Understanding Ofgem price cap

garrehsponges

As we all know the price cap is set to rise from £1,277 to £1,138 for those on standard meters who pay by Direct Debit.

As I understand it, the Ofgem price cap is a cap on unit of energy. The price above is based on "average" usage values: 2,900kWh of electricity, 12,000kWh of gas.

Let's assume you used halve that amount of electric and gas... the price should be capped at (£1,138 / 2) = £569 ? However if you plug those values into MSE Energy Club it currently states the British Gas standard variable rate will cost £719 a year (and that's not taking into account the 12% hike that will be coming on 1st October!)

So based on the above, it looks like the standard rate tariff is well above the cap? How is that possible? Is there extra fees that companies are charging? If so, is there a cap on those extra fees?

Is there a publication somewhere for actual cap of unit rates per pence?

jimjames

The Ofgem numbers don't include VAT. This calculator was created from the Ofgem documents and gives kWh rates (but again without VAT at present, probably the next enhancement)

http://price-calc.321web.co.uk/

BTW I'm, not sure where your numbers above come from but the cap rates are different for each area of the country.

Curiousgirl1

It doesn’t work like that. The new cap is £1277 and just because you only use half of the energy, it’s not half the price as the standing charge remains the same. That’s not halved 

garrehsponges

jimjames said:

The Ofgem numbers don't include VAT. This calculator was created from the Ofgem documents and gives kWh rates (but again without VAT at present, probably the next enhancement)

http://price-calc.321web.co.uk/

BTW I'm, not sure where your numbers above come from but the cap rates are different for each area of the country.

Great tool! Is this something you developed? Do you know what the source is for those regional unit rate caps (guessing Ofgem website somewhere?)

Consumerist

You can download an Ofgem pdf document with October energy tariff caps information <here>. I think you will need to add VAT to the amounts tabulated.

garrehsponges

Consumerist said:

You can download an Ofgem pdf document with October energy tariff caps information <here>. I think you will need to add VAT to the amounts tabulated.

Thank you! It's strange to me how they work it out all based purely on prices. I'm guessing that means there isn't an actual cap on unit rates and standing charges. So energy companies can e.g. charge a high unit rate but very very low standing rate to offset it - and as long as it doesn't mean it's more than £X per year for (Y)kWh

jimjames calculator http://price-calc.321web.co.uk/ maybe inaccurate because it states capped unit rates, but in reality it doesn't quite work like that?

[Deleted User]

garrehsponges said:

Consumerist said:

You can download an Ofgem pdf document with October energy tariff caps information <here>. I think you will need to add VAT to the amounts tabulated.

Thank you! It's strange to me how they work it out all based purely on prices. I'm guessing that means there isn't an actual cap on unit rates and standing charges. So energy companies can e.g. charge a high unit rate but very very low standing rate to offset it - and as long as it doesn't mean it's more than £X per year for (Y)kWh

jimjames calculator http://price-calc.321web.co.uk/ maybe inaccurate because it states capped unit rates, but in reality it doesn't quite work like that?

The cap is on the unit rates/standing charge. The price given is for the usage of OFGEMS 'typical' consumer. '12000/2900'.

The calculator is correct (perhaps minus vat as he states in another thread)/.

MWT

DeletedUser said:

The cap is on the unit rates/standing charge. The price given is for the usage of OFGEMS 'typical' consumer. '12000/2900'.

... almost...

The cap is on the standing charge and the total cost (including standing charge) for a typical consumer which is considered to be 3100kWh of electricity and 12,000 kWh of gas.

So there is not a precise cap on the unit charge as it depends what the supplier sets the SC to be...

garrehsponges

DeletedUser said:

garrehsponges said:

Consumerist said:

You can download an Ofgem pdf document with October energy tariff caps information <here>. I think you will need to add VAT to the amounts tabulated.

Thank you! It's strange to me how they work it out all based purely on prices. I'm guessing that means there isn't an actual cap on unit rates and standing charges. So energy companies can e.g. charge a high unit rate but very very low standing rate to offset it - and as long as it doesn't mean it's more than £X per year for (Y)kWh

jimjames calculator http://price-calc.321web.co.uk/ maybe inaccurate because it states capped unit rates, but in reality it doesn't quite work like that?

The cap is on the unit rates/standing charge. The price given is for the usage of OFGEMS 'typical' consumer. '12000/2900'.

The calculator is correct (perhaps minus vat as he states in another thread)/.

Where is the PDF that shows actual capped unit rates?

MWT

garrehsponges said:

Where is the PDF that shows actual capped unit rates?

There isn't one as the unit rates are not directly capped.

MWT

If anyone wants a clearer understanding of the various versions of the cap, take a look at the spreadsheet Ofgem provide:

https://www.ofgem.gov.uk/sites/default/files/2021-08/Default_tariff_cap_level_v1.9.xlsx