📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

** Price Caps: Are Any Really Worth It? Case Study **

Options
codger
codger Posts: 2,079 Forumite
Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
With all this talk about capping, I wondered if the following actual, current example may be of interest to other MSErs.

And also, if any wiser heads here might share their thoughts?

We are on EDF Energy Dual Fuel Online v3 Direct Debit as follows:

Electricity

kWh charge, first 225 used each quarter: 13.77p including VAT (Band A)
kWh charge, all other kWhs used: 10.49p including VAT

Gas

kWh charge, first 670 used each quarter: 5.565p including VAT (Band A)
kWh charge, all other kWhs used: 3.209p including VAT

EDF states: "The Band A Gas Rate applies to a block of 2,680 kWh per annum and is applied on a pro rata basis for each day covered by the relevant bill and rounded to the nearest kWh."

We are also told we must now pay an additional 11.5p per day because we are not directly connected to the National Grid gas pipeline network.

I've no idea what that is all about, but for the moment, it's probably by-the-by. The invitation we have received from EDF is to join its Price Protection 2009 Scheme, which will fix our energy costs until October 31st 2009. The figures vary depending on where you live in the UK, but we are being offered:

Electricity, STANDARD rate:

kWh charge, first 900 used per annum: 18.17p including VAT
kWh charge, all other kWh used: 11.00p including VAT

Gas, DUAL FUEL rate:

kWh charge, first 2,680 used per annum: 7.718p including VAT
kWh charge, all other kWh used: 3.368p including VAT

We would also be entitled to our current annual discount of £50.40p, this in respect of Direct Debit payments (electricity discount, £8.40p; gas discount, £16.80p) and Dual Fuel (£25.20p)

There is no mention of an electricity "dual fuel" rate. Capped gas prices only apply as dual fuel, i.e., the customer must take both gas and electricity from EDF.

There is no mention of online discount; currently, our EDF "energy online" rates are less than EDF's standard rates.

Our acceptance of the Capped Price Offer would see us:

immediately paying around 32% MORE for our electricity than we do now;

immediately paying around 39% MORE for our gas than we do now.

A bargain? The political climate is such that energy companies seem unlikely to come up with another price hike until January 2009, so raking in 32% more for electricity between now and then, and 39% more for gas between now and then, would seem A Very Good Thing.

If you're an energy company.

I have noted Martin's remarks, but continue to be dogged by the suspicion that energy companies are no different to banks. If an energy company, any energy company, is offering a "good deal", then I'm inclined not to believe the offer is motivated by altruism.

Or. . . am I being short-sighted? Cynical?

:confused:

Comments

  • You seem to have hit on a point that seems to be lost on many people who cap and then claim they are in profit fairly soon after capping....the fact that they have effectively been paying way over the odds for a certain length of time! Plus many people still insist on comparing their capped/fixed deal with their energy company's standard rate! I would suggest any talk of being 'in profit' should include:

    1) The figure should be adjusted to take into account the amount of 'overpayments' made immediately comapred to if the punter had carried on paying the energy comapny's cheapest rate.

    2) The cheapest rate on the market should provide the benchmark for any 'already in profit' calculation (and not even just the cheapest rate your particular energy company do)

    3) I also believe any finacial penalties charged for leaving early shoudl be added in to the total payments made.
    Call me Carmine....

    HAVE YOU SEEN QUENTIN'S CASHBACK CARD??
  • mech_2
    mech_2 Posts: 620 Forumite
    I am glad I fixed when I did. All the decent fixed deals are no longer available (I seem to remember Martin saying so too) and the only tariffs that are any cheaper than the one I am on now are EBICo, BG Click 5 and EON online extra saver 8. All three of these it is speculated may raise their prices soon. I have no penalty for leaving and my prices are guaranteed not to rise until 2011.

    I think the sceptics might be curiously more quiet come the spring.
  • codger
    codger Posts: 2,079 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Carmine: I wish there was a way of pinning on this board the three points you have made.

    Because I'm not sure, either, of just how deep is the research of those who advocate price capping (Martin excluded, naturally.)

    EDF have, for example, quoted in their letter to me a "typical saving" based on a customer profile that isn't remotely like mine, where the payment basis is, as you might well have guessed, at the standard rate. Not online. And not on dual fuel / direct debit, either.

    The Price Capped Rate is the *new* standard rate so migrating to it makes absolutely no sense.

    Nor, for that matter, does it make any sense at all to voluntarily agree to a 36% price hike now -- on top of all the other price hikes that have already occurred -- in hope of, er, what? That come the next price hike, I'll be better off? Well yes, I might be, except that:

    a) the next price hike will have to exceed the price hike I'm so enthusiastically embracing now;

    b) the next price hike won't kick in until I've already spent a key part of the winter months, forking out far, far more than I need to have done.

    Mech: you're probably correct, the good deals have all gone.

    The deals that are being offered now seem to me to be a cynical exploitation of consumer fear and consumer vulnerability: if you don't pay more TODAY you're going to have to pay much, much more tomorrow!!!

    As in this instance: pay 36% more for energy now all the way through to January 2009, and then somehow -- somehow -- rationalise the "savings" made come the end of the overall price protection period in October 2009. Put it another way: for the best part of four months out of a period of 13 months, stump up more than you would ever have paid and think you've got a bargain.

    Yeah. Right.

