Good morning all - Energy Q from a novice... Moved into our new property in April and went on the

Prichard

variable rate with Shell. This was in the belief that there were no competitive fixed rates available & the thinking was that we'd go onto a fixed rate when / if this energy price crisis eases. 

Now, Shell emailed to say that they are putting our Direct Debt up to £450 per month. I called to query why this was way higher than the price cap. They explained that this is because the price cap does not apply to the variable rate.

So I have two questions really:

(a) Is the above statement regarding the Price Cap accurate? I am sure that I read something from Mr Martin Lewis himself saying that there was little point going onto a Fixed Rate at the moment because there are no competitive deals - but I may have misread. 

(b) If the above statement is correct then presumably the best thing I can do would be to sign up to a Fixed Rate on the shortest possible term (12 months perhaps)?

MWT

Prichard said:

Now, Shell emailed to say that they are putting our Direct Debt up to £450 per month. I called to query why this was way higher than the price cap. They explained that this is because the price cap does not apply to the variable rate.

The 'price cap' applies to the cost per kWh and the standing charge, it does not limit the amount you pay each month, that is based on the amount you use.

So your variable tariff is controlled by the cap, but the amount you pay can still go up if you are using more than was originally estimated.

The amount they want to set for your DD may still be wrong though if their estimate of your use is wrong...

Can you tell us what they are using as your estimated annual consumption?

Also can you tell us how much you have used since you moved in?

Have you been giving your supplier actual meter readings or are they basing everything on estimates?

Farway

Is your understanding of Price cap correct?

It's average across the country, your area may be higher, plus the capped bit is the cost per Kw and daily standing charge, thus if you use more energy you pay more, it is not all you can eat for a fixed sum

There may be a fixed deal that "could" be cheaper than the upcoming capped rise later this year, but there is no hard & fast rule and it is a gamble and you need to do your own sums

Any maybe cheaper fix would most likely be offer from your current supplier. There's an article on it https://www.moneysavingexpert.com/utilities/-are-there-any-cheap--fixed-energy-deals-currently-worth-it--/

Prichard

MWT said:

Prichard said:

Now, Shell emailed to say that they are putting our Direct Debt up to £450 per month. I called to query why this was way higher than the price cap. They explained that this is because the price cap does not apply to the variable rate.

The 'price cap' applies to the cost per kWh and the standing charge, it does not limit the amount you pay each month, that is based on the amount you use.

So your variable tariff is controlled by the cap, but the amount you pay can still go up if you are using more than was originally estimated.

The amount they want to set for your DD may still be wrong though if their estimate of your use is wrong...

Can you tell us what they are using as your estimated annual consumption?

Also can you tell us how much you have used since you moved in?

Have you been giving your supplier actual meter readings or are they basing everything on estimates?

Estimated Annual Usage

Electricity: 8,726 KWH @ 28.455p (standing charge 43.39p per day)
Gas: 21,678KWH @ 7.479p (standing charge 27.22p per day)

Actual Usage 

Electricity: 1,170 KWH (20th April - today)
Gas: 1,569 KWH (20th April - today)

We have been giving actual meter readings.

si_74

You use a lot of power! I thought my house was a guzzler. On those usage levels I work out that, at current price cap levels, that you seem to be on then your annual usage would be £4362 so £363.50/month.

But, this is going to rise significantly in October. It depends whether you are in credit or debit now as well, but given the rise coming then £450 doesn't seem excessive. If the price cap/kwh in October goes to 42p for electricity and 11p for gas (which seems to be the general guess, though it is a guess!) then a full year at that level would be £6307 (£525/month). So getting into a bit of credit now may be useful.

Note that these calculations are on the full 12 months but gives an idea of where you are heading with energy bills. You will likely use less than the £363.50/month between now and October, but come winter you will likely use more than the £525/month. Over the year it should even itself out. It also doesn't take into account the £400 you'll get from government.

