Have I misunderstood the price cap? My new standard tariff is £2812.50!?

TheMightyLlama

As per the title. I've been advised by SSE that they'll be rolling me off my current fixed tariff onto either standard (£2812.50 estimated) or one of 1 year fixed (£4366.79) or 2 year fixed (£4522.52). 

This seems above the price cap of £1971 in all cases. 

What am I misunderstanding?

TheMightyLlama

Here's the screenie from SSE. 

EssexHebridean

Are the unit prices in line with the rates that apply on that cap? Remember it's only a cap financially based on an average household - if you use more than that average - which it sounds like you do - then your annual spend will be higher. 

MWT

TheMightyLlama said:

This seems above the price cap of £1971 in all cases. 

What am I misunderstanding?

The kWh and standing charge rates are capped, not the total bill.

If you use more, you pay more, there is no cap on the bill total.

BUFF

TheMightyLlama said:

As per the title. I've been advised by SSE that they'll be rolling me off my current fixed tariff onto either standard (£2812.50 estimated) or one of 1 year fixed (£4366.79) or 2 year fixed (£4522.52). 

This seems above the price cap of £1971 in all cases. 

What am I misunderstanding?

It is that the rates are capped - not the total. The £1971 is an indicator for the "average" customer, if you are not an "average" customer your figure will be different (by the sounds of things much higher in your case).

QrizB

TheMightyLlama said:

What am I misunderstanding?

The price cap is a cap on the daily standing charge and price per unit. It isn't a cap on the annual bill.

When "the media" say the cap is £1971, it meand that an average customer using 12000kWh of gas a year, and 2900kWh of electricity, living in an average region of the UK, will pay that much.

And the cap only applies to the suppliers' standard variable tariffs - "Standard" in your case - not to any other tariff they might care to offer.

There's a longer explainer at the link in my signature.

diystarter7

Cap is per unit and standing charges prices. You are not alone as people a few doors down thought they could manage the 2800+
but were shell shocked when I told them and their bill worked out to approx 4k

pochase

As mentioned above your usage is far above the average used to calculate the cap. 

Currently the prediction for the new cap in October is about £2980 to £3150, so if this is correct your annual bill will go far beyond £4000 on SVT.

Especially the cost of gas is expected to raise by another 70%.

QrizB

pochase said:

As mentioned above your usage is far above the average used to calculate the cap.

Based on the SVT quote, I think the OP is using around 3500kWh/yr of electricity and 20000kWh/yr of gas.

Currently the prediction for the new cap in October is about £2980 to £3150, so if this is correct your annual bill will go far beyond £4000 on SVT. 

Using those kWh numbers, I get around £4200/yr for the OP if they stick with the standard variable tariff. Which is cheaper than either of the SSE fixes on offer.

The_Fat_Controller

The answer is yes, you have totally misunderstood how the price cap works.

diystarter7

The_Fat_Controller said:

The answer is yes, you have totally misunderstood how the price cap works.

A bit harsh if I may say so.

But the OP is not alone as many and I've met a few that thought a "cap" was just that.  What they should be saying is the price per unit and the standing charges are capped - that is plain and simple English. There is no need to confuse people and this word CAP and the way its mentioned in the media can be misleading as noted here.

A CAP and saying its xxxx etc etc does confuse many and had me going when first announced as I thought that can't be true as I knew someone with a big house and their bills we close to 5k years before.