What should the unit prices be to cover wholesale prices?

ispookie666

Been tracking the futures for heating oil and it is all over the place! It feels to me the price of gas and heating oil have diverged.  It could very well be confirmation bias

QrizB

We're half-way through May, month four of six for the October cap pricing period, and how do prices for the month look? "Optimistic" is the word I'd choose (although it may turn out that "deceptive" would have been better).

So far the average wholesale prices for the month are:

• May to date - gas 2.53p/kWh, electricity 12.2p/kWh

Now before anyone gets too excited these could be a temporary blip and they could shoot back up again at any time, but at least we've had two weeks (from the past fifteen) with more normal prices and that's brought the period average down a little bit.

Currently my model is predicting an October cap of £1353 £2266, an increase of £295 or 15%.

My next scheduled update is at the end of this month.

wakeupalarm

QrizB said:

Currently my model is predicting an October cap of £1353, an increase of £295 or 15%.

My next scheduled update is at the end of this month.

April cap is currently £1971, are your figures correct?

Thrugelmir

Are you modelling using spot or future contracted prices?  The UK is currently exporting gas to Europe as has an excess of supply. Come the autumn/winter of 22/23 could be a very different scenario. 

QrizB

wakeupalarm said:

QrizB said:

Currently my model is predicting an October cap of £1353, an increase of £295 or 15%.

My next scheduled update is at the end of this month.

April cap is currently £1971, are your figures correct?

sorry, I've no idea how I let that mistake get through! £1353 was the pre-VAT price of the energy without all the other addons.

Now corrected.

I guess I shouldn't post calculations late at night.

Thrugelmir said:

Are you modelling using spot or future contracted prices?  The UK is currently exporting gas to Europe as has an excess of supply. Come the autumn/winter of 22/23 could be a very different scenario. 

Day-ahead prices (details here); the exact data used by Ofgem isn't available FOC to the public.

Sea_Shell

What do we think of the proposal for a 3 monthly cap review?

BBC - The UK should update the price cap on energy bills every three months instead of twice a year to help households, the energy watchdog has proposed.
Ofgem's chief executive Jonathan Brearley said: "Today's proposed change would mean the price cap is more reflective of current market prices and any price falls would be delivered more quickly to consumers."


I can see the reasons behind this...however, customers have enough trouble getting their heads round a twice yearly change, so having the rates change 4 times in a year, is just going to leave customers not knowing if they're coming or going.   

It'll also be harder for the good people here to help people navigate their billing, without accurate meter readings, if 4 varying rates need to be taken into account.   As it stands, it's been relatively easy to help people on an April-April basis, as only 2 tariffs apply, Summer and Winter in effect.

Also, if the caps were based on Apr-Jun, Jul-Sept, Oct-Dec and Jan-Mar...then I can see the "Spring" quarter reflecting more strongly any increase in prices due to increased demand...allbeit in arrears...of "Winter" past.

It might make it "fairer" (to whom?) but it will make it more complicated.   But then making things simple, wasn't the solution it would appear either. 

Mstty

@Sea_Shell I think at 6 months it's already too difficult for most users to work out a good deal and whether the fix being offered is a gamble or not.

Unless you are actively following this thread and for me Cornwall insights then with a 3 month price cap review it's a complete gamble for most.

I suspect the average user will get so confused they will just chose an expensive fix so they know their monthly DD.

wakeupalarm

As usual Ofgem proposes nothing that really helps consumers.  The fact is prices are too high, tinkering around the edges of a flawed system won't help and as others have stated will just add to the confusion. Maybe its an excuse to hide further costs.
I mean why propose quarterly changes, why not monthly, or daily or every 30 minutes?  If anything it should be going the other way with more 1Y, 2Y and 3Y fixes like with mobile and broadband companies.
In reality what is needed is some better targeted help from government to assist those that are really struggling already.

Chrysalis

QrizB said:

We're half-way through May, month four of six for the October cap pricing period, and how do prices for the month look? "Optimistic" is the word I'd choose (although it may turn out that "deceptive" would have been better).

So far the average wholesale prices for the month are:

• May to date - gas 2.53p/kWh, electricity 12.2p/kWh

Now before anyone gets too excited these could be a temporary blip and they could shoot back up again at any time, but at least we've had two weeks (from the past fifteen) with more normal prices and that's brought the period average down a little bit.

Currently my model is predicting an October cap of £1353 £2266, an increase of £295 or 15%.

My next scheduled update is at the end of this month.

Interesting, are these been honoured by Octopus Agile tariff?

Xbigman

wakeupalarm said:

As usual Ofgem proposes nothing that really helps consumers.  The fact is prices are too high, tinkering around the edges of a flawed system won't help and as others have stated will just add to the confusion. Maybe its an excuse to hide further costs.
I mean why propose quarterly changes, why not monthly, or daily or every 30 minutes?  If anything it should be going the other way with more 1Y, 2Y and 3Y fixes like with mobile and broadband companies.
In reality what is needed is some better targeted help from government to assist those that are really struggling already.

I've seen this story on multiple sites today (BBC news, DM, etc) and OFGEM are trying to push it as consumer friendly but it isn't. Over previous months they have stated that the price cap has protected consumers from rapid rises but now they are changing it to a system where it won't do that in future. Having your cake and eating it comes to mind. OK, they might claim that it will be more responsive to drops as we come out of the energy crisis but any future rises will be faster too. There is nothing to gain long term. This is just another short term 'keep people happy' announcement that shows OFGEM are clueless about anything to do with energy. 

As I recall the change to a 3 monthly review was because the energy companies were being forced to sell energy at a loss and they wanted it changed. Nothing to do with consumers at all. 

Darren