Wholesale gas prices fell to their lowest level of the year on the day that energy company Eon announced its latest hike in bills.

Eon, which has about 5 million customers, became the latest of the big six energy suppliers to increase its bills when it announced on Friday that prices for gas and electricity will rise by an average 18.1% and 11.4% respectively from September 13 (see the Eon announces price rises news story).

But when Eon made the announcement, wholesale day-ahead gas prices had dropped to their lowest point of the year, at 49.9p per therm, and electricity prices sunk to their lowest point two days previously, at 45.2 megawatts per hour.

The supplier follows British Gas, Scottish Power & Scottish and Southern Energy in announcing price rises in recent weeks, which the industry has blamed on a 30% rise in wholesale costs since last winter.

There have been repeated calls for the sector to be referred to the Competition Commission amid allegations of unfair rises.

A series of events created a “perfect storm” for energy prices earlier in the year, after the Japanese earthquake and tsunami put nuclear reactors out of action, unrest in the Middle East drove up energy prices, and Germany decided to exit nuclear power.

But gas has fallen by 22% and electricity by 19% since their March peaks amid the slowdown in the global economy.

The companies buy their wholesale gas and power a long time in advance but the price of buying ahead is also at five-month lows and still falling.

Expert opinions

Omar Rahim, of energy market analysis site, Energy Trader Daily, says: “The wholesale electricity and gas markets have fallen consistently since March, this is not something that has happened suddenly.

“It’s ironic that on a day when suppliers are again raising their prices, gas prices are at a year low and electricity prices are also at multi-month lows.”

Energy companies have recently been urging customers to fix their energy prices for the next year to shield them from further rises but if commodity prices continue to drop it could mean that millions are locked into high tariffs.

Andrew Horstead, risk analyst at energy specialist Utilyx, adds: “If wholesale prices continue to drop, the decision to put up energy prices for households is going to be a difficult PR pill to swallow.”

The average Eon dual fuel bill for a customer paying with direct debit will rise by 15.2% to 1,190 from next month.

Eon says almost 600,000 were unaffected by the rise, including its most vulnerable customers on WarmAssist tariffs.

It is the second price rise by Eon this year after it increased electricity tariffs by 9% and gas by 3% in February (see the Eon to raise prices news story).

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“Fix now!” That’s the message you’ll hear now from many mortgage experts with rates at record lows. But as broker London & Country’s David Hollingworth (right) says, none of these commentators are in possession of a crystal ball.

Should I fix or go for a variable rate mortgage? It is perhaps the most common question posed by mortgage borrowers.

What they generally mean is not whether fixing is a good product but whether it will work out cheaper than a variable deal over the next 2, 3 or 5 years.

It really is the perennial dilemma for borrowers and is an impossible question to answer definitively unless you are in possession of the proverbial crystal ball.

Being the topic at the forefront of most borrowers’ minds means that it’s always a favourite for debate amongst market commentators and economists.

Although there is clearly extremely useful insight to come out of economist findings there is never any guarantee they will be correct.

No matter how you approach it, the cheapest deal will depend entirely on what happens to interest rate movements in the coming months and years.

It is also generally true that you will be able to find an opinion or forecast that is either more extreme than or is a polar opposite of the majority view.

Unfortunately, all too often the talk around whether it makes sense to fix will be based on someone’s view of what will happen to interest rates.

If that view means that variable rates would look cheaper there can be a temptation to brand fixed rates as poor value.

That may turn out to be true when looking back with the luxury of hindsight but there are other factors that need to be taken into account.

Experts can get it wrong

After all, for every forecast that proves to be correct there will be a number that are way off the mark.Economists are currently trying to make sense of what remains a very uncertain and volatile market.

That inevitably leads to a shifting expectation of what will happen to interest rates and new economic data continues to trigger changes in thinking.

This week has shown how uncertain the outlook remains as continuing fear over the euro debt crisis and US economy has led to a collapse in world stock markets.

That is unlikely to reduce the expectation for interest rates to remain low for some time to come.

However, it was only the beginning of this year that the market fully expected an imminent rise in base rate and fixed rates began to climb as a result.

