blip yet. Although it could…

Perhaps further falls in fixed rate offers after end March when the Market Stabilisation Charge comes to an end

https://www.cornwall-insight.com/press/cheapest-fixed-energy-tariff-130-more-than-april-price-cap-forecasts/

No sign of a spike in wholesale gas yet but always possible.

Cornwall Insight latest:
  

These are GB average figures including VAT. There are significant variations from region to region. They are based on wholesale costs and other factors at close of business on 16 February; these are likely to be close to those used by Ofgem to calculate the Energy Price Cap for April-June 2024.

Source: Predictions and Insights into the Default Tariff Cap - Cornwall Insight

And to pre-empt Jeffus, here are the UK gas wholesale prices for the past six months:
  

The peak here was 136.70 on 23 October last, so it’s fallen by more than half since then.

We have a couple of weeks before deciding whether to stick or twist, but I’ve been poking around elsewhere to see what’s currently available. I was very surprised to see a 2-year fixed rate tariff from Ecotricity with a guaranteed standing charge (SC) for electricity of 41p/day. I wonder if Dale Vince knows something we don’t about where SCs are likely to go over the next couple of years; the 2024Q2 price cap sets the average SC to 60p, but for my region it’s only (!) 56p. The difference is nevertheless staggering.

Comparing the Ecotricity rates with OVO’s equivalent tariff, I reckon that you’d have to be consuming more than 5300kWh/year for the higher price per unit to outweigh the saving on SC. My usage over the past 12 months has been 1142kWh:
  

I’d feel pretty foolish, though if SCs fell significantly in response to Ofgem’s planned revision of the way they’re applied. The exit fees would probably swallow any saving and more. 

*  Trivia: I lived for several years 200m over the hill from New Lawn, the home ground of Vince’s green football club Forest Green Rovers.

That’s the point with fixing or not fixing.

You don’t, you can’t, have the facts about what will happen with prices in the future, so to fix or not fix is a gamble that you take on what will happen with prices.

And even if you never look at the fixing options and always stay with variable rates that’s still a gamble, just one that you are taking without thinking about it.
You are already in the game, you might as well consider how you want to play it.

Sometimes fixing is not even about saving money, but about knowing how much you will be paying for the next year (or 2, or however long you fix for).
I have fixed, I know how much electricity and gas I use each year, so I know how much that will cost me each month for the next 12 months.
For some people that is important to know, even if it is more than they might have paid on variable rate.

I fixed in December for 12 months, at the moment with the changes coming in April that looks like it might have been the wrong time for me to fix. (If i did it to try and save money).
Or it might not have been, that will depend on what further changes are made to unit prices and (particularly for me as a low user) the standing charges in summer and autumn.
I won’t know for sure if I made the right money saving decision (gamble) for me until next December. (Well actually I’ll be able to work it out once I know what the autumn rates will be).
And then I’ll have to make another gamble between fixing again or not.

I thought SVT prices were decreasing on 1 April 🤷🏼

Thanks, Abby 😊

Hi, 

can I get your opinions please. What is the best rate to be on now the rates have gone down.  I don’t really understand it all. I’m o variable at the minute. Thank you 

In my case, OVO is offering a 1 or 2-year Fixed Loyalty plan, which has higher unit rates and standing charges. Unless you anticipate energy prices increasing in the future, there is no incentive to switch, or you can simply consider switching elsewhere for those offering a better deal.

That's incredible. The fixed daily  charges for my account are ludicrously high. It reduces the incentive to save. My variable daily rate is 66.55p electric and 30.07p gas. North East England.