Energy price cap to rise to £2,800 in October: OFGEM Chief Exec

Mstty

So less like a "rumour" as some have suggested? More like a cry for help to put pressure on the Government to get themselves organised for the amount they have in mind.

Still states approx £2800 so maybe some wiggle room.

This leads onto who should get the next level of help is it Band A-D again or more targeted?

wrf12345

Ofgem keeps saying it is looking after consumers but in reality it is making sure the energy companies can recover all the money they have lost in the past year or so, so even if the costs of electric and gas do not go up they will still let them raise rates. If consumers cut back on usage then even higher standing charges will be allowed to force low users to pay for previous losses. The energy companies want the government to give consumers free money to pay for this so that consumers do not realise the extent to which they are being ripped off, whereas the government should be encouraging low use by outlawing standing charges (which would give everyone a £250-360 boost) and perhaps using the bloated green taxes to reimburse the companies (and scaling that back once energy prices go down again).

The industry is trying to panic the govn into giving consumers free money, no-one is standing up for the poor old consumer.

GingerTim

QrizB said:

GingerTim said:

https://www.bbc.co.uk/news/business-61562657

The boss of the UK's energy regulator has warned that the energy price cap is expected to rise to around £2,800 in October.

I don't think anyone else has posted the link to where Ofgem have published the letter:

https://www.ofgem.gov.uk/publications/letter-jonathan-brearley-chancellor-and-secretary-state-business-energy-and-industrial-strategy-default-tariff-cap

It makes interesting reading.

Indeed! A pretty clear warning to, and cry for help from, the government. Seems like Sunak may announce something soon to distract from stories about the mini-Hacienda in Downing Street during lockdown.

markin

Mstty said:

markin said:

Mstty said:

Benny2020 said:

Some people think because solar is not a complete answer then it is of no use what so ever.
My 3.5 kwh a day in January and December is enough to cover my daytime needs and at this time of the year my usage from the grid is down to 1.5 kwh a day. Also get £70 a month FIT payments.

But the people most affected by these price rises cannot afford solar. 

But the people that can afford it reduces the day time cost per MWH so everyone benefits.

Not by enough it isn't. 

For 6-8hrs a day it would seem to drive half price or more power at peak demand, and cutting gas demand 10-20%, On poor solar days (23rd) its only 3hrs. Drax

And if we had Germanys 50GW we would be 100% solar some days this week. https://www.sma.de/en/company/pv-electricity-produced-in-germany.html

Seems lots of people have the same idea.

 UK solar rooftop deployment to exceed 500MW in 2022

Mstty

I have tenants that can afford to put on £15 a week. One example is a single mum that has been regularly beaten by her previous boyfriend and she has two children. Living on benefits. No parents to turn to for help.

So what do we do for her?

£15 a week for energy in an EPC grade D heavily insulated walls and floors but still on electricity only storage heaters.

£3 is standing charges on her prepayment meter now she has £12 left for the week.

I appreciate in the summer she has 6kWh a day to play with but come winter it will be heat or eat.

We will try and get on the gas boiler scheme for people on benefits in to install as this will be cheaper for winter. 

bristolleedsfan

wrf12345 said:

Ofgem keeps saying it is looking after consumers but in reality it is making sure the energy companies can recover all the money they have lost in the past year or so, so even if the costs of electric and gas do not go up they will still let them raise rates. If consumers cut back on usage then even higher standing charges will be allowed to force low users to pay for previous losses. The energy companies want the government to give consumers free money to pay for this so that consumers do not realise the extent to which they are being ripped off, whereas the government should be encouraging low use by outlawing standing charges (which would give everyone a £250-360 boost) and perhaps using the bloated green taxes to reimburse the companies (and scaling that back once energy prices go down again).

The industry is trying to panic the govn into giving consumers free money, no-one is standing up for the poor old consumer.

Absolutely correct, OFGEM yesterday used phrases/soundbites that SP and EON have been using designed to minimise both energy companies bad debts going forward and the funds/monies energy companies are obligated to hand out to people struggling.

DuranGirl

Big ouch. But Martin's email this week suggested my supplier's latest fix offer might be worth taking up, so I've done the sums and, in light of the Ofgem forecast, I've gone for it as it comes in at £700 lower than that (thanks Martin). Still makes my heart pound at the thought of where money's going to come from.

Ultrasonic

I find it hard to judge how well OFGEM may be doing their best for consumers personally, since as last year demonstrated it is absolutely not in consumer's interests for energy firms to go bust.

Long term I'll be interested to see to what extent the price rises manage to get more people to reduce their energy use. Predictions based soley on the price cap changes obviously don't factor in to what extent individual households may be able to reduce the impact of price rises by doing so.

MattMattMattUK

wrf12345 said:

Ofgem keeps saying it is looking after consumers but in reality it is making sure the energy companies can recover all the money they have lost in the past year or so, so even if the costs of electric and gas do not go up they will still let them raise rates. If consumers cut back on usage then even higher standing charges will be allowed to force low users to pay for previous losses.

Ofgem is looking after the consumers, otherwise there would be no cap. It has also been demonstrated that it is not in the consumer's interest for the suppliers to go bust, because the majority of the costs of balances need to be recovered via the standing charge. The energy providers do not make a profit on the standing charge, it is there to cover fixed costs (network, base provision, SoLR, social etc.). The higher standing charge is not used to force anyone to pay for previous losses, it is used to cover the cost of the new provider giving the SoLR customers their credit balances. It also does not penalise low users, it applies network costs to everyone, which is the fair way to do it, if people do not want to pay network costs then they need to not use the network.

wrf12345 said:

The energy companies want the government to give consumers free money to pay for this so that consumers do not realise the extent to which they are being ripped off, whereas the government should be encouraging low use by outlawing standing charges (which would give everyone a £250-360 boost) and perhaps using the bloated green taxes to reimburse the companies (and scaling that back once energy prices go down again).

The energy companies do not want a situation where customers are in debt, or defaulting on bills, that is expensive and difficult to deal with. The government has multiple ways to tackle that, or not, the choice is political. It is likely that none of the energy providers will make a profit this financial year, they might make a small one next. This crisis demonstrates exactly why we need a huge investment in non-fossil fuel energy, something which the green levy does. Outlawing standing charges would be idiotic as it would mean that the network costs would need to be recouped elsewhere, so additional unit rates, it would also mean that medium and higher users would be subsiding lower users which makes no sense either. 

wrf12345 said:

The industry is trying to panic the govn into giving consumers free money, no-one is standing up for the poor old consumer.

There is no such thing as free money, the "industry" is not trying to panic anyone, the Ofgem statement was only made because they were summoned to the HoC committee and told to make a statement that included their best guess of the October rise. I am sure the industry does not want to be forced to sell below cost, no business would, but many energy suppliers accept that profit will be negligible for another year or two, they are aiming for survival. 

superkoopauk

QrizB said:

GingerTim said:

https://www.bbc.co.uk/news/business-61562657

The boss of the UK's energy regulator has warned that the energy price cap is expected to rise to around £2,800 in October.

I don't think anyone else has posted the link to where Ofgem have published the letter:

https://www.ofgem.gov.uk/publications/letter-jonathan-brearley-chancellor-and-secretary-state-business-energy-and-industrial-strategy-default-tariff-cap

It makes interesting reading.

Thanks for posting the link QrizB - interesting indeed!

Does appendix A give you any clues as to why the Ofgem prediction is so different from yours?  Looks like the majority of the increase is on wholesale costs - perhaps Ofgem are predicting a spike in wholesale costs in the next two months?