freezing the cap price

pochase

And what are you doing in April when the scheme ends? Which is exactly when we expect the highest cap. So tey will pay for the highest cap plus they will start to pay back this pay holiday, so the cost goes up even more.

MattMattMattUK

pochase said:

And what are you doing in April when the scheme ends? Which is exactly when we expect the highest cap.
So tey will pay for the highest cap plus they will start to pay back this pay holiday, so the cost goes up even more.

The issue will be somewhat muddied by then, but whilst unit prices will be higher usage will drop significantly with more daylight and warmer days so I don't think the peak prices being in April will be as bad as many fear. That being said, any kind of payment holiday would be a disaster. 

Staffordian11

Thinking about ways to ease pressures without the government spending a fortune subsidising everyone, I wonder if a partial freeze could be introduced to alleviate the hardships the October cap rise will bring?

By this, I mean insist all energy companies offer the first so many kWhs of gas and electricity to each domestic customer at a cheaper subsidised rate, such as the current one, the rest being at whatever the OFGEM cap for October and beyond happens to be.

This would be proportionately more beneficial to lower income groups and at the same time encourage everyone to keep their usage lower.

I can hear cries of "but the systems probably cant cope with this", but I recall in the 1970s my parents had a dual rate tariff for gas, albeit one which offered cheaper unit prices  for the higher use, the opposite of my suggestion, so it cannot be too hard to implement.

MattMattMattUK

Staffordian11 said:

Thinking about ways to ease pressures without the government spending a fortune subsidising everyone, I wonder if a partial freeze could be introduced to alleviate the hardships the October cap rise will bring?

By this, I mean insist all energy companies offer the first so many kWhs of gas and electricity to each domestic customer at a cheaper subsidised rate, such as the current one, the rest being at whatever the OFGEM cap for October and beyond happens to be.

This would be proportionately more beneficial to lower income groups and at the same time encourage everyone to keep their usage lower.

It would be proportionally more beneficial to low users, to those who are at work all day and those with solar, who would end up paying very little, but to nothing substantial to alleviate the difficulties of those at home all day such as pensioners and the disabled.

Staffordian11 said:

I can hear cries of "but the systems probably cant cope with this", but I recall in the 1970s my parents had a dual rate tariff for gas, albeit one which offered cheaper unit prices  for the higher use, the opposite of my suggestion, so it cannot be too hard to implement.

If the system was set up for it then it would be possible, the system could be modified to handle it, the issue is how quickly that could be done, how much it would cost to do and the utility of doing so.

There is almost no merit to a partial freeze, a far better solution would be targeted help. The main benefit of the freeze would be that it would keep inflation down, because overall we would pay for a freeze one way or another anyway. 

[Deleted User]

Staffordian11 said:

Thinking about ways to ease pressures without the government spending a fortune subsidising everyone, I wonder if a partial freeze could be introduced to alleviate the hardships the October cap rise will bring?

By this, I mean insist all energy companies offer the first so many kWhs of gas and electricity to each domestic customer at a cheaper subsidised rate, such as the current one, the rest being at whatever the OFGEM cap for October and beyond happens to be.

This would be proportionately more beneficial to lower income groups and at the same time encourage everyone to keep their usage lower.

I can hear cries of "but the systems probably cant cope with this", but I recall in the 1970s my parents had a dual rate tariff for gas, albeit one which offered cheaper unit prices  for the higher use, the opposite of my suggestion, so it cannot be too hard to implement.

Beware of unintended consequences. The owners of homes with PV solar would benefit enormously from such a scheme as was the case with zero standing charge tariffs. The latter had to be withdrawn as suppliers do not make money from customers who do not pay anything towards their operating costs.

Staffordian11

MattMattMattUK said:

There is almost no merit to a partial freeze, a far better solution would be targeted help. The main benefit of the freeze would be that it would keep inflation down, because overall we would pay for a freeze one way or another anyway. 

I agree entirely about targeted help. But I don't see any realistic way of doing this. Many who need help are not on benefits, so just targeting benefit recipients misses many out, and conversely, giving help to all pensioners means helping a huge swathe of the population who are relatively wealthy.

I've not seen any suggestions as to how help can be efficiently targeted, hence other suggestions which can be introduced relatively easily and cheaply.

pochase

I like the idea of a subsidised price for the first x KWh, I have suggested that myself in another thread.