That increase never came about and rate predictions have subsequently turned right around with the majority of a recent BBC poll suggesting there will be no move this year.

What should you do?

So how should borrowers approach the question of what deal to go for? They really need to think about what will be the best deal for them by considering how well equipped they are to deal with different levels of rate increase.

If a borrower is convinced that rates will remain low but is also able to deal with an uplift in their mortgage costs they could make a sensible decision to go for an initially lower but variable tracker deal.

If, however, the thought of worrying about whether, when and by how much rates might move in the years to come scares the living daylights out of them then the security of a fixed deal will help ease those worries.

Even worse, if they would find their monthly budget squeezed by relatively mild increases they perhaps need to decide whether it is a risk that they can afford to take.

In short, you have to focus on making the right choice for you after all, you will be the one having to meet the payments.

Security of a fix may end up costing a bit more in the long run but that could be a worthwhile premium to pay for knowing exactly where you stand amid the uncertainty of the current market.

Views expressed are not necessarily those of MoneySavingExpert.com.

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Important! How this site works

We think it’s important you understand the strengths and limitations of the site. We’re a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can’t guarantee to be perfect, so do note you use the information at your own risk and we can’t accept liability if things go wrong.

• This info does not constitute financial advice, always do your own research on top to ensure it’s right for your specific circumstances and remember we focus on rates not service.

London’s leading shares index sustained more heavy losses today as the turmoil engulfing world markets showed no signs of easing.

The FTSE 100 Index opened more than 2.5% lower off 140 points at 5,253 amid investor panic over the deepening eurozone debt crisis and health of the US economy.

The FTSE 100 registered its biggest fall of the year yesterday shattering pensions and savings funds as it wiped 50 billion off its value while Wall Street’s Dow Jones Industrial Average plunged 4.3%, one of its worst ever falls.

The picture was just as bleak in Asia where Japan’s Nikkei 225 slid 3.7% and Hong Kong’s Hang Seng dropped 5%.

The plunge in share prices came amid rising fears that Italy and Spain, the eurozone’s third and fourth largest economies, could default on their debt and require EU-funded bailouts.

The FTSE 100 Index plunged to its lowest levels since early September last year, while Germany’s DAX fell 2.7% and the Cac-40 in France dropped 2.2%.

The banking sector suffered the greatest falls in London including a 14% drop for Royal Bank of Scotland, which today published half-year results revealing a 794 million loss.

Lloyds Banking Group fell 10% to around half the price the Government paid for its shares in its 21 billion bailout while Barclays also dropped 10%.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, says: “The markets are in catch-up mode in early trade, having missed some of the late sell off in the US and a weak overnight performance in Asia.”

Recent problems

World markets have been on a downward trajectory in recent weeks as the US debt crisis added to ongoing concerns in Europe.

The vast spending cuts outlined in America’s debt-limit deal raised fears over the world’s biggest economy falling back into recession.

Meanwhile, some traders and analysts are expecting the US to be stripped of its AAA credit rating, in light of recent weak economic data and its debt-laden public purse.

Elsewhere, European Commission president Jose Manuel Barroso fuelled fears after he called for a “rapid reassessment” of the eurozone’s multi-billion euro rescue fund as he said new powers granted just two weeks ago were insufficient to contain the current crisis.

The FTSE 100 Index closed down 3.4% last night its biggest daily drop since March 2009.

The Dow Jones lost 512.76 points, which was the steepest points fall since December 2008. It was the ninth worst fall by points for the Dow.

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Thousands of holidaymakers have had their summer get-away ruined after the collapse of tour operator Holidays 4 U.

The Sussex-based firm, which sold trips to Turkey, went into administration today, leaving 50,000 with future bookings without a holiday in the middle of the peak summer period.

On the positive side, those affected will have the cost of their package or flights refunded by the UK’s Civil Aviation Authority (CAA), under its Atol guarantee.

Meanwhile, anyone currently abroad can continue their holiday as normal as the CAA will ensure they are flown home at no extra cost, again under the Atol protection.

How many people are affected?

Holidays 4 U has 13,000 customers currently on holiday and 50,000 booked on future flights.

My holiday’s not yet started. What should I do?

