Oh dear. I knew that gas and electricity costs were bound to rise from now on, for one reason or another, but this present hike in the cost of domestic gas for cooking and heating is most unwelcome. It also affects the price of electricity, as power stations are mostly run on gas nowadays. My current 2 Year Fixed-Price deal with SSE (now part of Ovo) runs out on 1st December. So, like a great many other people, I will face a price rise this winter. What should I do? I can't escape paying more than I do at the moment. What's the best plan?
It helps that for those on the default variable tariff, Ofgen's price cap limits what can be charged. The cap has just been raised, from yesterday (1st October), and it means a price increase that will hurt for those on low incomes. It will be raised again from 1st April, and I'm sure that the price increase then will be even stiffer.
SSE are assuming that over the next year I will consume 23,124 kWh of gas, and 1,563 kWh of electricity. I'm on a smart meter, so they know my personal consumption pattern, which reflects the fact that for anything up to 100 days of the year I'm away in the caravan, and consequently not using up gas or electricity at home at anything like the normal rate. (It clearly pays me to be on holiday!)
SSE says I'm currently using electricity and gas at the rate of £110 per month, and tell me that if I want to adopt a new 2 Year Fix it will now cost me a whopping £184 per month. Gulp. I don't think so. Not yet, anyway.
However, their default Standard tariff - the variable one they will switch me to, if I don't take out a new fixed deal - will currently cost me only £121. It's comparatively low because of the price cap. But next April, when the cap is next changed, I'm sure I'll be paying rather more per month, if still on this Standard tariff - my guess is £155. And then, in October 2022, when the cap is raised further, I reckon I could be paying £180 per month on that Standard tariff.
By October 2022, one year from now, the worldwide supply situation for gas may have improved, so that wholesale prices have become a little lower. Presently I'm thinking that a new 2 Year Fixed deal, taken out in September next year, might cost me 'only' £170 a month, slightly less than the Standard tariff will. So that's when I'll go Fixed again.
Obviously, I don't have a magic crystal ball, and can only make reasonable guesses. I'll watch the unfolding price position closely, and revise my plans (and my budgeting) accordingly.
Even if I'm right, it'll be no joke to end up paying £170 per month for my gas and electricity. That's a 55% increase on what SSE say I should be paying now, in October 2021.
Still, a move to SSE's Standard tariff from December won't involve much immediate pain. Presently I'm paying £117 each month by direct debit - more than I need to - and I've built up some credit on both the gas and electricity accounts. So a modest hike to £121 per month won't break the bank.
The real crunch will come next April. But it coincides with a pension increase, and this will soften the financial hit somewhat.
But what about my Savings Plan, geared to buying a new all-electric car in 2026? I won't be able to put away so much. And the car purchase may have to be deferred to 2027 now. Drat.
