What part of fixed price contract do you not understand?

Millions of households on fixed-price contracts to miss out on Government’s energy savings promise
Consumer watchdogs demand answers as EDF Energy says it will not pass on the full £50-worth of savings from cuts to green levies onto customers with long-term deals

8 comments on “What part of fixed price contract do you not understand?

  1. The guy doesn’t seem to know that British Gas has “fixed and fall” contracts where the customer shares any fall, but not rise, in the variable rate rather than a straightforward fixed-price contract

  2. I think the energy companies are on dodgy ground here. How does the contract cover govt green levies? Are they listed separately on the bill? Are they a charge levied to off-set a government tax or are the energy companies providing a service by paying the levies for us (as the banks were, allegedly, in the bank charges case)?

    Suppose the govt had increased them… I strongly suspect that consumers would have had their “fixed” bill raised to cover that contingency, so it follows that any fall would have to be passed on.

    Imagine that you were buying a house, and the conveyancer took the requisite amount of stamp duty tax from you; then before the completion, the govt lowered stamp duty, but the conveyancer told you he was going to keep the money? I think you would be outraged and rightly so.
    Compare this to the conveyancer keeping a reduction in local authority search fees; in this case he is charging for the service of performing all the relevant searches, so is under no obligation to pass the reduction on.

  3. @ Jonathan Miller
    Try reading your bill
    British Gas specifies how much of the bill covers “Green and Social levies” imposed by Mr Miliband – to contrast it with their profit margin. They are a cost imposed on energy users via the companies by the previous government – effectively a regressive tax on the poor to subsidise those rich enough to install solar panels or own a windfarm.
    A fixed price contract is fixed in price – intended to insure the customer from rises in wholesale fuel costs but under English Law if its fixed price the price is fixed until the expiry of the contract, so the company takes the pain of any increase in its costs the benefit of any decrease. British Gas with its “fixed and fall” passed on the benefit.

  4. @john77
    Unfortunately that only applies if there isn’t an out-clause in the contract. I’ve just had a look at the Eon fixed price contract which says:

    We may change the Terms and Conditions of this contract, but we will not change the prices unless:

    the information you have given us is incomplete or incorrect;

    there is an increase in VAT payable on electricity or mains gas;

    there is an increase in our costs as results of any action by a governmental or statutory body;

    Seems to me that last point would apply to the green levies.

  5. I think we need a futures market for electricity. I would be keep to lock in a price that I am willing to pay and then let someone else bear the risk/reward of price changes. It works for farmers why not the consumer electricity market?

  6. Fixed price can be factored into price changes. So you get fixed price now, then at some point the company increases gas price they charge by 10% rather than 8% because of fixed rate deals perhaps.

  7. Some consumers have had the sense (or naked-ball risk-taking neck) to sign up to fixed price contracts. This presumably means that those consumers on variable price contracts will get stiffed by more than the cost increase, to make up for the “freebies” those on fixed-price contracts are getting. Why aren’t the Graun and ZaNulabour jumping up and down about this capitalist injustice?

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