What should the unit prices be to cover wholesale prices?

Spies

So with today's estimate of £3500.a year, what does that do to the potential unit rates? 

Evan3020

Up 78% from current SVR

Spies

So 49.8p for electric and 12.46p for gas? 

pochase

Spies said:

So 49.8p for electric and 12.46p for gas? 

Why would gas come down? Current forecast is already 14.17p

QrizB

I've posted this elsewhere but I'll put it here too. Wholesale gas for the coming winter is around 500p/therm, which is 17p/kWh wholesale and equivalent to something like 20-21p/kWh retail. Five times last winter's gas cap.

Spies

pochase said:

Spies said:

So 49.8p for electric and 12.46p for gas? 

Why would gas come down? Current forecast is already 14.17p

I was basing it on +78% on current SVR but I guess that's inaccurate. 

pochase

Spies said:

pochase said:

Spies said:

So 49.8p for electric and 12.46p for gas? 

Why would gas come down? Current forecast is already 14.17p

I was basing it on +78% on current SVR but I guess that's inaccurate. 

The percentage for gas and electricity are not the same. Gas was already at 90% increase at the last predication in early July.

Cornwall Insights has not published a split between gas and electricity for the new £3500, or a press release at all,  but we can expect for it to hit and exceed the 100%

QrizB

Spies said:

So 49.8p for electric and 12.46p for gas? 

Gas is something like 2.5p/kWh more expensive than the wholesale price, electricity is 12p/kWh more expensive than wholesale. This means that a rise in wholesale prices will have a more direct effect on gas prices than on electricity ones.

For example, the current cap has gas at (4.9+2.5) 7.4p/kWh and electricity at (16.6+12) 28.6p/kWh. If wholesale prices of both gas and electricity were to increase by 100%, the retail prices would become (9.8+2.5) 12.3p/kWh and (33.2+12) 45.2p/kWh; increases of 66% and 58% respectively.

[Deleted User]

pochase said:

Cornwall Insights has not published a split between gas and electricity for the new £3500, or a press release at all,  but we can expect for it to hit and exceed the 100%

I'm sure that many (like myself) currently on an 1st October 22 (or September) end date fix are waiting with a sinking feeling of what the new (even higher projected) cap rates are going to be come 1st October.  TBH I've stopped updating my spreadsheet for what my bills are likely to be until the numbers for October are set in concrete once Ofgem make that decision in August.

The last spreadsheet update just over a month ago, using my actual usage numbers (less than the Ofgem 'average'), saw my yearly bill from Oct 22 to be in the order of £2500.  I'm now looking at hundreds more than this. 

QrizB

The end of the pricing period, and time for my final forecast. Why final? Bcause, really, these are hindcasts. They tell us what the wholesale spot price of energy has been for the past six months, but that doesn't necessarily help us guess what it will be for the next six.

Forward gas prices are at unprecedented heights - over 500p/therm (17p/kWh) wholesale for December and January 2022, and well over 300p/therm for Winter 2023 - so any projection based on the past is fruitless.

See here for a table of what Cornwall Insights are projecting energy prices to be for the next five quarters. It's not pretty.

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Prices during July have been higher than the rest of the period.

Wholesale gas ranged from 5.2p/kWh to 11.2p/kWh, electricity from 16.2p/kWh to 33.4p/kWh.

I'm contiinuing to use day-ahead electricity prices are from Nordpool and gas prices are from Guy Lipman. Last pricing period I came up with 6.5p/kWh for gas and 17.4p/kWh for electricity; Ofgem used 4.9p/kWh for gas and 16.6p/kWh for electricity when deriving the April cap.

Average prices for July are up significantly on June, and almost as high as March was.

• February - gas 6.33p/kWh, electricity 16.2p/kWh
• March - gas 10.34p/kWh, electricity 25.0p/kWh
• April - gas 5.66p/kWh, electricity 17.7p/kWh
• May - gas 3.13p/kWh, electricity 12.5p/kWh
• June - gas 4.36p/kWh, electricity 16.0p/kWh
• July - gas 7.61p/kWh, electricity 24.4p/kWh
  

This gives us an average wholesale price for the period of 6.25p/kWh for gas and 18.7p/kWh for electricity, which in turn suggests that the retail price of gas will fall slightly to 7.3p/kWh, and electricity rise slightly to 29.6p/kWh, leading to a small rise in the Ofgem cap.

What this actually means, of course, is that Ofgem's cap for the period turned out to be pretty close to the actual cost of supplying energy. Hopefully energy suppliers will have broken even and we won't see another raft of failures during the coming months.

As I mentioned in the first line of this post, my approach to modelling the Ofgem cap has not proved effective. I'm not planning to continue this series of posts.