When fixed tariffs first became popular around ten years ago, many who took the plunge ended up better off - especially those who fixed for a long period, say four or five years.
With the second round of fixed tariff mania, about four years ago, many who took it ended up worse off. Don't be fooled into thinking that they are a great deal because some people were better off ten years ago.
If you're thinking of fixed then check entire tariff, incl standing charges, and the small print - very carefully. The tariff is likely to be higher than you are now on and charges will be slipped in under the radar. There's also at least one out there where fixed doesn't mean fixed and the supplier has a get out should wholesale prices go up significantly.
But fixed isn't for me for this reason. It's a gamble. You are gambling on the future world wholesale energy price movement. Now who are you taking this bet with? Ah, yes. Large multinational energy firms. Who is likely to know more about future world wholesale energy price movements, big multinationals or the man in the street? Energy prices Stateside are tumbling and will continue to do so.
Energy prices in the States are tumbling for a reason totally unrelated to the UK. Fracking has released an abundance of gas and that has forced prices down. They've also got different geographical, environmental and regulatory considerations to the UK so it doesn't naturally follow that what happens there will happen here. As an aside, their windfall will almost certainly also affect their foreign policy. They no longer need to be
too concerned with energy security (I think they're actually looking to start exporting) and their outlook on the middle east policies will also probably change if it hasn't done so aready.
The UK on the other hand will almost certainly see prices increasing for a number of reasons over the next few years. Environmental levies, Carbon pricing, Renewable obligation, speculators and Electricity market reform (upgrading the network) being some of the main drivers. Add in the short term disruption in the middle east, irrational impacts of sporting events for example, no real appetite for fracking and Friday afternoons where the traders b****r off to the pub instead of dealing and you'll begin to realise that it's a bit more complex than suppliers profiteering, although that comes into it too. Mr Milliband's promise to freeze prices is pretty much unenforceable and even if it was the companies would just hike prices up before legislation came in to place. It's nothing more than an attention seeking soundbite, but that's purely my opinion. Others, better qualified than me, have been commenting on the state of the market far longer than I have.
DECC
“By 2050, we are likely to need much more electricity.
...electricity supply may need to increase by around 30–60%.
We may need as much as double today’s electricity capacity to deal with peak demand.
...rising demand from electrification of heating, transport and parts of industry, and economic and population growth.”
“...over the next decade the UK electricity sector will need around £110 billion of capital investment.”
Major energy users Council
“Between now and 2020 electricity costs are predicted to increase by 80%.” MEUC
However, this is all speculation. Pre recession the market was forecasting the $200 barrel of oil. Recession kicked in, prices tumbled, and we're now stumbling along at about $100-$110. That effectively guides the prices we pay for gas internationally which has a big impact on the price we generate electricity at due to the role gas plays.
Official statistics are here for anyone interested. The point of that is that despite what everyone thinks might happen there are so many parameters that might come into play nobody actually knows what WILL happen.
As far as the domestic market is concerned the real question isn't whether or not to go with a fixed or "flexible" deal,
they're both a gamble, Fix and the market moves up, you win: fix and the market goes down, you lose. (Although the fact that there's only normally one or two price changes a year, and you're dealing with relatively small sums of money, you don't actually win or lose that much anyway) The question is whether or not competition genuinely works in the market such as it is and whether or not you have a genuine chance of beating the big boys to any significant degree. Wanna guess the answer?
Personally I'm shortly going to pick a supplier that offers a product that I'm least uncomfomfortable with, fix my cost so I know what I'm paying and not look at it again for 2-3 years.
