Energy Firms

StarTrekkie007

Hello,

Energy costs are going through the roof. Currently I am on the variable tariff (that I suspect is at the Government price cap).

Due to the Government price cap, energy firms are selling at a loss (assuming customers are on deals at the Government price cap).
How long will these energy firms last. Will be see them all going under in the upcoming year ?
Could an energy firm, temporarily cease trading & reopen when energy prices go down rather than just continue trading at a loss.

Feeling that the energy firms are stuck in the middle. They don't dictate the "trade" price of gas & electricity, but must not sell over the Government price cap,
so they are stuck selling at a loss.

QrizB

StarTrekkie007 said:

Due to the Government price cap, energy firms are selling at a loss (assuming customers are on deals at the Government price cap).
How long will these energy firms last. Will be see them all going under in the upcoming year ?

Energy companies have been selling sat a loss for the last 4 months or so. That's why so many have gone bust.

In April, just under two months from now they will be able to raise their prices to a level where they will be making much smaller losses; they might even make a profit.

I would expect most of the ones trading today to be able to make it to April.

Nattymax

Can energy companies only increase their flexible tariffs in April.? Or are they allowed to raise them whenever they wish (giving u  a months notice perhaps)

Verdigris

Nattymax said:

Can energy companies only increase their flexible tariffs in April.? Or are they allowed to raise them whenever they wish (giving u  a months notice perhaps)

Only when Ofgem reset the cap, currently April and October.

The SVT is set by Ofgem and all energy providers have to offer that rate to people coming off fixes, or having been transferred to them by the SoLR process, when suppliers cease trading. Suppliers have a little wiggle room between the daily charge and the unit rate but essentially it is the same for all suppliers. There are regional differences, owing to differing transmission costs.

MWT

Verdigris said:

Nattymax said:

Can energy companies only increase their flexible tariffs in April.? Or are they allowed to raise them whenever they wish (giving u  a months notice perhaps)

Only when Ofgem reset the cap, currently April and October.

The SVT is set by Ofgem and all energy providers have to offer that rate to people coming off fixes, or having been transferred to them by the SoLR process, when suppliers cease trading. Suppliers have a little wiggle room between the daily charge and the unit rate but essentially it is the same for all suppliers. There are regional differences, owing to differing transmission costs.

Not quite true, they can change them at any time on 30 days notice as long as the changed SVT remains under the Ofgem cap, so if wholesale prices fell for example they could decide to reduce their variable rate if they wanted, or if they had not already raised their SVT to the maximum allowed by the cap they could choose to do so at any point on 30 days notice.

Ofgem only sets the cap, it does not dictate the actual tariff.

Verdigris

Good point. It is funny how easy it is to think that the present situation, where suppliers can't profitably alter the SVT, is the norm.

Should we have a sweepstake on when the first reduction below cap price will occur?

wakeupalarm

2029Verdigris said:

Should we have a sweepstake on when the first reduction below cap price will occur?

1st April 2029

DiseasedBunny

Verdigris said:

Good point. It is funny how easy it is to think that the present situation, where suppliers can't profitably alter the SVT, is the norm.

Should we have a sweepstake on when the first reduction below cap price will occur?

Depends when Russia fires the first nuke…

Shedman

DiseasedBunny said:

Verdigris said:

Good point. It is funny how easy it is to think that the present situation, where suppliers can't profitably alter the SVT, is the norm.

Should we have a sweepstake on when the first reduction below cap price will occur?

Depends when Russia fires the first nuke…

That would warm us all up....although somewhat terminally

Sea_Shell

It could all get a bit eek, if the price of gas goes way above what the price cap is set at for the April-October period.

How would the remaining suppliers fair, if the price got consistently over 300p per therm??

facade

Sea_Shell said:

It could all get a bit eek, if the price of gas goes way above what the price cap is set at for the April-October period.

How would the remaining suppliers fair, if the price got consistently over 300p per therm??

Ofgem said that they would review the cap before October to prevent more energy firm bailouts if Something Bad happened, like a European boycott of Russian gas massively increasing the market prices of Norwegian & North Sea gas.

(I suspect that most of Europe would sell out Ukraine in a heatbeat if it means that gas is 4p per kWh rather than 40, I can't see a boycott lasting into the autumn tbh)