What should the unit prices be to cover wholesale prices?

PennineAcute

All ifs and buts, I feel that Martin's current advice really does need looking at in greater detail.

On the 6/12/21 I fixed my elec at 22.36p UP and 24.38p SC from the DD SVT of 4.04p UP and 26.12p SC
On the 6/1/21 I fixed my gas at 5.48p UP and 26.123p SC from the DD SVT of 20.14p UP and 24.38p SC

I just missed out on a 4.xx p Gas UP, due to waiting for my Zog to EDF transfer to complete.

Both of these fixes are with EON Next for 18 months and no exit fee.

As you can see from my spreadsheet, for both gas and elec (from the above dates) I am looking at overpaying by £65.80 up unto 31/3/22, compared to the SVT DD rate.

Assuming an increase to 8p for gas and 30p for elec (with the same standing charge) I am looking at a saving (from 1/4/22 - 30/9/22) of £125.16 - giving me a net saving of £59.36 from the above dates.

Of course, every one is different - but this shows that it is so important for people to really look into their usage and to make their own decision.   My gas usage for the next few months could increase more than I have allowed, but it will take a drastic usage change for me to be worse off at the beginning of October, looking at the probable SVT rates for April.

chris1973

For millions of people the increase in costs, will probably mean them not bothering to take out a PCP for a new car, keeping a mobile phone for two years instead of two months and perhaps only taking one holiday this year, and deciding not to buy that 186th pair of shoes.

But for millions of others its going to mean genuine hardship as fuel poverty bites. Let's not forget that hypothermia is just as big a threat to the elderly, chronically sick and infirm as Covid is, although of course not as newsworthy. Whether that risk is from fear of turning the heating on or because their prepayment meter has run out of credit is immaterial - the fact that its happening in 2022 in the 28th richest country in the World is what is ludicrous - this Country is slipping back to the Victorian era. Won't be long before we all back toiling in the fields in return for a hayloft to sleep in and doffing our caps to the lord of the manor.

Either way, regardless of which side of the wealth divide you sit on, for most working people or those surviving on limited income or pension, its going to mean less disposable income to spend, so belts will be tightened. So that is going to mean Pub Landlords, Greggs, Costa and the High Street all moaning to the press about lack of trade. It'll be like lockdown all over again..........

spot1034

That is why the government needs to take this matter very seriously, as I think there are signs that they are now doing. There is also the point made before in another thread that if the energy price cap is allowed to rise as per the present rules, this would add significantly to inflation which would in turn cost the government a large sum in just a few months when pensions and benefits are next uprated, not to mention put upward pressure on wages both in the public and private sectors, so it might be in their interest as well as everyone else's to find a formula which stops energy prices rising too much.

QrizB

spot1034 said:

That is why the government needs to take this matter very seriously ... it might be in their interest as well as everyone else's to find a formula which stops energy prices rising too much.

The problem is that someone has to pay for the energy. If prices go up, it's consumers directly via higher bills; if prices don't go up, either suppliers have to carry on supplying energy below cost and go bust or the Govt has to subsidise them (which is consumers again, but indirectly via taxes).

There is no magic energy tree.

QrizB

I'm going to update this thread today (we're halfway through January) but wanted to write this first.

Various people are saying "the Govt should scrap VAT and the Green Levy, that will help bring prices down". Let's see what effect that would have.

My estimate of the annual Ofgem cap here was £2102 (about £175/month). The post broke down all the components that make up that number. VAT was exactly £100, while the "green levy" makes up the majority of the Policy Costs element of £159. If the Government scrapped both of these, in their entirety, that's £259/yr that could come off the total - leaving £1843 (about £154/month, a saving of £21/month).

Is £1843 lower than £2102? Is £154 less than £175? Yes, of course it is. But compared to the current cap of £1277 (£106/month) it's still a 44% increase.

And reducing bills by an average of £259/yr would cost us all, collectively, an additional £7.5Bn.

MattMattMattUK

QrizB said:

I'm going to update this thread today (we're halfway through January) but wanted to write this first.

Various people are saying "the Govt should scrap VAT and the Green Levy, that will help bring prices down". Let's see what effect that would have.

My estimate of the annual Ofgem cap here was £2102 (about £175/month). The post broke down all the components that make up that number. VAT was exactly £100, while the "green levy" makes up the majority of the Policy Costs element of £159. If the Government scrapped both of these, in their entirety, that's £259/yr that could come off the total - leaving £1843 (about £154/month, a saving of £21/month).

Is £1843 lower than £2102? Is £154 less than £175? Yes, of course it is. But compared to the current cap of £1277 (£106/month) it's still a 44% increase.

And reducing bills by an average of £259/yr would cost us all, collectively, an additional £7.5Bn.

The green levy is probably the most important part of thr policy costs, going towards carbon neutral energy and reducing our dependence on international gas markets. If the VAT is scrapped it will need to be recovered elsewhere, so one tax cut would ultimately lead to another tax rise.

QrizB

I guess it's time to peek at the slow-motion collision that is the UK energy market, where the irresistable force of international energy prices encounters the immovable object that is the UK Ofgem price cap.

The end-of-December version of this post is here; the one you're reading now is an interim update, 2 weeks into January.

January has been a bit of a Curate's egg; average gas prices are down from December's record high but still elevated, while electricity is the lowst average we've seen since August..  I'm taking the average monthly day-ahead electricity prices from Drax and the daily gas prices from Guy Lipman.

• August - gas 3.71p/kWh, electricity 10.6p/kWh
  
• September - gas 5.19p/kWh, electricity 17.7p/kWh
  
• October - gas 6.85p/kWh, electricity 16.4p/kWh
  
• November - gas 6.68p/kWh,  electricity 18.4p/kWh
  
• December- gas 9.36 p/kWh,  electricity 22.6 p/kWh
• January to date - gas 6.77p/kWh,  electricity 15.8p/kWh

If January continues in this vein, the average wholesale price for the 6-month period will be 6.43p/kWh for gas and 16.9p/kWh for electricity; an increase of 4.23p/kWh for gas and 12.9p/kWh for electricity on the prices used when calculating the current cap.

The retail price cap (including 5% VAT, previously not explicitly modelled) would therefore be around 8.5p/kWh for gas and 31.4p/kWh for electricity.

Sea_Shell

On those rates I'd be coming off a cheap fix of £780 pa, straight onto the cap at c.£1,830 (on my usage).   

All this media talk of 50% increases is from "Cap to Cap" as I understand it, so the REAL increases for many people exiting a fix over the coming months will be MUCH higher.   Which we are seeing with the number of "HOW MUCH" threads appearing in these parts.

Like you say, it's a slow motion car crash, that will be crashing through many a front door from 1st April.  Which will seem like a really bad April Fools joke, on top of everything else. 

markin

What was the Average 1 year fix in March 2021 or 2 year in 2020, Was it 5-10% below the cap?

ispookie666

Used to love the tariff from Symbio at 12.9p/KW, cheaper than my FIT of 16p/KW.  
This would be the first time when Night rate for economy 7 is more than my FIT rate