Economy 7: price differences between suppliers

Sterlingtimes

I have renewed the tariff for my mother with E.ON from April 2022.

Rates are for Midlands on standard variable tariffs.

E.ON charges as follows including VAT: Day 33.15p per kWh / Night 16.96p per kWh / Standing Charge 48.21p per day.

Octopus would charge as follows: Day 29.93p per kWh / Night 21.39p per kWh / Standing Charge 47.94p per day.

For E.ON Day / Night is x 1.95

For Octopus Day / Night is x 1.40

Why does Octopus have such a small differential between Day and Night charges when compared with Octopus? Octopus does not appear to be a "time of day" champion.

My mother consumes 85% at night so E.ON is better than Octopus.

Perhaps moving suppliers is still worthwhile.

jimexbox

Most suppliers have stopped taking new customers. 

Sterlingtimes

jimexbox said:

Most suppliers have stopped taking new customers. 

Thank you. I did not know that. Potentially, that is anti-competitive behaviour. 

QrizB

Sterlingtimes said:

Why does Octopus have such a small differential between Day and Night charges when compared with Octopus? Octopus does not appear to be a "time of day" champion.

Ofgem cap the average unit rate for the average multi-rate customer. How a supplier arranges its rates to meet that cap is up to them.

I wrote a post a couple of weeks ago explaining this in more detail; see here.

MWT

E7 differentials are entirely up to the supplier to set, they just have to keep within the cap total, and you are right that there are still reasons to move between suppliers based on how they have decided to set the difference.

Broadly, if you use less than 50% at night then Octopus is cheaper, over 50% and E.ON is cheaper.

Sterlingtimes said:

Why does Octopus have such a small differential between Day and Night charges when compared with Octopus? Octopus does not appear to be a "time of day" champion.

Octopus are probably the best time of use champion, with more ToU tariffs than any of the other domestic suppliers, they just don't aim their E7 tariff at people with such a large differential, the typical split is 58/42% Day night and at that rate and below they are cheaper than E.ON.

MattMattMattUK

Sterlingtimes said:

jimexbox said:

Most suppliers have stopped taking new customers. 

Thank you. I did not know that. Potentially, that is anti-competitive behaviour. 

It is not anti-competitive behaviour, it is a nature of a market where suppliers are being forced to sell their product below costs, they do not want any more customers at the moment as every customer is losing them money. 

EssexHebridean

I suspect that Octopus don't particularly want "traditional" E7 customers - they're a company I've kept a good eye on the tariffs of over the past few years as I like their general attitudes and ethos but they've never yet come up at a sensible price for us. They definitely are supporters/providers of TOU tariffs, but the more modern style rather than E7.  We don't quite achieve the same day/night split at your Mother being closer to 25%/75%, but still rather more emphasis on use on off peak rates than is deal for most suppliers. 

MWT

I suspect this has a lot to do with the way the settlement system works and the assumptions about the E7 usage profile.

Once everything can move to half-hour settlement there would be more incentive to offer an E7 tariff that more accurately reflects the actual costs at the time the energy is used, but right now, an E7 customer with 85% night use is going to be a lot less profitable for E.ON as they are giving them a low rate for the majority of their use, but are not getting the benefit of that as a reduction in their costs as the settlement is based on the average of the profile not the specific time of use of the customer.

Sterlingtimes

MattMattMattUK said:

Sterlingtimes said:

jimexbox said:

Most suppliers have stopped taking new customers. 

Thank you. I did not know that. Potentially, that is anti-competitive behaviour. 

It is not anti-competitive behaviour, it is a nature of a market where suppliers are being forced to sell their product below costs, they do not want any more customers at the moment as every customer is losing them money. 

I think that you are correct. I should probably have said that the market is no longer competitive.

Sterlingtimes

EssexHebridean said:

I suspect that Octopus don't particularly want "traditional" E7 customers - they're a company I've kept a good eye on the tariffs of over the past few years as I like their general attitudes and ethos but they've never yet come up at a sensible price for us. They definitely are supporters/providers of TOU tariffs, but the more modern style rather than E7.  We don't quite achieve the same day/night split at your Mother being closer to 25%/75%, but still rather more emphasis on use on off peak rates than is deal for most suppliers. 

Perhaps, my mother is an oddity. She is 93 and lives in a one-bedroom apartment. She goes to bed at 9 PM. From 08 December to 07 January, she used 61 kWh day and 635 kWh night, i.e. 91% night. The new E.ON April 2022 tariff is therefore very favourable to my mother. It might appear that the ever-friendly Octopus ("love and power") would have charged my mother a great deal more. I think that the Octopus might prefer to kill Economy 7.

MattMattMattUK

Sterlingtimes said:

MattMattMattUK said:

Sterlingtimes said:

jimexbox said:

Most suppliers have stopped taking new customers. 

Thank you. I did not know that. Potentially, that is anti-competitive behaviour. 

It is not anti-competitive behaviour, it is a nature of a market where suppliers are being forced to sell their product below costs, they do not want any more customers at the moment as every customer is losing them money. 

I think that you are correct. I should probably have said that the market is no longer competitive.

As long as the price cap remains below cost then it will not be a competitive market and te reality is there is only so long this can go on before the government has raise/abandon the cap or provide direct subsidy.