OFGEM moving to quarterly price cap reviews - confirmed

sevenhills

GingerTim said:

He also said they are 'looking at the standing charge'.

They should be either a zero standing charge' tariff or Ofgem should set the price for the first 2,000 units at zero % VAT.
That would help the poor and help tackle climate change.

QrizB

sevenhills said:

GingerTim said:

He also said they are 'looking at the standing charge'.

They should be either a zero standing charge' tariff or Ofgem should set the price for the first 2,000 units at zero % VAT.
That would help the poor and help tackle climate change.

It seems to me that giving away free energy would increase consumption and make climate change worse.

MattMattMattUK

sevenhills said:

GingerTim said:

He also said they are 'looking at the standing charge'.

They should be either a zero standing charge' tariff or Ofgem should set the price for the first 2,000 units at zero % VAT.
That would help the poor and help tackle climate change.

The standing charge should be increased to cover all network costs and the unit rate should cover the unit costs.

Neither proposal would make any difference to climate change, because that is based on how much energy is used, not the rate of the standing charge or VAT.

prowla

Seems like the suppliers have got their way then "we need to be allowed to increase our prices more".

If the quango, whose job is supposed to be to protect consumers, really cared about the consumers they would stipulate how prices should behave when falling and other measures to prevent price-gouging.

Of course, whatever happens, if OFGEM specify a maximum price, the energy companies will simply interpret that as a minimum price.

MWT

prowla said:

Seems like the suppliers have got their way then "we need to be allowed to increase our prices more".

If the quango, whose job is supposed to be to protect consumers, really cared about the consumers they would stipulate how prices should behave when falling and other measures to prevent price-gouging.

They already do, and with quarterly reviews the effect of falling costs will affect the cap quicker than it used to...

prowla said:

Of course, whatever happens, if OFGEM specify a maximum price, the energy companies will simply interpret that as a minimum price.

Ofgem set the cap on the Standard Variable Tariff, historically the suppliers all offered fixed tariffs at prices below the cap so it seems you are incorrect on that point...

Even for the Standard Variable Tariff there were suppliers offering prices below the cap, and in fact there still are even now...

tghe-retford

QrizB said:

sevenhills said:

GingerTim said:

He also said they are 'looking at the standing charge'.

They should be either a zero standing charge' tariff or Ofgem should set the price for the first 2,000 units at zero % VAT.
That would help the poor and help tackle climate change.

It seems to me that giving away free energy would increase consumption and make climate change worse.

The alternative - and nobody wants to say this out loud - is that energy reduction will be accomplished through the free market where the poorest will simply be priced out of lighting and heating while the rich who lecture us on climate change will still jet about on carbon spewing private jets. The talk is of a "major permanent decline in our living standards" where energy becomes a luxury rather than an essential. But aside from the odd columnist, no-one dares speak of this potential uncomfortable reality for millions.

Mstty

QrizB said:

sevenhills said:

GingerTim said:

He also said they are 'looking at the standing charge'.

They should be either a zero standing charge' tariff or Ofgem should set the price for the first 2,000 units at zero % VAT.
That would help the poor and help tackle climate change.

It seems to me that giving away free energy would increase consumption and make climate change worse.

Did they say free energy?

A standing charge provides no energy and a vat reduction isn't free.

There could however be a reward system for low energy users which could make others look at reducing energy if the rewards were substantial. (Second homes would need declaring as such as to not fleece the system) Those over the set limits for what is deemed reasonable for a dual fuel or single file house would then pay on a rising scale on their deemed excessive usage. That would focus the majority on their energy use.

[Deleted User]

prowla said:

Seems like the suppliers have got their way then "we need to be allowed to increase our prices more".

If the quango, whose job is supposed to be to protect consumers, really cared about the consumers they would stipulate how prices should behave when falling and other measures to prevent price-gouging.

Of course, whatever happens, if OFGEM specify a maximum price, the energy companies will simply interpret that as a minimum price.

Read my post above. Suppliers were losing up to £700 per customer on the SVT due to the imposition of the Cap in a rapidly price increasing market. Yes, it did allow the Government to claim that it was protecting consumers from high energy prices but, as we now know, this relief was very short-lived as suppliers started falling over like dominoes. The cost of these failures being added to our present and future bills. If the Cap in October does go up by 70% then that is the overall cost increase from early February through to early August, and I see no evidence that prices are going to fall as we head into Winter.

Yes, reviewing the Cap every three months may lead to higher prices which will offer some financial protection to suppliers. However, I confess that until a proper audit is carried out, I have no idea whether higher energy costs now versus the costs of future supplier failures is a better/cheaper option. The problem, of course, with supplier failures it isn’t a case of ‘thank you and goodbye ‘. The SoLR has to bear the cost of taking those consumers on which includes buying unhedged energy and paying back consumer credits. Quite rightly, it wants to recover these costs from Ofgem and consumers.

Ofgem deserves to be held out to dry. It is not responsible for wholesale prices; however, it could and should have done more to ensure that Licences were not granted to cowboys (often promoted by this and other PCWs as offering the cheapest deals); that robust financial checks were put in place, and there was mandatory hedging. Unfortunately, that ship has sailed.

FWiW, there is a body of opinion that the Cap should be abandoned and the supplier market should be freely allowed to compete on price. 

sevenhills

QrizB said:

It seems to me that giving away free energy would increase consumption and make climate change worse.

There would be no free energy, just getting rid of the tax on a set amount of energy, which could be recouped by increasing tax in high energy consumption.
Tax on domestic energy is only 5% compared to over 60% on vehicle fuel. In the interests of climate change, these two taxes should be equalised.

BUFF

https://www.telegraph.co.uk/bills-and-utilities/gas-electric/energy-price-cap-could-hit-4400-january/