All future Holidays 4 U packages and flights are now cancelled.

Anyone with a package or flight-only deal from Holidays 4 U is fully protected. They can claim a refund from the CAA (see its website for details).

There is a chance those with flight-only deals may be able to re-book the same seat.

Holidays 4 U only sold seats on airlines; it isn’t a carrier, so call the relevant carrier to check. In most cases, it will be Turkish budget airline Onur Air.

I’m currently overseas. What should I do?

The CAA says those on holiday now are unaffected and can continue in any accommodation as normal.

It will ensure all customers due to fly home in the coming weeks will be able to do so as planned.

Travellers should arrive at the airport for check-in as normal for their flight home, as it will pay the airline for the fare.

However, it adds that in some cases passengers may be placed on alternative flights home. If there are any flight changes, information will be placed on the Atol website.

Holidays 4 U customers currently abroad can call the CAA on +44 (0)161 444 5810 for help.

In some cases, hotels may ask guests to pay for their stay again they’d have already paid when booking the package even though the CAA will reimburse the accommodation provider.

The problem is some hoteliers overseas do not understand the Atol protection. The CAA says, if you’re forced to pay, keep all receipts and claim the cash back from it when you return.

What about unaffected accommodation/other holidays costs?

Any separate accommodation booked with a travel agent, or any other holiday booking such as car hire and excursions is not protected by the Atol scheme if you are unable to use it if you can’t reach your destination.

Try to get any elements refunded. If unsuccessful, try to claim on your travel insurance (see below).

If you booked accommodation or other holiday extras on plastic it is unlikely you’ll get compensation from your card firm.

Under section 75 of the Consumer Credit Act you can get a refund from your plastic provider if the retailer/travel firm breaks its contract, if you paid over 100.

In this case, only your flight or package has been cancelled, not anything outside that booking. So accommodation/car hire/other providers will still offer that service.

Visa and Mastercard run voluntary schemes offering a similar guarantee, which again is unlikely to pay out.

Will travel insurance pay out?

If you’ve booked non-refundable accommodation or other extras, call your insurer.

Whether you get a payout depends on the policy. Many insurers cover cancellation but not all do so there is no one-size-fits-all answer.

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Tesco Clubcard customers can double the value of their reward vouchers to spend on posh food, cosmetics and pet food at the supermarket from today.

The scheme, branded the Summer Clubcard Voucher Exchange, will run for a month. It is similar to the various double-up schemes available over Easter and last year, where shoppers only needed to earn half the usual number of points to buy applicable products.

The difference this time is there are fewer departments in which Summer Exchange tokens can be used by the 16 million Clubcard holders. For instance, they can no longer be used on clothing or toys.

On the flip side, they can now be used on Tesco Finest grocery products the store’s premium brand.

What are Clubcard vouchers?

Shoppers who hold the Tesco loyalty card get two points per 1 spent at the supermarket. Each point is then worth 1p to spend at Tesco, sent in the form of Clubcard vouchers.

Importantly, even during the next month, customers can still spend their vouchers in the usual way with non-Tesco retailers where they can get up to three times the value by exchanging them for Clubcard Rewards, if they don’t want to participate in the separate Summer Exchange.

This may provide better value in many cases, so check before buying.

What vouchers can I double in value?

Only Clubcard vouchers in 5 multiples can be exchanged. So a 5 voucher will become a 10 Summer Exchange token, while a 10 voucher will become a 20 Summer Exchange token, and so on.

You can use a higher value Clubcard voucher and any change will be credited back to your Clubcard account when making the exchange.

Say you have a 7 voucher, you can convert 5 of that into a 10 Summer Exchange token with the remaining 2 credited back to your account in points.

Where can I make the exchange?

The exchange
can be done in-store (excluding Tesco Express) at the signposted desks, or online (though you’ll need a printer).

What can I use the Summer Exchange tokens on?

Before exchanging, identify the department you want to spend the voucher in as they will then only be valid for that section.

Below are the departments you can spend your vouchers in.

• Tesco Finest (in-store only)
• Skincare, cosmetics and fragrance (in-store only)
• Pet food and accessories (in-store only)
• Flowers and plants (in-store only)
• Opticians (in-store only)
• Mobile phones and accessories (online and in-store)

Exclusions apply so check online before exchanging.

