Can someone explain what the first unit rate (KWh)is please...

twoflower169

Hi I have just received today notice from Eon that our current contract which is a Saveonline V1 (for Gas and Electric) is ending today!!! They are changing us over to EnergyOnline standard, which has a frist rate unit, instead of a daily standard charge. I dont know what this is or how to even work it out ( I do understand from the letter it has a yearly max), but as I dont understand it I cant compare to any of their products or anyone elses.

Also the letter says you can change up to todays rate!!! I dont think thats very fair for the letter to arrive on the day the contract changes, shouldn't they have notified me before today.

Any help would be grateful.:)

dave_ave

My guess is there standard rate has 2 tier charging - the first so many kWh are x pence per unit and the rest are at y pence per unit.

Cardew

The first(higher) rate is called the Tier 1 or primary rate.

Like most companies EON charge a higher rate for those kWh in lieu of the daily standing charge - it is by far the most common charging structure these days.

With EON they charge a higher rate for the first 900 kWh electricity and 2,680 kWh gas pa.

davidgmmafan

The higher rate is just another way of doing the same thing. The idea behind a higher tier or a standing charge is to cover the fixed costs of supplying a property with gas or electricity.

The standing charge is probably easier to understand, the drawback is that even if your usage is zero for a period of time you will still be paying the standing charge. The higher rate wouldn't be charged in a period where usage was zero, but can be complicated.

I believe E.On charge it evenly throughout the year, which makes it easier to work out, any kind of gas sculpting to me is designed to confound customers.

twoflower169

Cardew wrote: »

The first(higher) rate is called the Tier 1 or primary rate.

Like most companies EON charge a higher rate for those kWh in lieu of the daily standing charge - it is by far the most common charging structure these days.

With EON they charge a higher rate for the first 900 kWh electricity and 2,680 kWh gas pa.

So Cardew - The letter says they "divide this limit by 365days and then multiply it by how many days the bill is for" If I wanted to compare my last bill for example to this new contract, I use the above equation times the unit rate for x amount, then the remainder units x the secondary rate.

They have also cut my discount for paying online by 8.6%. I'm hoping they have a better deal that they will let me change to if I complain I have only just received the letter. I dont mind switching users per say but it took so long last time round.

Any other advice welcome, on this or the tariff.

Pincher

Even if your usage is zero, the infrastructure for supplying you is still being maintained and upgraded. EOn et al have to pay the National Grid something, which is separate from buying gas for £1, and selling it to you for £1.15.

30 years ago, everybody paid standing charge, and then some marketing genius decided "no standing charge!" sounds better because customers are idiots, and will switch to the company without standing charge. The door to door salesmen are STILL saying it to me, like it's a relgious revelation. :mad:

Note that the overheads like the call centre, IT system are part of the gross profit, so why not simply increase the pence per kWh, and have just one rate? So:

Company A, singe rate 3.0 pence per kWh,

Company B, Tier 1 4.8pence( first 2680kWh), Tier 2 2.8 pence

Which would you choose?

On the surface, you would think the main rate is 2.8pence , vs. 3pence, so obviously you should choose company B. But depending on usage, that is not strictly true.

Company A is good for low usage users. If you are company A, you have to put a stop to that! Because you end up paying more to the National Grid than you make by selling gas! Let's say the profit on £100 of gas sold to a customer is £15, the company probably pays the National Grid £50!

Cardew

twoflower169 wrote: »

So Cardew - The letter says they "divide this limit by 365days and then multiply it by how many days the bill is for" If I wanted to compare my last bill for example to this new contract, I use the above equation times the unit rate for x amount, then the remainder units x the secondary rate.

They have also cut my discount for paying online by 8.6%. I'm hoping they have a better deal that they will let me change to if I complain I have only just received the letter. I dont mind switching users per say but it took so long last time round.

Any other advice welcome, on this or the tariff.

Your first paragraph is correct.

However if you wanted to find out how much extra(if any) the tier system costs over your previous daily charge, you simply find the difference in price between primary and secondary units and multiply by 900 for electricity and 2,680 for gas. e.g.

Primary units 15p/kWh , secondary units 10p/kWh. Therefore the cost is 900 x 5p = £45 This would compare to a daily standing charge of 12.32 pence.

In practice if you used the full 900/2,680 kWh the daily standing charge and extra cost of the Tier system are usually about the same.

The advantage of the tier system is when you use very low amounts of gas/electricity in a quarter e.g. a holiday home or some people switch off their gas over summer.

dogshome

Hi twoflower169 - OK. You now know the Higher cost units replace the Daily Standing Charge, but with the end of your Saveonline V1 contract it's highly unlikely that E.on will have automatically switched you over to their cheapest tariff.

Make the effort to put yourself in command of the Utilty Bills today
To do this you need to know your annual consumption of Gas & Elec in Kwh - One meter unit of Elec is a Kwh, for Gas one meter unit = either app. 11Kwh on a metric meter or app. 31 on an Imperial meter - Your meter will be marked on the front as to which it is.
You can gather this information together from your past bills or ask your supplier for it - If you have been in residence for less than a year, post the numbers you have and someone will estimate your years use.

Armed with your yearly use, visit 'switchwithwhich' taking care to enter 'year' into the drop down menus. This site has an advantage in that it not only lists the cost from all the suppliers with the cheapest at the top, but with use of the 'tariff' icons it will show all the details of that suppliers tariff right alongside those of the tariff of your present supplier

twoflower169

Hi all,

Thankyou for your replies. I think I get it, I'm trying to use the website to find out the last years consumption and costs but the website has been so so slow today. Probably being overloaded by customers like me, just receiving this letter!

Former_E.ON_Company_Representative:_Malc

twoflower169 wrote: »

Hi I have just received today notice from Eon that our current contract which is a Saveonline V1 (for Gas and Electric) is ending today!!! They are changing us over to EnergyOnline standard, which has a frist rate unit, instead of a daily standard charge. I dont know what this is or how to even work it out ( I do understand from the letter it has a yearly max), but as I dont understand it I cant compare to any of their products or anyone elses.

Also the letter says you can change up to todays rate!!! I dont think thats very fair for the letter to arrive on the day the contract changes, shouldn't they have notified me before today.

Any help would be grateful.:)

Hi twoflower and sorry for the late reply.

I must also apologise for the very late arrival of the letter informing you of the ending of Saveonline 1.

This was part of a much wider issue. These letters should have been sent out a fair time ago but were incorrectly held by our mailing house.

Saveonline 1 was the only online tariff we did with a daily standing charge rather than two tier charging.

I'm afraid we no longer offer any online tariffs with a standing charge.

There is already some excellent advice on here about two tier tariffs and how the primary/secondary rates are calculated. Don't think I can really add to this.

I would do as others have suggested and pop your usage in kWh on to one of the comparison sites. This will list all the tariffs available to you, both with us and the other suppliers. Choose the deal which best suits your circumstances.

The standard online product you have been automatically switched to does not have any restrictions or tie-ins so you will be able to change this easily whenever you wish.

Again, sorry for the inconvenience caused by our mistake in sending the letter so late. Give me a shout if you need any more info as will be happy to help.

Malc