Energy suppliers are seeking to tie customers to fixed deals costing as much as £4,000 a year, as ministers face growing warnings over “untenable” proposed rises to the price cap this spring.
A 12-month fixed deal for a typical household now costs an average of almost £2,500, according to data from comparison website uSwitch.
That is £500 more per year than the £2,000 level that Ofgem, the energy regulator, is expected to increase the cap on variable tariffs to in April.
Ovo Energy, the UK’s second-biggest supplier, is offering a fixed-rate deal worth just under £4,200, according to the data.
Certainty – a cap on costs even – costs money.
Someone, somewhere, has to take that risk after all. And they’ll want to be paid for doing so.
As it happens we’ve got such a system. Futures and options. Not entirely worthwhile for the single retail consumer but a firm can do it. Thing is, you need lots of liquidity, lots of speculators, so that you can transfer that risk.
Fun how the standard lefty shout is that we must tax liquidity in speculative markets so as to make risk transference more expensive, isn’t it?