To ask someone to explain the price cap to me?

[Mulhollandmagoo]

Posting here for traffic mainly, as we have fixed our energy bills at a ridiculously high rate in a panic and maybe shouldn't have?

Our previous fixed energy rate was £96 per month, which we paid DD, this ended at the end of Feb, so after conversing with our energy company we fixed again to start the beginning of march, at £245 per month, but this is so much higher that the current price cap, it's actually higher than the proposed October price cap, did we do the right thing by fixing? We can get out of our fixed tarrif with a tiny admin fee, is it worth doing so? Or should we just stay as we are, we can just about afford it, but it does make things tight, so if coming off our fixed rate saves us a little bit of money that would be really helpful.

I know this is such a daft question but having done some reading on it, it seems we shouldn't have fixed, but honestly I can't get my head around it, I really don't understand, can they change us more than the price cap?

The price cap sets the maximum price per kwh and the maximum standing charge companies can charge so there isn't a set monthly/annual figure as it depends on usage.

The current price cap is roughly whats in this screenshot:

How does it compare to your fixed rate charges?

And yes, fixed rates can be higher than the price cap as its the Standard variable rate that is covered by the price cap.

It's the price per kwh and the standing charge and your annual usage that you need to look at

No, whilst energy prices are so high it's generally not a good idea to fix, unless you were one of the few existing customers offered a particularly amazing rate by Eon a few months back.

Companies offer a fixed contract simply because they want to convince you to spend more money. On the standard variable rate they don't make any (or much, much, much) less profit.

Always look at the unit rates of standard variable vs the unit rates of a fixed contract.

The price cap only applies to an un-unfixed, standard variable rate.

Companies can charge whatever they like on a fix. It's truly the wild west.

For years people have had it drummed into them that a fix is a "deal". It's now however a scam, generally speaking, whilst wholesale prices are so high.

If you fix at above the level of the price cap, then yes you're worse off than if you were just at the Standard Variable Rate. The only way that you'd be better off in the end is if prices increased substantially during your fixed term, such that the cap had to rise above your fixed rate, sufficient to cancel out the earlier imbalance.

You need to look at what you've actually agreed. On it's own, £96 and £245 doesn't tell you very much, because you don't know if it's the right amount for your usage.

It could be that £96 was insufficient, you've built up debt so you're paying more now to address that. It could also be that your utility company is charging extra now, so you can start to pay towards your winter 2022 usage, so the price increase might not be as bad as it looks. Or it could be that you have signed up to an expensive fix, but without comparing unit prices and daily standing charges, it's impossible to say.

But if you continue with your fix, you'll overpay over the summer, but it won't go up in October, which was reported yesterday to be around another 40% on top of the April price rise. Remember that you use more energy in winter than summer, so it might be worth paying extra now, if it saves you from paying higher rates later in the year.