As a fellow above average user I fixed a couple of weeks ago, but not sure I would now as the deals that are currently around seem too close to the October price cap to be worth considering. Lots of number crunching to decide that!

jbuchanangb

You have only got 2 months to go on but their estimates are outrageous. Unless you heat by electricity, it would be reasonable to multiply your 2 months usage by 6 to get a full year, namely 7020. That is well above average, so you may need to be doing a root and branch check on what is guzzling the energy. Last year I used 1709kh gas in 54 days in April and May which led to 13350kWh for full year. So you could push back on Shell with your own estimates and calculated monthly payment. In the end you will pay for what you use, irrespective of whether your monthly payment is too high or too low. If its too high you build up a credit balance, which will help against future charges, if it is too low you may get a nasty surprise in a year's time and have some catching up to do.

Prichard

Interesting. Assume you are talking gas rather than electricity? It's a reasonably large (2,200 sq ft+) property and also 140+ years old so it's hardly the most energy efficient thing in the world. Fortunately we have a couple of log burners and a large supply of wood to burn this winter. Hopefully that will help! 

However, our boiler is also probably towards the end of its life (think it is about 15-20 years old). Our hot water is also ferociously hot but turning the thermostat down on it does not seem to make a huge amount of difference. Do you think that changing to a new (and presumably more efficient) boiler might be worth looking into?

Robin9

Prichard said:

Estimated Annual Usage

Electricity: 8,726 KWH @ 28.455p (standing charge 43.39p per day)
Gas: 21,678KWH @ 7.479p (standing charge 27.22p per day)

Actual Usage 

Electricity: 1,170 KWH (20th April - today)
Gas: 1,569 KWH (20th April - today)

We have been giving actual meter readings.

Wow  -  its not easy to extrapolate these figures but elec is 600 KWh  a month so I can believe the 8726 figure. Gas at this time of year is not so easy  but with no heating on what are you using gas for  ?

Prichard

Robin9 said:

Prichard said:

Estimated Annual Usage

Electricity: 8,726 KWH @ 28.455p (standing charge 43.39p per day)
Gas: 21,678KWH @ 7.479p (standing charge 27.22p per day)

Actual Usage 

Electricity: 1,170 KWH (20th April - today)
Gas: 1,569 KWH (20th April - today)

We have been giving actual meter readings.

Wow  -  its not easy to extrapolate these figures but elec is 600 KWh  a month so I can believe the 8726 figure. Gas at this time of year is not so easy  but with no heating on what are you using gas for  ?

Our gas usage can only be hot water / a small amount of cooking. But as above - our hot water is hotter than the sun. Absolutely biblical heat. I tried turning the thermostat down and also just having it on for 1 hour per day last week. So wonder if that will make much of a difference. 

Prichard

jbuchanangb said:

You have only got 2 months to go on but their estimates are outrageous. Unless you heat by electricity, it would be reasonable to multiply your 2 months usage by 6 to get a full year, namely 7020. That is well above average, so you may need to be doing a root and branch check on what is guzzling the energy. Last year I used 1709kh gas in 54 days in April and May which led to 13350kWh for full year. So you could push back on Shell with your own estimates and calculated monthly payment. In the end you will pay for what you use, irrespective of whether your monthly payment is too high or too low. If its too high you build up a credit balance, which will help against future charges, if it is too low you may get a nasty surprise in a year's time and have some catching up to do.

What exactly makes you think that the estimates are outrageous? Heating is fully gas si nothing to do with that. 

Again; electricity is not something we knowingly use a lot of. We both work from home meaning that there are 6 screens in the house on for 10-12 hours per day (5 times per week) plus TV. A baby video monitor that we just keep on 24:7 (should probably turn that off as it gets red hot - so probably not the most efficient).

MWT

Prichard said:

Estimated Annual Usage

Electricity: 8,726 KWH @ 28.455p (standing charge 43.39p per day)
Gas: 21,678KWH @ 7.479p (standing charge 27.22p per day)

Actual Usage 

Electricity: 1,170 KWH (20th April - today)
Gas: 1,569 KWH (20th April - today)

We have been giving actual meter readings.

Those estimates are only a little high based on your actual readings, but your actual use is very high for the time of year, are there any circumstances that would make sense of that?

Do you have an EV for example which would explain the high electricity use, is the property a bungalow perhaps, which might explain the high gas use?

Just based on those estimates, even with no increase in October, and taking no account of any debt that may have already accrued, your DD would need to be over £360 a month, so that £450 isn't looking so unreasonable given that we know the prices are going up before winter and you may already have underpaid a bit for the first two months...