Where can I spend the Summer Exchange token?

The Summer Exchange token can be used in any Tesco store where the item you want exists (plus online for mobiles).

Can I get change from the Summer Exchange tokens?

No. The cost of the products purchased must equal or exceed the value of the Summer Exchange tokens. This means you can’t use a 10 token to buy an 8 item even if you accept you’ll lose 2.

Can I buy something worth more than I have in Summer Exchange tokens?

Yes. You can pay the difference yourself.

Is there a deadline?

Clubcard vouchers can only be converted to Summer Exchange tokens until 1 September. Exchange tokens will then be redeemable until 11 September.

Does the Clubcard scheme change otherwise?

• Earning points. The revamp does not affect the way you collect points, where you usually earn two points per 1 spent at Tesco.
• Spending points. You’ll still be able to triple the value of Clubcard points that can be used at certain non-Tesco retailers.

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Millions of households face a sharp rise in the cost of gas and electricity as the first of the summer price hikes comes into force.

Scottish Power is today raising electricity prices by a typical 10% and gas prices by a whopping 19% on average, in a bitter blow to 2.4 million households.

The rise affects all Scottish Power customers other than the 700,000 on a fixed or capped deal and will see typical dual fuel bills (where both gas and electricity is supplied) soar by a mammoth 175 a year.

British Gas is raising prices by up to 18% on 18 August, while Scottish and Southern Energy (SSE) will increase rates by up to 18% on 14 September.

The trio blame a rise in the cost of wholesale energy (the power they buy to then sell to us).

EDF, Eon and Npower are all expected to increase the cost of power but have yet to announce their plans.

Escape lock-ins

British Gas and SSE customers can escape from variable tariffs that appear to lock them in, if they’d benefit from switching.

Many gas and electricity deals come with an exit fee of up to 100 (though typically around 60) for those who leave before the term of the deal ends.

But where a supplier puts prices up, because that results in a contract change that’s detrimental, rules from regulator Ofgem mean many consumers don’t need to pay that penalty as long as they inform their power firm they wish to switch before the increase.

Therefore, it is now too late for Scottish Power customers.

The amnesty does not apply to those on a fixed rate deal because the price of their tariff will not rise, due to the nature of the product.

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MoneySavingExpert.com has submitted its concerns about daily deals sites to the major players. As part of our proposed shake-up, we’ve asked them to adopt a code of conduct to protect consumers.

The major sites such as Groupon, kgbdeals and LivingSocial offer many great deals but too often we hear of consumers unable to access them because they are over-subscribed, leaving consumers with a worthless voucher that they often find difficult to get refunded.

This typically happens when sites offer deals on services, such as massages, for smaller merchants who are flooded with bargain-hunters so are unable to cater for the demand.

We highlighted the issue in Martin Lewis’s daily deals blog on Tuesday. Since then, we have received hundreds of comments about daily deals sites from readers; many good, but the majority saying they were unable to use their voucher.

Who have we contacted?

Over the past two days we have officially contacted Crowdity, Goody Pass, Groupon, Kelkoo Select, Keynoir, kgbdeals, LivingSocial, Wahanda and Wowcher.

We emailed them a copy of Martin’s blog which outlines our concerns, and our calls for reform, which includes the code of conduct (see it below).

We have given them a few days to digest our concerns before formally replying. We will publish their replies when they are all in.

Martin says: “The daily deals industry needs to get its house in order.

“Companies risk being seen as ‘get the money in the bank, not the customer through the door’ merchants, unless they collectively improve standards.”

What are daily deals sites?

Daily deals sites, sometimes referred to as group buying sites, work by selling you a voucher which you then exchange with the merchant in question, such as a spa, hairdresser or supermarket. Often, you pay a lot less for the voucher than the value of the items or service you get.

We often feature daily deals on MoneySavingExpert.com, but only the good ones, and always check there is sufficient capacity before publication.

