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.

The uncertainty at the moment is around the standing charges more than the unit prices.

That affects low users more than high users

It can get very speculative just which way SCs will go, and if any change to SC will also mean an increase/reduction in unit rates.

With a looming election quite a bit in the next year (not just energy pricing) is going to come down to political wishes and electioneering promises. (Which may or may not happen).

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...

Just a quick update. Wholesale gas prices remain low and lower than the previous Cornwall Insight price cap estimate. The cold snap and issues with shipping haven't fed through to prices so far at least.

Obviously there are no guarantees with prices…

As always fixed rates give piece of mind.

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

Thanks.

I wonder if that was before or after tankers stopped sailing through the Red Sea. I can’t imagine that the troubles down there won’t have an effect on prices soon - perhaps even before Ofgem’s 15 February polling date.

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…

Latest from Cornwall Insight

https://www.cornwall-insight.com/press/price-cap-predictions-continue-to-fall-despite-disruption-in-the-red-sea/

Be interesting to see if better fixed rates are released before 1st April

Also if any customers who have recently signed up to fixed rates will be tempted to pay exit fees at the end of March.

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.

hey guys, so i came across the fixed plans and they may look appealing, i jus feel going forward we will be paying more and more each year with whatevers going on the world. currently i am on variable (simpler energy)

There’s been an ongoing discussion about this since December here, where you may find some food for thought.

Meanwhile, I’m a bit confused by the figures you show for your current variable tariff. The standing charge for electricity would suggest that you’re either in the north of Scotland or in the South West, and paying on demand rather than by Direct Debit (DD). Since there isn’t too much gas around in far North Britain, I’m guessing Devon or Cornwall. Either way, you could save perhaps £150 a year by changing to paying by DD.

Last, I think the data Ofgem use to fix the second quarter’s price cap will be finalized next week, so we’ll have a much better idea of what to expect. At the moment, Standard Variable Tariffs are expected to fall significantly from 1 April.   

thank u for the link, i am based in glasgow.

I’m not fixing yet…..Waiting till late August to see what price cap will be Oct to Dec…

Everything is pointing to cheaper but it takes about 9 months for wholesale prices to filter down. And don’t panic if middle east gets worse, their contribution is small beer (10-15%), Russia was 40% and cheap.

Figure 2: Cornwall Insight’s Default Tariff cap forecasts using new Typical Domestic Consumption Values: Standing charge and unit rate (dual fuel, direct debit customer)

hmmm interesting. i guess we will find out what the second quarter’s price cap will be to get better idea if anyone wants to fix now.

Thanks. Am I right in thinking that the boundary between the Northern and Southern electricity distribution regions in Scotland runs along the Clyde? So Celtic are in Northern Scotland, but Rangers in Southern?

The only maps I can find show a vague line from the Clyde to the Tay, so it would be good to know whether Greater Glasgow is in fact split between two regions (which match the old Electricity Boards in England, but I’m not sure how far south Scottish Hydro stretched).   

no no both celtic and rangers are in southern scotland. when i checked last...my area falls under scottish hydro or scottish power.

Thanks. So I’m none the wiser ...

nah man...its all good lol

OK, I’ve now found a map where the DNO boundaries are a bit clearer. It certainly looks as if the whole of Glasgow is in fact in Southern Scotland region 18, served by Scottish Power:
  

Sorry to have been so confused and confusing. I wonder if the border shown is different from that of the (old) Scottish Hydro area.  

I’m not always an ML/MSE fan but there’s a post worth a read on the subject 

https://www.moneysavingexpert.com/utilities/-are-there-any-cheap--fixed-energy-deals-currently-worth-it--/

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.

Hey guys, any updates on second quarter’s price cap? 

Soon!(tm)

The new price cap, for April-June 2024: Get energy price cap standing charges and unit rates by region | Ofgem

Note the sometimes startling changes in standing charges - any change in standing charges has the biggest impact on those with lowest consumption. There are also unusually large variations around the country, ranging from an 10% increase to a 9% decrease. Do your sums carefully!

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.