Fixed Price Gas /Electricity?

Question

Is it a con? Just checked my last electric bill & was charged £137.05 for the quarter. With all the talk of a big increase on the way ( possibly as much as 40%) I checked with my supplier British Gas & they suggested I could fix the price till Dec 09.The tariff they offered would mean that the amount of my last bill would have been £185.42.......thats up by 35% anyway.... ok thats less than 40% but its not much of a saving against the anticipated 40% rise is it. I think these companies are scaremongering to make people flock for fixed rates which actually are no better ! Anyone else smell a rat here?

Answer 1

I certainly can they fix prices but in between they just put it up anyway so your no better off.TraceyR

Answer 2

Interesting. I have never heard of that here in the US. We have programs where they will average your monthly payments over a year so you pay the same each month. But no "fixed price" for future purchases.

I suppose using future contracts it would be possible to buy now for later use. But right now prices for energy are at record highs. In this case you would essentially be playing the commodity market with futures even if the company is doing it for you.

I would think if the price of energy went down you would be stuck with the higher price.

Not sure it is a good idea.

I know airlines do this sort of hedging to see a more stable price for fuel so they can offer, book, flights far in advance and have an idea of their fuel costs.