How to calculate the October increase?

Noblesafe

Hello All,

I just have a quick question regarding the October price cap increase. I spent all last night trying to work out different variables and just wanted to see if I was doing this correctly.

Martin Lewis said yesterday that if you find a fixed tariff of no more than 35% of what you currently pay then it's worth considering. Is this 35% more than my monthly direct debit or 35% more than the unit price for gas and electricity?

Also, I found a tariff with British Gas (my current supplier), but I will be paying more over the next 4 months than I currently pay. Is it worth waiting until we get closer to the October date or secure a fix now?

I appreciate any help you can give.

Thank you.

Mstty

Welcome to the forum.

The October increase us expected to be between 42-46% depending on which prediction you put most trust in.

Energy usage between now and October should be a lot less than winter so any fix now won't actually cost most people a great deal but it must be factored in as some still use a lot of energy in summer.

Pen/paper/spreadsheet and see if it works for you.

Noblesafe

Hi Mstty,

Thank you, I am glad to be a part of the forum and thank you for your response.

So when looking at the 42-46% increase do you calculate the % increase on the unit rates or what my current direct debit is (Estimated by British Gas on my usage)? 

I currently pay £223.80 per month and the fix I am thinking of going to is £281.41, which is less than a 32% increase, but the gas unit rate is more than 35%, the electric is less than 35%.

Mstty

Noblesafe said:

Hi Mstty,

Thank you, I am glad to be a part of the forum and thank you for your response.

So when looking at the 42-46% increase do you calculate the % increase on the unit rates or what my current direct debit is (Estimated by British Gas on my usage)? 

I currently pay £223.80 per month and the fix I am thinking of going to is £281.41, which is less than a 32% increase, but the gas unit rate is more than 35%, the electric is less than 35%.

You are asking the right questions for sure. As you have worked out most fixes the increase in gas is higher than electric as the expected rise of 42-46% in October is broken down to a guess that 60% of that increase will land on gas and 40% on electricity (based on the April '22 rise)

If you want to provide me with your yearly use and kWh and the current Standing charge and price per kWh you pay and the fix deal details I can run them through my spreadsheet👍

pochase

The direct debit they project for will give you an idea, but if you want to have a better picture you will need to analyse you usage.

Currently we don't expect an increase in the standing charges, but of course the DD includes the standing charge and so the percentages are lower as if you look at the increase for the unit rates.

From the latest data from Cornwall-Insights we might be looking at 11.8p for 42p for electricity, which would be 60% per KWh gas and 45% to 50% per KWh electricity.

So take the estimates above direct debits are based on and calculate your cost for gas, electricity and both standing charges. Multiply you gas use by 11.8p, electricity by 42p and add the two standing charges. Divide by 12 and you have a monthly amount based on the same consumption as the fixed rate offered to you. Now you can compare it much better. Of course you need to take into account how much more you pay for the months up to October.

And the final and biggest problem now - nobody knows how good the predictions are, it might be spot on, better or worse. So it still is a gamble, but you can expect the offers to become worse the nearer we get to October.

simonr91

pochase said:

The direct debit they project for will give you an idea, but if you want to have a better picture you will need to analyse you usage.

Currently we don't expect an increase in the standing charges, but of course the DD includes the standing charge and so the percentages are lower as if you look at the increase for the unit rates.

From the latest data from Cornwall-Insights we might be looking at 11.8p for 42p for electricity, which would be 60% per KWh gas and 45% to 50% per KWh electricity.

So take the estimates above direct debits are based on and calculate your cost for gas, electricity and both standing charges. Multiply you gas use by 11.8p, electricity by 42p and add the two standing charges. Divide by 12 and you have a monthly amount based on the same consumption as the fixed rate offered to you. Now you can compare it much better. Of course you need to take into account how much more you pay for the months up to October.

And the final and biggest problem now - nobody knows how good the predictions are, it might be spot on, better or worse. So it still is a gamble, but you can expect the offers to become worse the nearer we get to October.

Do you happen to have the predictions for the standing charge at all?

pochase

It is very unlikely that there will be a change to the standing charge, or if so it should be minimal.

But again, nobody will know until August/September when we get the new cap information.

Noblesafe

Hello both,

@Mstty - British Gas are a bit naff in providing usage but they did say based on estimates we use 14657 kWh of Gas and 4716 kWh of electricity in a year. 

Current tariff is:

Gas - 7.282 unit & 27.22p standing charge
Electricity - 27.627 unit & 44.75p standing charge

New tariff:

Gas - 10.299 unit & 29.959p standing charge
Electricity - 34.110 unit & 50.230p standing charge. 

@pochase:

So would that be:

Gas 

11221.4 x 11.8 = 14,412.71 + 27.22 = 14,439.93 / 12 = 1,203.32

Electricity

393 x 42 = 116,506 + 44.75 = 16,550.75 / 12 = 1,379.22

Is that correct?

pochase

Noblesafe said:

Hello both,

@Mstty - British Gas are a bit naff in providing usage but they did say based on estimates we use 14657 kWh of Gas and 4716 kWh of electricity in a year. 

Current tariff is:

Gas - 7.282 unit & 27.22p standing charge
Electricity - 27.627 unit & 44.75p standing charge

New tariff:

Gas - 10.299 unit & 29.959p standing charge
Electricity - 34.110 unit & 50.230p standing charge. 

@pochase:

So would that be:

Gas 

11221.4 x 11.8 = 14,412.71 + 27.22 = 14,439.93 / 12 = 1,203.32

Electricity

393 x 42 = 116,506 + 44.75 = 16,550.75 / 12 = 1,379.22

Is that correct?

Nope, that is not correct.

1. You don't have a standing charge for the year, it is per day, so you need to multiply the standing charges by 365.
2. you are skipping decimals here. 11.8*11221.4= 144.412 not 14,412 or 116,506 + 44.75 = 116,550 not 16,550
3. last you need to divide your result by 100 to convert it to £
4. you are saying BG is using 14657 KWh for gas, but you are using 11221 KWh in your calculation. Same for electricity you calculate with 393KWh instead of 4716KWh

pochase

Here are the calculations for all three. The DD amount are off by a 3 pound. 

In this scenario you would save £46 per month from October, but I estimate that July to September you pay maybe £35 more.

Noblesafe

Thats perfect thank you @pochase.

So based on that and the fact that the cap will probably increase, albeit slightly in Jan, it's worth getting that new fixed tariff, isnt it?