Price Cap

dave0564

There has been much debate on this recently, and the increase confirmed today will cause trouble for many.  Hopefully Treasury initiatives will actually reach those who need help most.  But I have a couple of technical questions about the cap:

The cap is to move from £1,277 to £1,971.  These are averages, based on typical consumption at the capped unit rates, and equalising any regional differences.  I have 2 questions:

1        having found the relative unit and standing charge rates from last October, and noting Ofgem's note that the "typical user" uses 4,200 kWh of electric and 12,000 kWh of gas each year, I have been unable to recalculate the cap value (error around 20%, so it's not the VAT) for October.  What is it that I don't understand about the calculation?
2        the cap total value calculation acknowledges that there are regional variations.  Are these material (for this purpose allowing differences in either kWh cost or daily standing charge >2.5%)?

More generally, do we know whether local default tariffs issued by the energy companies are in line with the regional variations in the cap?  My company asks for a postcode when I want a quote, so I presume so.  Just looking for confirmation.

Hoping someone can help.  Thanks. 

Merlin139

The rates shown on the Ofgem rates tables for 01/Oct/21 use 3100 kWh Electric and 12000 kWh Gas

Works out around:

21p kWh Electric

4p kWh Gas

SC of 26p each for Gas and Electric Regional rates will distort the figures.

The new tables will be published tomorrow according to Ofgem Website.

https://www.ofgem.gov.uk/sites/default/files/2021-08/Default tariff cap level - 1 October 2021 - 31 March 2022.pdf

dave0564

Merlin:     Thanks for the reply

The 900 kWh difference on electric gets me closer.  The calculation for October though still comes out a bit over £100 too high, which is about 8%.

The unit rates you quote (and which I have, although I have 25p for electric SC) exclude VAT @ 5%.

Any more thoughts?  I can't believe that Ofgem would state the cap without the VAT (which doesn't explain my difference anyway).....

MWT

You are using the wrong kWh figure.

The 'typical' usage is 2900kWh in all the calculations that result in the headline totals you see like the £1277.

Rosie1001

Is the cap the most per unit you can pay ..!!??

im already paying more on economy 7 variable with EDF … I’m confused by this 

dave0564

MWT:    Thanks.

That then (using the October numbers) takes me to a difference of just about £60, which is scarily close the VAT value.

Do the unit rates and SC rates given by Merlin above include VAT?  I thought that they didn't.

dave0564

Rosie:

The Price Cap is NOT the most you can pay.  The cap sets the maximum for each kWh and per day standing charge.

Obviously, there are only 365 days in the year, so that is fixed, but the usage depends on you - the more you use, the more you pay - but at the capped unit rate.

Does that a) make sense b0 help?

Rosie1001

Nope ..still don’t get it … 

Im already paying £180 a month in electric for one bed apartment..so looking at what’s being said , im going to be paying a extra £90 a month approximately on top of my payment already 

Rosie1001

Last bill for 6 weeks worth of electric 

facade

The published October cap did not include the 5% VAT. The new one is supposed to, but I don't recall seeing if it did.

MWT

dave0564 said:

MWT:    Thanks.

That then (using the October numbers) takes me to a difference of just about £60, which is scarily close the VAT value.

Do the unit rates and SC rates given by Merlin above include VAT?  I thought that they didn't.

Yes, those rates include VAT, the trick is you need to use 2900kWh and the standing charges to get to the £1277.

That £1277 is a blend of all the regions and incudes the standing charge and VAT.

The original Ofgem figures for the cap calculation use 3100kWh and exclude VAT except where they publish their own summary table.

In any event, wait until tomorrow and we should have the new cap spreadsheet to work with so we can see the impact on standing charges for example...