MSE News: Martin Lewis: Why your energy bill might be going up by MORE than 54%

MSE_Helen_K

As April's energy price cap increase looms, many people have contacted us shocked that their monthly energy bills have increased way above the average 54% price cap rise. In the video below (with transcript) MoneySavingExpert.com founder Martin Lewis explains why this might be the case and suggests what you can do about it if you think the rise is unfair...

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'Martin Lewis: Why your energy bill might be going up by MORE than 54%'

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polymaff

There's a another, more subtle, reason why many may see a rise above 54% and it has nothing to do with tariff switching, Direct Debit adjusting or change of consumption.

"... As the percentage increases on the four factors [that comprise the energy bill] are quite different, a cap that's up 54% doesn't mean that our bills will rise by 54%.  Here it is up 63% on a like-for-like number of units for each fuel."

... posted 7th March.  Went right over the heads of the forumites.

MWT

polymaff said:

"... As the percentage increases on the four factors [that comprise the energy bill] are quite different, a cap that's up 54% doesn't mean that our bills will rise by 54%.  Here it is up 63% on a like-for-like number of units for each fuel."

... posted 7th March.  Went right over the heads of the forumites.

Most of the posts not understanding that the mix of electricity/gas and relative use compared to the 'typical' user affects the percentage increase have not even read the posts at the top of this group before posting, so it is not so much that it went over their heads, they just didn't stop to read anything at all for the most part before posting.

It doesn't help that the media reduce it all to a single number for impact and never explain adequately that it is a gross simplification of many higher and lower increases.

Sea_Shell

It's also quite eye-opening as to how many people, until now, have let issues with their usage, charging, billing, metering etc just drift, without ever getting to grips with it all ... until now.

It's now such a massive issue that people are now focusing all their attention on it, where they otherwise would maybe not have bothered. 

If nothing else "good" comes out of this, maybe the education around energy and how it's metered, charged and billed will be something many will have learned from, which will help them throughout the rest of their lives. 

Knowledge is power!!           (measured in kilowatts!!)

polymaff

Sea_Shell said:

It's also quite eye-opening as to how many people, until now, have let issues with their usage, charging, billing, metering etc just drift, without ever getting to grips with it all ... until now.

It's now such a massive issue that people are now focusing all their attention on it, where they otherwise would maybe not have bothered. 

If nothing else "good" comes out of this, maybe the education around energy and how it's metered, charged and billed will be something many will have learned from, which will help them throughout the rest of their lives. 

Knowledge is power!!           (measured in kilowatts!!)

You'd hope so - but I doubt it.  It doesn't help that the media get it wrong - or rely on experts who've got it wrong.  I refer you to Marriage Allowance Transfer as a recent, glaringly similar, fiasco.  They all , including HMRC, got it completely wrong - and that made it all the much harder to get folk to resist confirmation bias and re-think from the bottom up.

https://en.wikipedia.org/wiki/Confirmation_bias

MikeRob63

I have only just registered to comment about my 63% price rise under the price cap. This is out of frustration due to EDF repeatedly sending responses which do not answer my questions about my increased charges under the price cap. Either the customer care department cannot understand the issue or they are embarrassed.  The media and government use a single figure of 54% from April 1 when the reality is much higher for many.  Glad I have come across some people who have grasped the issue.

Mr_Mann

I calculate my increase to be 72 %. When I multiply my usage by the current variable tariff prices it's £721.80/year and with the new prices from April it will be £1241.99 for the same usage. That's a 72 % increase on the same tariff. Nothing to do with Direct debits or changing tariffs. 
They have been sneaky in the way they are doing it. It's an economy 7 tariff and the day rate has only increased by about 14% (4p/unit) but the night rate has gone up by 131% (10p/unit) and the standing charge has more than doubled as well, 104% to 49.92p/day
So they are loading the increase on the night rate and standing charge. I've read ofgems rules and although they don't list maximum charges for economy 7 it seems suppliers can charge regional differences as well, ie more than the cap. I wouldn't mind so much if I lived on a Scottish Island but I live on the south coast of England ! Strangely even remote North Yorkshire is cheaper ! So it seems that ofgem don't set a limit (cap) on how much each component of the bill can rise.
Don't believe the news when it say 54 % maximum rise

QrizB

Mr_Mann said:

I've read ofgems rules and although they don't list maximum charges for economy 7 it seems suppliers can charge regional differences as well, ie more than the cap.

Ofgem sets a cap for E7 based on an assumed split of 42% night rate, 58% day rate. If you use more night rate than this, your bill will be less than the intended cap; if you use less night rate, your bill will be more.

Exactly how a supplier achieves this is up to them. They could have a very high day rate and a relatively low night rate, or a moderate day rate and a higher night rate. It sounds as though your supplier has chosen to keep the day rate low but to bump up the night rate. Would it be Utility Warehouse, by any chance? how do your new rates compare to EDF's?

If you use less than about 25% of your electricity on the night rate there's a good chance you'd be better off moving to a single-rate tariff.

Mr_Mann

Thanks QrizB.
I use about 76% night units so it should be cheaper ! Yet it isn't. Yes UW as you thought. How did you guess ?
I've used the link and compared the prices, they're almost identical, with EDF just a few fractions of a penny more for my region. Interesting that their PAYG tariff is a few pence cheaper for night units though, we are always told Direct Debit is the cheapest way to pay ! I'll keep that in mind for next winter. 

MWT

Mr_Mann said:

I've read ofgems rules and although they don't list maximum charges for economy 7 it seems suppliers can charge regional differences as well, ie more than the cap. I wouldn't mind so much if I lived on a Scottish Island but I live on the south coast of England ! Strangely even remote North Yorkshire is cheaper ! So it seems that ofgem don't set a limit (cap) on how much each component of the bill can rise.

There isn't just one cap, so no, nothing is being done that is 'more than the cap', there is a different cap for each region, a different cap within each region for single rate or multi-rate metering and different again for pre-pay...

Similarly Ofgem do not cap anything based on a percentage increase, all of the caps are based on the total bill amount to include both kWh and standing charge, and a separate set of caps to specifically limit the standing charge on its own.

Unfortunately the press like to reduce a whole raft of different numbers and circumstances to a single '54%' number which is just an average of a bunch of other averages and is exactly applicable to pretty much nobody.

Some will be above 54%, some will be below it for all the reasons above and additionally because the ratio of gas/electricity/day/night etc, are also different for each of us...

k_man

Mr_Mann said:

I calculate my increase to be 72 %. When I multiply my usage by the current variable tariff prices it's £721.80/year and with the new prices from April it will be £1241.99 for the same usage. That's a 72 % increase on the same tariff. Nothing to do with Direct debits or changing tariffs. 
They have been sneaky in the way they are doing it. It's an economy 7 tariff and the day rate has only increased by about 14% (4p/unit) but the night rate has gone up by 131% (10p/unit) and the standing charge has more than doubled as well, 104% to 49.92p/day
So they are loading the increase on the night rate and standing charge. I've read ofgems rules and although they don't list maximum charges for economy 7 it seems suppliers can charge regional differences as well, ie more than the cap. I wouldn't mind so much if I lived on a Scottish Island but I live on the south coast of England ! Strangely even remote North Yorkshire is cheaper ! So it seems that ofgem don't set a limit (cap) on how much each component of the bill can rise.
Don't believe the news when it say 54 % maximum rise

I don't remember seeing any headlines stating

54% maximum rise

54% average rise, yes

While the media often get things wrong, like facts, they rarely understate things