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Firedog
Super User
FiredogSuper User
Super User
December 15, 2023
Solved

Price cap increases- To fix or not to fix?

  • December 15, 2023
  • 217 replies
  • 5948 views

Customers on variable tariffs (SVT) are being notified these days of tariff increases from 1 January. At the same time, many are being given the opportunity to switch to a fixed-rate tariff. I am trying to decide whether it would be a good idea to fix, but I’m not sure I have all the information I need. Gas hasn’t been invented yet in my corner of the world, so I’m only interested in electricity tariffs.

Cornwall Insight are a well respected crystal-ball gazer where energy prices are concerned. Their predictions for 2024 show small ups and downs in unit prices, but one startling forecast is for a hike in the standing charge of the order of 15% on 1 April. For a light user like me, this is hugely significant. On SVT, the standing charge would amount to 37% of my bill in January, but by October this would have risen to more than 41%. The fixed rates I’m being offered would keep the standing charge at more or less the current level, so that makes fixing look like a good idea. 

But … we know that Ofgem are considering changes to the way standing charges are calculated and applied. If by some miracle any change were to be implemented before 1 October next, would I miss out on any benefit this might bring? I guess the answer to that is Yes, but that it’s not very likely any change will happen by then. Agree?

And does anyone know the reason for the increase in standing charges predicted for 1 April next? Are we going to be paying for the cost of bailing out Bulb customers?

 

    Best answer by BPLightlog

    Updated on 29/08/25 by Ben_OVO

    The Energy Price Cap, set by Ofgem, is normally changed on 01/01, 01/04, 01/07 and 01/10 each year. The price cap can go up or down and, if you’re on the standard variable tariff (Simpler Energy) then your rates will go up or down to match the price cap change. We offer fixed tariffs for one or two years. If you opt in for a fixed tariff then your rates will be fixed, and protected from price cap changes. If you’re up for renewal, or are currently on the Simpler Energy plan, you can switch to a fixed tariff via your online account or app (see below).

     

     

    I’ve been asked about the question ‘to fix or not to fix’ often in the last few months and I always offer the same answer .. how comfortable are you with the possibility that prices might increase over the next year?

    There are no two ways about it .. it is a gamble. I liken it to taking out insurance (the optional sort) where it’s a calculation as to the possibility of an expense for a loss/damage compared to - for the most part - having financial cover for those things.

    Back in 2021 we fixed our energy rate for 2 years and almost everybody told me that it was at too high a level. Little did I (or anybody else) know about the pending war in Ukraine and the problems with supply from the Russian pipeline.

    This time, despite the outlook, we have not fixed .. although, in effect, our tariff is a constant variable if that makes any sense. All of that is why I’ve invested in solar PV, battery storage, a Ripple community solar park and a small wind generator, so that we have a degree of self/low generation support whatever happens

    217 replies

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    Jeffus
    Rank 20
    Jeffus
    Rank 20
    December 28, 2023

    … I don’t see the point in wavering now just because someone else’s guesses have changed.
     

    I’m fairly sure that CI’s guesses are closer to the truth than anything I could ever come up with. In particular, I think that their Q2 forecast for unit rates is likely to be close to whatever Ofgem settle on in just a few weeks’ time. My rationale for fixing was based on estimates that have changed significantly, and the new figures indicate that what might have been to my benefit before is no longer so advantageous. It’s a fairly safe rule that the most recent prophecy is more likely to be right than earlier ones. 

    The last time I fixed my rates, for two years, it was just before the price cap went into orbit in 2021. That saved me an awful lot. Let’s see how we go over the next year. 

     

    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.

    Nukecad
    Super User
    NukecadSuper User
    Super User
    December 28, 2023

    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).

    I said, Hey - Watts going on.
    Jeffus
    Rank 20
    Jeffus
    Rank 20
    January 2, 2024

    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...

     

     

     

      Jeffus
      Rank 20
      Jeffus
      Rank 20
      January 11, 2024

      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.

       

        Jeffus
        Rank 20
        Jeffus
        Rank 20
        January 18, 2024

        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

         

          Firedog
          Super User
          FiredogSuper UserAuthor
          Super User
          January 18, 2024

          "… in the short term energy prices look like they're actually going to be coming down and stabilising."

           

          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.

           

          Noel | I have no official status; I'm just a volunteer who comes here to help other customers. My gear: Aclara SGM 1416-B Electricity-only E7 meter; Chameleon IHD3-PPMID-AAA | It may look as if I know what I’m talking about, but don’t let that fool you. |
            Jeffus
            Rank 20
            Jeffus
            Rank 20
            January 18, 2024

            "… in the short term energy prices look like they're actually going to be coming down and stabilising."

             

            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…

             

             

              Jeffus
              Rank 20
              Jeffus
              Rank 20
              January 22, 2024

              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.

               

                Jeffus
                Rank 20
                Jeffus
                Rank 20
                February 1, 2024

                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.

                 

                  A
                  Rank 4
                  azam216
                  Rank 4
                  February 9, 2024

                  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)

                  2 year fixed                                                                 1 year fixed                                VARIABLE (Current)
                  £164 avergae per month                                        £164 per month                             £192 per month


                  Plan rates


                  Electricity                                                                       Electricity                                 Electrcity
                  Unit rate - 27.83p/kWh                                               27.83p/kWh                               28.22p/kWh                  
                  Standing charge - 61.55p/day                                     61.53p                                        65.90p


                  Gas                                                                                   Gas                                             Gas                         
                  Unit rate - 5.93p/kWh                                                 5.93p/kWh                             7.39 per kwh
                  Standing charge - 29.27p/day                                      29.25                                        33.30p

                   

                  i mean on paper from above….the fixed rates look appealing but i thought id run it by you guys first to advise me better.

                   

                  what you guys think?

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