I don't know if I should fix energy deal or not

DevaVictrix

I have never understood the terminology with energy bills, especially 'price cap'. Surely the more you use, the more you pay?

Either way I currently pay £80 a month for gas and electric but next month my fixed rate ends. I've been sent an email saying if I 'do nothing' then I'll pay £1600 a year from August. Or, I can start another fixed deal for £2k a year. 

If I 'do nothing' will that £1600 end up being more than £2k in the future? 

I'm confused by it all because I don't know where all the numbers in the news are coming from... isn't unit price the key figure? 

pochase

Yes unit price is the key figure.

Ofgem calculates the cap amount based on an "average" usage of 12000KWh gas, 2900KWh electricity and the standing charges. This is currently £1957, and latest predictions are it might raise to £3500 in October.

From the cap amount the highest unit rates that suppliers can charge are calculated, so while there is the overall cap amount you also have maximum unit rates. This unit rates are not the same, but are slightly different for the different regions in the country.

As the cap figure is based on an average, you are correct saying the more you use the more you pay.

For your example the fixed rate would look good, as we currently expect the cap to go up by an overall 76%, but we will need real usage figures over the last 12 months and what rates are offered to you for a closer look.

DevaVictrix

Thank you for your response. 

In my mind it would be far easier to understand if the news talked of unit prices. I'm in my 40s and have only had gas in a property for the last two years. It's always been electric only. Even now my gas usage is half the average, whereas somehow my electric is average. 

It's difficult to work out what my average might cost compared to the UK average.

Thanks

pochase

You are not alone here.

Unfortunately the press, and even Martin Lewis, like the one percentage in a headline more than detailed information.

Unit rates and standing charges would be much more meaningful and who is interested could easily calculate his cost.

On the other hand many, if not most coming for advise to the forum will quote direct debit figures, but many don't know what there usage for the last year was.

Evan3020

"Even now my gas usage is half the average, whereas somehow my electric is average."

"It's difficult to work out what my average might cost compared to the UK average."

If your gas is half the average then the cost will be half the average?

If your electricity is average then the cost will be average.

pochase

Evan3020 said:

"Even now my gas usage is half the average, whereas somehow my electric is average."

"It's difficult to work out what my average might cost compared to the UK average."

If your gas is half the average then the cost will be half the average?

If your electricity is average then the cost will be average.

I  think @DevaVictrix would like that you give him the cost in £. That is what he is complaining about.

QrizB

DevaVictrix said:

I have never understood the terminology with energy bills, especially 'price cap'. Surely the more you use, the more you pay?

Yes, the price cap is a synthetic annual bill equivalent for the average householder in an average part of the country. There's an explanation of the current (and previous) cap at the link in my signature, including calculation of the prices applicable to eeach supply region.

Either way I currently pay £80 a month for gas and electric but next month my fixed rate ends. I've been sent an email saying if I 'do nothing' then I'll pay £1600 a year from August. Or, I can start another fixed deal for £2k a year. 

If I 'do nothing' will that £1600 end up being more than £2k in the future?

Almost certainly, but we won't know until Ofgem announce the October cap rates next month.

I'm confused by it all because I don't know where all the numbers in the news are coming from... isn't unit price the key figure?

So far, none of the press releases with cap forecasts have included that level of detail. People on this forum are expecting electricity unit prices in the range 42-45p/kWh and gas unit prices of 13-15p/kWh, but use those values with caution; we're just random people on the internet.