    Funny, isn't it, how consumers have to do the math; not a single energy company says "here's a guaranteed way to ensure you pay 36% LESS than you would have otherwise have done during the period of our Price Cap Promise".
  • Yeah I made a big mistake in capping with Eon till Oct 2009. I have just switched to BG Energy 5. It will cost me £35 to leave Eon but I should get 65 from Quidco for a duel fuel switch. Energyhelpline is showing Bg will save me approx £322 a year.

    I'm doing it quick before the winter sets in, to avoid paying the ridiculous Eon tariff on those heavy months.

    What was I thinking. :eek:
  • codger wrote: »
    Carmine: I wish there was a way of pinning on this board the three points you have made.

    Because I'm not sure, either, of just how deep is the research of those who advocate price capping (Martin excluded, naturally.)

    EDF have, for example, quoted in their letter to me a "typical saving" based on a customer profile that isn't remotely like mine, where the payment basis is, as you might well have guessed, at the standard rate. Not online. And not on dual fuel / direct debit, either.

    The Price Capped Rate is the *new* standard rate so migrating to it makes absolutely no sense.

    Nor, for that matter, does it make any sense at all to voluntarily agree to a 36% price hike now -- on top of all the other price hikes that have already occurred -- in hope of, er, what? That come the next price hike, I'll be better off? Well yes, I might be, except that:

    a) the next price hike will have to exceed the price hike I'm so enthusiastically embracing now;

    b) the next price hike won't kick in until I've already spent a key part of the winter months, forking out far, far more than I need to have done.

    Mech: you're probably correct, the good deals have all gone.

    The deals that are being offered now seem to me to be a cynical exploitation of consumer fear and consumer vulnerability: if you don't pay more TODAY you're going to have to pay much, much more tomorrow!!!

    As in this instance: pay 36% more for energy now all the way through to January 2009, and then somehow -- somehow -- rationalise the "savings" made come the end of the overall price protection period in October 2009. Put it another way: for the best part of four months out of a period of 13 months, stump up more than you would ever have paid and think you've got a bargain.

    Yeah. Right.

    Funny, isn't it, how consumers have to do the math; not a single energy company says "here's a guaranteed way to ensure you pay 36% LESS than you would have otherwise have done during the period of our Price Cap Promise".


    VERY salient point here! This is IMO one of the reasons the energy companies are REALLY pushing people into signing up for a fixed product now! Have you EVER seen these companies advertise their *cheapest* rate with quite the relish they are advertising their fixed tariffs?? The most expensive part of the year for gas/electricity punters is about to begin!! Get those punters 'locked in' at a high rate now and see those Winter bills GROW! More upfront cash for the energy companies. Oh, wait, this punter has 'seen the light' and wants to change supplier. That will be £35/£50/£75/£100 please, and shut the door on your way out (Oh, and btw, thanks for paying over the odds for the last few months, lol).
    Call me Carmine....

    HAVE YOU SEEN QUENTIN'S CASHBACK CARD??
  • mech wrote: »
    I am glad I fixed when I did. All the decent fixed deals are no longer available (I seem to remember Martin saying so too) and the only tariffs that are any cheaper than the one I am on now are EBICo, BG Click 5 and EON online extra saver 8. All three of these it is speculated may raise their prices soon. I have no penalty for leaving and my prices are guaranteed not to rise until 2011.

    I think the sceptics might be curiously more quiet come the spring.


    If you don't mind me asking, what exactly is the fixed price tariff you are on actually called, mech? TIA!
    Call me Carmine....

    HAVE YOU SEEN QUENTIN'S CASHBACK CARD??
  • Cardew
    Cardew Posts: 29,063 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Rampant Recycler
    Codger,

    Without getting into the merits/demerits of capping to Oct 31 2009, this whole thread is based on percentage increases that are completely wrong IMO.

    Tier 1 electricity has indeed increased by 32% but Tier 2 - which is the important increase for most people - has increased by only 4.9%

    So anyone using the UK average of 3,300 kWh per year would see an increase of 13.8% - not 32%

    Tier 1 gas has increased by 39% but Tier 2 gas (again the most important increase) has only increased by 5.0%

    Anyone with an average UK consumption of 20,500 kWh is looking at an average increase of 11.9% not 39%.

    So anyone considering the merits/demerits of capping with EON should be looking at increases of 13.8% for electricity and 11.9% for gas as the basis of their calculations if they have average consumption and a considerably lower percentage rise if they have heavy consumption.

    So I am afraid basing your argument against capping using figures of 32% and 39% makes no sense.
  • Cardew
    Cardew Posts: 29,063 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Rampant Recycler
    Woodgnome wrote: »
    Yeah I made a big mistake in capping with Eon till Oct 2009. I have just switched to BG Energy 5. It will cost me £35 to leave Eon but I should get 65 from Quidco for a duel fuel switch. Energyhelpline is showing Bg will save me approx £322 a year.

    However BG Click Energy 5 prices have not yet increased(when all the others did) and are pretty certain to do so soon.

    Still probably will be lower than EON capped, but by how much? and will they rise again next year? The eternal dilemma we all face!!
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.2K Banking & Borrowing
  • 253.2K Reduce Debt & Boost Income
  • 453.7K Spending & Discounts
  • 244.2K Work, Benefits & Business
  • 599.3K Mortgages, Homes & Bills
  • 177K Life & Family
  • 257.6K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.