Our proposed code of conduct

1. Retailers must have the capacity to fulfil all vouchers. You should always cap the number of vouchers sold for a deal to a number that can be fulfilled in a reasonable and timely manner. And to stop working with any retailers who regularly don’t deliver.
2. Customers must get a full refund where the service has not been fulfilled. There should be no time limit on these refunds, provided customers have attempted to fulfil them in a reasonable time.
3. The cap should be published for each deal. This would allow people to take a decision as to how busy the service is likely to get.
4. If providers go bust the refund should be automatic. Daily deals sites work with many small companies and in our current economy that means some will go under. When this has happened we’ve heard of daily deals sites that haven’t contacted consumers and offered automatic refunds, they’ve waited until they’re claimed. That’s not appropriate.
5. It should be published how many people taking up the offer, the retailer can serve each day. This would allow it to be easily seen how tough it could be to get an appointment. For example, if it is a massage on offer, how many therapists are there? And how many massage beds are available?
6. Retailers must not increase prices. If a voucher is sold that allows people to redeem a cash value (eg, spend 15 and get 50 to spend in-store), the company must guarantee it will not raise its prices during the voucher redeem period otherwise this is misleading when consumers sign up.

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With university tuition fees set to rise to up to 9,000 a year from 2012, Nicholas Barr (right), a London School of Economics professor, who brought the current Income Contingent Repayment system to the UK, says governments have done a disastrous job of explaining true costs.

One of the worst features of the debate about paying for universities is that all governments have been woeful beyond belief in explaining how the system of student loans work.

They have let the word ‘debt’ escape, and run round like a rabid ferret.So people think of student loan debts like credit card debts.They are not.

They are a payroll deduction, like income tax and national insurance, but smaller than either. A better way of thinking of the system is as a form of graduate tax, but one that does not last forever.

Before explaining, it’s a good idea to answer the ‘so what’ question, ie, why is going to university a good idea?

So why should I go to university?

The argument the Government gives for going to university is graduates generally earn more than non-graduates.

That is true, but it is only part of the story.When I meet my ex-students they are not all making shed-loads of money (though some are).But what stands out is most of them really enjoy their work.

Because people are living longer they will have to work longer so you will be working for a long time.

So it’s enormously important to have a job where you don’t wake up on a Monday morning with a sinking feeling in the pit of your stomach.

Having a degree does not guarantee that and of course many people without a degree also enjoy their work. But having a degree increases your chances of having a job that pays well and which you enjoy.

I may owe 40,000 when I’m done. Isn’t that scary?

If you put it that way, yes. But that is not the way to put it.

Here are the key points:

1. The Government has been a total waste of space in publicising that loans have income-contingent repayments (for students starting in 2012 and after, repayments will be 9% of earnings above 21,000).If you earn 25,000 (about the national average) your repayment will be 9% of 4,000 = 360 per year, or 30 per month.

   
   This year, someone earning 25,000 pays 292 in income tax per month and 177 in national insurance contributions. So loan repayments are like income tax in that low earners make low or no repayments, they are automatically related to the size of your pay packet, but are much smaller than income tax.

   
   The only differences are the tax is paid only by people who have been to university and does not last forever (if you start university in 2012 or later, anything a person has not repaid after 30 years is forgiven). The table shows how this loan system would look under the new system.

2. Thinking of student debt like credit card debt is filing it in the wrong bit of your brain.Repayments are like a capped graduate tax, so the right place to file it is as a payroll deduction like income tax and national insurance.
3. Though 40,000 is large, it needs to be seen in proportion. If you think that owing 40,000 is scary, the really bad news is that over a full career, in cash terms, a typical graduate will pay the Government over a million pounds in income tax and national insurance.Any number can be made scary by adding it up over many years; think how much you will spend on food over the next 50 years.

If I want to buy something on credit after my degree, will my student loan be taken into account?

Yes, but that won’t be a problem. Lenders (mortgage, car, etc) are normally interested in your take-home pay, net of deductions like income tax, national insurance and loan repayments. The latter will reduce your borrowing capacity, but not by much since your monthly repayments are a relatively small fraction of earnings.

Remember that your income will generally be higher because you have a degree and lenders regard graduates as good risks. So a person’s borrowing capacity will generally be higher with a degree than without.

Views expressed are not necessarily those of MoneySavingExpert.com.

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