Problem will be how to integrate this into the billing system within a few weeks. 

Also you would need regular meter readings, something that a lot of people don't do. 

MattMattMattUK

Staffordian11 said:

MattMattMattUK said:

There is almost no merit to a partial freeze, a far better solution would be targeted help. The main benefit of the freeze would be that it would keep inflation down, because overall we would pay for a freeze one way or another anyway. 

I agree entirely about targeted help. But I don't see any realistic way of doing this. Many who need help are not on benefits, so just targeting benefit recipients misses many out, and conversely, giving help to all pensioners means helping a huge swathe of the population who are relatively wealthy.

I've not seen any suggestions as to how help can be efficiently targeted, hence other suggestions which can be introduced relatively easily and cheaply.

I think that the unfortunate nature of the situation, as well as the wider state of the nation's finances and economy is that it is not possible for everyone to be helped, the majority are going to have to accept a drop in living standards. I think it needs to be targeted based on some fairly crude criteria and accept that functionality and expedience trump perfection. Politically it also has to be palatable, and fiscally it has to be vaguely affordable. 

I think on that basis it would need to include those on UC, PIP and legacy benefits and probably pensioners as well, I know that means some people will not get help and still struggle, but generally the level of income required to qualify for benefits is a reasonable threshold to qualify for state assistance therefore it make sense to use that. For pensions you could apply it to only those getting Pension Credit, but politically it will probably be given to all pensioners. 

There will be some who get no help but would need it to live comfortably, there will be many more who will annoyed that they get no help when others do, there will be more still annoyed with having to fund for it but not getting anything back. It will not be perfect, just as the CJRS/SEISS were not, some will fall through the gaps and I say that as someone who was not entitled to help during Covid (Ltd company director, remunerated almost entirely in dividend), so I know what it is like to be one of the ones who misses out, but it is better that we help the majority of those who need it, rather than everyone missing out because we cannot find a perfect solution. 

deano2099

It's interesting they want a commercial loan with the government backing it. Why can't the UK government just give them a loan on commercial terms and interest, given they can borrow cheaper than energy companies can? Then the energy companies can do the scheme they're suggesting.
The government are backstopping it anyway. If the supplier goes bust, the government has to pay up. If they don't, a commercial company get the interest. Seems all risk no reward.

Staffordian11

MattMattMattUK said:

Staffordian11 said:

MattMattMattUK said:

There is almost no merit to a partial freeze, a far better solution would be targeted help. The main benefit of the freeze would be that it would keep inflation down, because overall we would pay for a freeze one way or another anyway. 

I agree entirely about targeted help. But I don't see any realistic way of doing this. Many who need help are not on benefits, so just targeting benefit recipients misses many out, and conversely, giving help to all pensioners means helping a huge swathe of the population who are relatively wealthy.

I've not seen any suggestions as to how help can be efficiently targeted, hence other suggestions which can be introduced relatively easily and cheaply.

I think that the unfortunate nature of the situation, as well as the wider state of the nation's finances and economy is that it is not possible for everyone to be helped, the majority are going to have to accept a drop in living standards. I think it needs to be targeted based on some fairly crude criteria and accept that functionality and expedience trump perfection. Politically it also has to be palatable, and fiscally it has to be vaguely affordable. 

I think on that basis it would need to include those on UC, PIP and legacy benefits and probably pensioners as well, I know that means some people will not get help and still struggle, but generally the level of income required to qualify for benefits is a reasonable threshold to qualify for state assistance therefore it make sense to use that. For pensions you could apply it to only those getting Pension Credit, but politically it will probably be given to all pensioners. 

There will be some who get no help but would need it to live comfortably, there will be many more who will annoyed that they get no help when others do, there will be more still annoyed with having to fund for it but not getting anything back. It will not be perfect, just as the CJRS/SEISS were not, some will fall through the gaps and I say that as someone who was not entitled to help during Covid (Ltd company director, remunerated almost entirely in dividend), so I know what it is like to be one of the ones who misses out, but it is better that we help the majority of those who need it, rather than everyone missing out because we cannot find a perfect solution. 

I suspect you are spot on.  I guess the old adage of not letting perfection be the enemy of the good applies here...