Yes or no, given the current conflict?
It’s frustrating that we have to faff around with suppliers and power has become like mortgages - unnecessary complexity….
I’m on a fixed with Octopus so will likely stay put. I believe that even though it’s fixed it will get discounted with the government changes in April.
Prob best to pop your details into a comparison sight and see what options you have.
We fixed for 5 years over a year ago. Power prices generally only go in one direction…..
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Our electricity fixed deal expires in April and looking at options the fixed ‘deals’ from Octopus are currently higher than the price cap flexible Octopus rate.
e.g.
Flexible Electricity: 27.83p/kWh
Flexible Gas: 6p/kWh
12m Fixed Electricity: 29.86p/kWh
12m Fixed Gas: 7.01p/kWh
Unusually Octopus are charging a £75 exit fee if you leave early. This suggests that they believe the prices will come down during the term and people may wish to switch again.
Given the price cap reduces in April this gives 3 months of breathing space so I’m going to let ours default to flexible (price cap) when the fixed deal expires and see what happens over the summer. Even people on fixed deals will see a reduction in April due to the green levies being removed from bills and moved elsewhere.
It’s worth following what happens to the Agile prices on Octopus as this is priced daily so it’s easy to see the trend.
Fortunately our gas is fixed until the end of Novemeber which is some way off.
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If you look on YouTube, you will find the CEO of Octopus explaining what’s going on right now with gas (and hence electricity) prices and what this means for their fixed prices. Bottom line is that gas is currently twice the price it was a week ago and as they buy gas and electricity forward to underpin any fixes, the fixed prices are rising fast. He explained the £75 exit fee as a necessary sharing of risk between them and their customers and he said that they will (indeed have to) stay within the price cap, so the April reduction will apply to those on variable tariffs. But it’s likely that prices will be much higher in the summer, but depending on particular what happens to Homuz and whether gas transporters can get insurance and reliably pass through the straits without being attacked. He promises further regular updates.
I cannot understand why electricity prices are still tethered to gas when more and more of our generation is coming from renewables. It made sense when most of our electricity came from gas and coal but it no longer does.
As to whether to fix it’s always going to be a gamble.
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All the infrastructure needs to remain in place even if solar and wind supply 99 pct of the energy. I’m sure there is an alternative but it will cost time and lots of money.
This is because the regulator decides the cost of a unit of electricity by how much it cost to produce it using gas. Not wind, solar or any other source, it is the cost of ‘making’ electricity using gas. A complete scam.
As we will never be self sufficient as a gas producer, even with shale ( which is indeed a terrible way to get gas) it beggars belief that with another ‘war’ disturbing oil and gas supplies and therefore prices, governments here are still resistant to allowing more sustainable production of electricity here.
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The other excuse for keeping the tie to the price of gas is that the elevated prices are required in order to fund grid upgrades without which more renewables are not feasible. Some parts of the grid are already unable to cope, especially on sunny days when rooftop solar exports cause over voltage problems, for example.
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The system is more nuanced than just being pegged to the price of gas.
The regulator buys in sufficient generation for predicted demand. Renewables (wind, solar and biomass) are at the front of the queue. The regulator is obliged to take all that these generate or if that exceeds demand pay them to switch off. (That cost is added to your bill).
When there is insufficient capacity available from renewables then the regulator will solicit bids from other sources; interconnectors and gas mostly. They’ll contract for sufficient of these, selecting the least expensive offers. The market price is then set at the most expensive of these options. Typically this is gas but can also be the supply via an interconnector .
So yes the market price for electricity in the UK is, usually, pegged to a particular gas fired station. But not always.
The other thing to consider is that whilst Renewable generators are paid the same price as the gas and interconnectors this is usually LESS that their guaranteed price. Therefore there is a mechanism to pay the renewable generators a top up to their contracted price. This isn’t reflected in the market price of electricity but it is added to your bill.
If the market price is less than the guaranteed price for a particular renewables supplier, and they’re on a CfD (Contract for Difference) then they repay the extra. This rarely happens.
In summary, the market price of electricity in the UK is, largely, set by the cost of producing some of that electricity by gas.
The market price of electricity in the UK doesn’t reflect the cost of electricity generated by renewables that receive guaranteed prices that are typically above the market price. Your bill will reflect these extra subsidies.
Gas fired generators may also receive a subsidy to maintain a guaranteed dispatchable capacity available on an agreed lead time. The lead time will vary dependent on the generator type. OCGT are the fastest to spool up but less efficient than CCGT. Your bill will also reflect these sub sidi es.
The foregoing is, of course, a gross oversimplification.
Willy.
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Hormuz is open but you are correct in your assumption that movement of oil and gas will need increased insurance cover. Current estimate to get movement 3% upwards ;value of vessel and cargo.Presently @ 1% downwards.
A few tankers have popped through accepting that the greater risk of attack is the huge number of empty vessels at anchor awaiting passage off of Oman.
Trump might be able to insure convoys but he does not have destroyer/ drone strength to protect them.
I fixed my supply with eon a couple of weeks ago but I am sure that hidden away in the small print will be a’war clause’.
Willy, you were right in that I was having a minor rant and I was oversimplifying far more than you. And thank you for explaining all of that.
As I have just been looking at my energy prices and whether to fix, I have found that nearly all the fixed rate deals have suddenly stopped! In the end my flexible rate with Octopus remains the best deal I can get much to my surprise.
I think my main point was that we still rely on gas and therefore imported gas rather than being closer to being energy self sufficient. This means that recent events completely alter energy prices here with significant impacts on all of our finances/lives etc. and the price fix. There is a terrible irony in
I do also realise that there is a cost to becoming more self sufficient including significant costs increasing the infrastructure. However, the infrastructure will need to be significantly updated/strengthened simply on current use growth. Every time new homes are built the infrastructure groans, but a bit like the roll out of internet/broadband, the infrastructure should be a national strategy and i’m not sure it is.
As we move into the future, I think that it is already clear that certain things such as energy and water, etc, will become points of barter and control. Nationally these things could and should be addressed and maybe issues such as price caps would become less overwhelming or better understood. I think most of us see increases in price caps as the shareholders and executives of these companies just getting richer.
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Outfox went up by £10 a month for electric only (January tariff actually) earlier in the week compared to previous look for 12 month fix, now £20 more. I was hoping until recent events that given the price cap dropping in April that they might drop their offerings too, obviously now that’s off the table due to uncertainties. Ho hum at least we’re heading into spring/summer.
Outfox is now £20/month cheaper than when I last posted.