The cap

brianfenland

Trying to calculate what cost could be to me as an above average user of both gas and electricity after April. Using +40% and +51% to calculate. Can anyone advise if the standing charge simply rises by same % as the kWh price please.  First time on cap after Igloo then Avro went bust. Now with Octopus

JJ_Egan

Standing charges vary with each and every tariff .

Sea_Shell

I think it will mainly depend on how they're going to distribute the extra SoLR claims levies.

We don't know yet if they'll be on unit rate, standing charge or separate.

Maybe they'll scrap green levies to compensate??

It's all very "finger in the air" at the moment.   We'll know more this time next month...ish.

Astria

Considering some fixed rates are 50p/unit electric and 15p/unit gas, I wouldn't be surprised if the increase next year is 100%, ie double what we are paying now on SVR but the standing rate being largely the same. The actual wholesale figure may drop slightly but I'd expect them wanting to make back the loses they've been making for people on the current SVRs and FRs.

QrizB

brianfenland said:

Trying to calculate what cost could be to me as an above average user of both gas and electricity after April. Using +40% and +51% to calculate. Can anyone advise if the standing charge simply rises by same % as the kWh price please.  First time on cap after Igloo then Avro went bust. Now with Octopus

In your position I'd take my annual consumption and recalculate based on 8p/kWh for gas, 30p/kWh for electricity and £100/yr per fuel for standing charge. This will be fairly close to the new rate (within 10% either way).

wittynamegoeshere

According to Radio 4 tonight, the green levy is a percentage, I think they said 23% on electric, which is shocking.  If so then the government have had a massive windfall of extra money from us as a result of the rise.

I'm wondering if they may restructure the levy so it works in the opposite way against the price, i.e. if the price goes up the levy goes down, if the price goes down the levy goes up.  They could use the current wholesale price as a zero levy starting point, so if the wholesale price drops the retail one doesn't and the levy takes the difference.  This would mean that the levy would become a price stabiliser rather than amplifying the changes as it may currently do if it really is a percentage.

There has been lots of discussion about shifting the levy from electric to gas, this goes back to before the price rises.  This would encourage the take-up of heat pumps by making it economic to switch.  But raising gas prices at the moment would be extremely unpopular.  So perhaps we could have a levy-free winter followed by a new stabilising levy on gas only.

Also there's 5% VAT, which is likely to be removed, especially as Boris has previously pretty much promised this as a bonus of leaving the EU.

So... the price change in April is probably a complete unknown, as it's very likely that there's going to be a complete restructuring of the tax and levy.

QrizB

wittynamegoeshere said:

According to Radio 4 tonight, the green levy is a percentage, I think they said 23% on electric, which is shocking.  If so then the government have had a massive windfall of extra money from us as a result of the rise.

R4 might have been wrong, or at least might have mis-communicated.

According to Ofgem the default tariff cap is made up of nine components: wholesale costs, the policy cost allowance, an adjustment, network costs, operating costs, payment uplift, EBIT, headroom and VAT. All the environmental costs (which I think are what is known as the green levy) are part of the "policy" component.

Policy costs are calculated on a £/MWh basis, apart for the Warm Home Discount which is £/customer. These costs are reflected in the value of the cap. You can see from the linked Ofgem document that policy costs fell from £172 in the April 21 cap to £159 in the Oct 21 one.

wittynamegoeshere said:

I'm wondering if they may restructure the levy so it works in the opposite way against the price, i.e. if the price goes up the levy goes down, if the price goes down the levy goes up.

CFDs do work that way, as has been discussed on this forum several times recently. This infographic from the LCCC shows that effect; the Interim Levy Rate is currently zero and forecast CFD payments for the period are negative.

wittynamegoeshere

Thanks, that makes much more sense, I was surprised to hear their supposed expert say it was a percentage.  Just the usual standard BBC attempt at journalism then.

So are we all now paying zero green levy?  If so then the BBC were just spreading misinformation.  Definitely not a first, but do they just make stuff up?  This was on PM on Radio 4 this evening, sometime just after 5pm.

wittynamegoeshere

https://www.bbc.co.uk/sounds/play/m001329g

The report is from 23:40.

The speaker was conservative back bencher Craig McKinley MP, so not the BBC's fault, other than perhaps for broadcasting rubbish without checking or questioning it.

"The green levies, 23% for electric, 2.5% for gas, about 12% of our bill are these additional levies."

So with VAT it would be a 17% reduction.

Is this complete rubbish?

QrizB

wittynamegoeshere said:

"The green levies, 23% for electric, 2.5% for gas, about 12% of our bill are these additional levies."

So with VAT it would be a 17% reduction.

Is this complete rubbish?

By Ofgem's reckoning, for their typical dual-fuel DD-paying customer, the Oct 21 cap is £1277 of which £159 (12.4%) is policy costs and £61 (4.8%) is VAT.

The policy cost allowance for electricity is roughly 4.4p/kWh and £7/customer; for gas it's £0.14p/kWh and £7 per customer. With capped electricity at 21p/kWh and gas at 4.1p/kWh that's 21% and 3.4% respectively. Not far off what the MP said.

However with wholesale energy prices as high as they are, it seems likely that the green elements of the policy cost allowance will fall in the April 2022 cap. I've mentioned CFD costs above; the current cap includes about 0.7p/kWh for CFDs, which should drop to zero (and could even be negative) in the April calculations. I haven't looked into the way RO and FIT costs are calculated but they might also fall (the rO is the single biggest green element in the policy cost allowance, around 60% of the entire cost).

[Note that the the policy cost is not entirely due to green levies; it includes eg. the ECO (energy-saving measures for the less well off in bad-EPC homes) and WHD (an energy bill subsidy for those on certain means-tested benefits).]

Fairzo

wittynamegoeshere said:

 Boris has previously pretty much promised