MSE News: Ofgem's 12-month price forecast falls slightly

Former_MSE_Helen

The average annual dual fuel energy bill for the next 12 months is expected to be £1,326, according to Ofgem...

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Ofgem's 12-month price forecast falls slightly




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Bluebirdman_of_Alcathays

https://www.ofgem.gov.uk/publications-and-updates/methodology-supply-market-indicator

So OFGEM now think we use 3.8 MWh Elec, and 15MWh gas a year.

A notable rise from the figures we were given earlier in the year of 3.2 and 13.5.

Which is it?

Bark01

The methodology isn't constant. I think the Q1 change to methodology was significant but I can't find reference of what it was.

Version date Summary of changes
27/03/14 First edition following 2013/14 review of methodology
31/07/14 Consumption input methodology amended
27/11/14 Network charges methodology amended to note that
we use indicative and final charges when available.

Pincher

"The average annual dual fuel energy bill for the next 12 months is expected to be £1,326"


https://www.ofgem.gov.uk/ofgem-publications/64026/domestic-energy-consump-fig-fs.pdf

What are they talking about? Based on their "medium" consumption of 16,500/3,300kWh, you can get one year fixes for around £1,050, including standing charge and VAT.


Based on my 20,000/5,000kWh consumption, I am fixed till January 2016 for £1,340. Am I the average user, now?

Bark01

Its based on the SMI (supply market indicator), this uses a different consumption to typical consumption. There is a link to the SMI data in Birdmans post.

In vary basic terms the consumption is worked out as follows:

SMI = Mean = more representative of suppliers
Typical = Meadian = more representative of customers

Bluebirdman_of_Alcathays

Not good enough. That's a difference of 10% gas 15% electricity - no way a well calculated average should differ that much between mode and median - the main factors that can skew the distribution of a mean calculation are "outliers", and residential supply is far more stable than that.

They have 20 jobs on offer at the moment - perhaps it's time for a serious statistician.

Pincher

It does make sense if they just collect standard tariffs from all the suppliers, multiplied by the number of customers each has, then do an average. Job done.


Lots of time freed up for the pub.

Consumerist

Pincher wrote: »

"The average annual dual fuel energy bill for the next 12 months is expected to be £1,326"

What are they talking about? Based on their "medium" consumption of 16,500/3,300kWh, you can get one year fixes for around £1,050, including standing charge and VAT. Based on my 20,000/5,000kWh consumption, I am fixed till January 2016 for £1,340. Am I the average user, now?

It makes more sense if you bear in mind that a sizeable majority of customers have remained on a standard variable tariff with their incumbent supplier since denationalisation.

Bark01

Bluebirdman_of_Alcathays wrote: »

Not good enough. That's a difference of 10% gas 15% electricity - no way a well calculated average should differ that much between mode and median - the main factors that can skew the distribution of a mean calculation are "outliers", and residential supply is far more stable than that.

They have 20 jobs on offer at the moment - perhaps it's time for a serious statistician.

The source data is freely available from DECC and the methodology is published on the OFGEM website, so feel free to check it if you like..

The SMI consumption is an estimate of future consumption based on the latest available data. updated monthly weather corrected and shown as a mean average

The Typical figure aims to show a trend and is based on 2 years worth of historical data, its reviewed every 2 years. the current TDCV (Typical Domestic Consumption Value) was set at the end of 2013 and was based on the data from 2010-2011 and is not weather corrected and is show as a Median average.

You are not comparing apples and apples. Each methodology has a its benefits as they are trying to show different things - SMI needs to show the whole market as it attempts to forecast profits for the supplier. TDCV attempts to show the average consumer.

Bluebirdman_of_Alcathays

Bark01 wrote: »

The data is all freely available from DECC as is the methodology, so if you'd like to have a go...

I'm not a statistician, but thank you for the kind offer.

However, I don't expect the regulatory quango, who let's not forget we all fund, to produce two entirely different figures for average consumption in less than 1 year. Tariffs are generally creeping down, and the general consensus is that people are using less. According to the geniuses on Millbank, we're all suddenly spending more than 10 months ago.

Shome mishtake surely?