Energy Prices

royalcresent

I'm currently paying £210 per month for dual fuel with SoEnergy with a fixed rate deal that runs out in February. I've been offered a new fixed rate deal at £500 per month for a 2 year fix or £600 per month for a one year fix. What I don't understand is, that when my current fix ends, and I don't take out a new fixed deal, does that mean on the flexible rate deal (with a price cap of say £1,900 per year) I'll only be paying around £160 per month?

emmajones1976

You need to stop thinking in terms of how much you are contributing to the bill each month, and look at the unit rates. Energy is not "all you can use for a fixed price".

You are also totally misunderstanding how the price cap works.

royalcresent

The price I'm paying though is based on my annual usage?

emmajones1976

No, the direct debit you are paying is based on an ESTIMATE of your annual usage, if you pay too much you will be in credit and if you pay too little you will be asked to increase your direct debit or make a one-off payment to get it back on an even keel.

As for the price cap, that is based on an AVERAGE use. In practice the current price cap is around 21p per unit for electricity. If you use a million units, you pay for a million units.

TheMilkmansDad

where I the £1,900 per year figure coming from? is that based on your usage on the SVR or the household average?

emmajones1976

TheMilkmansDad said:

where I the £1,900 per year figure coming from? is that based on your usage on the SVR or the household average?

Its what the OFCOM capped amount is predicted to rise to. However there has been a fundamental inaccuracy posted in how it works.

dbks

royalcresent said:

I'm currently paying £210 per month for dual fuel with SoEnergy with a fixed rate deal that runs out in February. I've been offered a new fixed rate deal at £500 per month for a 2 year fix or £600 per month for a one year fix. What I don't understand is, that when my current fix ends, and I don't take out a new fixed deal, does that mean on the flexible rate deal (with a price cap of say £1,900 per year) I'll only be paying around £160 per month?

When your current energy tariff expires, and you fail to agree to another, then you will be charged at the supplier's default tariff.

[Deleted User]

royalcresent said:

The price I'm paying though is based on my annual usage?

You need to get your mind around the difference between variable and fixed tariffs. If I take out a 2 year fixed tariff today then I can rest easy for the next two years knowing that my unit prices and standing charges are fixed. Variable tariffs are by definition variable. They can go up or down with one caveat. The caveat being the Ofgem Cap which effectively ‘fixes’ the upper limit of a variable tariff for 6 months (April through September, and October through March. The period between Caps is currently under review).

The risk of not taking out a fixed tariff today is that no one actually knows which direction fixed price tariffs will go when the new Ofgem Cap is announced in a couple of weeks time.

MWT

royalcresent said:

... does that mean on the flexible rate deal (with a price cap of say £1,900 per year) I'll only be paying around £160 per month?

If you use 2900kWh of electricity and 12,000 kWh of gas a year then yes, your annual cost would be close to the cap (some small variations by region).

If you use more or less than those amounts then your total cost will be higher or lower accordingly.

The cap only limits the standing charge and indirectly the kWh rate, it does not directly limit you total bills, those depend on your use.

royalcresent

I think I understand now, it is the standard rate that's capped, not the usage amount.