Energy price cap freeze on a fixed tariff

[Deleted User]

QrizB said:

Deleted_User said:

Mstty said:

Doesn't Ofgem work with the typical domestic consumption values TDCV which is 2900kwh for electricity not 3100kwh for their calculation.

It says 3100kWh in the header of their tables.

It's an idiosyncrasy of the system that, while the table uses 3100kWh, the published figure for the cap is based on 2900kWh.

Very strange, but I bow to your expertise.

Does that mean they use the tables to covert to unit rates, and then convert the unit rates back up to an annual total for headlines?

Mstty

[Deleted User] said:

Mstty said:

Deleted_User said:

Chrysalis said:

Deleted_User said:

Chrysalis said:

Deleted_User said:

Zaul22 said:

Sorry if this has already been answered somewhere else in this massive thread, but is Truss expected to cap the unit rates just like Ofgem, or cap the total bill so for people paying £1200 ish on the 28p rate it would still be a massive increase?

Cap the unit rates to make the 'average user' cost £2500.  To something around 11p for gas and 35p for electricity if my maths was correct.

Its a just under 27% increase, so gas should be nearer to 9p.

That's not how the cap works, so I don't believe you.

How does it work then?

;

At the moment there's a capped annual bill for someone who uses 0kWh of electricity (divide by 365 to get the standing charge), 3100kWh of electricity (minus the first amount and divide by 3100 to get the unit cost), 0kWh of gas, and 12000kWh of gas.  That's 4 different amounts, in pounds.

The relevant numbers for the October cap are about £170, £1700, £100 and £1800.  That's where the headline figure of about £3500 comes from - £1700 + £1800.

If the gov caps the headline figure to £2500, we don't know which of the four numbers they will change and by how much.

You can assume any set of changes to those four figures, and each will give you a different unit price.  Just applying a flat percentage, which is calculated after summating and averaging four different factors (and actually more which cover region, single fuel, payment method etc.) isn't now it's done.

Doesn't Ofgem work with the typical domestic consumption values TDCV which is 2900kwh for electricity not 3100kwh for their calculation.

It says 3100kWh in the header of their tables.

Not sure what source that is but Ofgem set the price cap and here's a document which stated the TDCV

https://www.ofgem.gov.uk/publications/ofgem-updates-price-cap-level-and-tightens-rules-suppliers

QrizB

[Deleted User] said:

QrizB said:

Deleted_User said:

Mstty said:

Doesn't Ofgem work with the typical domestic consumption values TDCV which is 2900kwh for electricity not 3100kwh for their calculation.

It says 3100kWh in the header of their tables.

It's an idiosyncrasy of the system that, while the table uses 3100kWh, the published figure for the cap is based on 2900kWh.

Very strange, but I bow to your expertise.

Does that mean they use the tables to covert to unit rates, and then convert the unit rates back up to an annual total for headlines?

I can only guess that yes, they do.

Ofgem move in mysterious ways.

MWT

[Deleted User] said:

MWT said:

Deleted_User said:

Chrysalis said:

Deleted_User said:

Zaul22 said:

Sorry if this has already been answered somewhere else in this massive thread, but is Truss expected to cap the unit rates just like Ofgem, or cap the total bill so for people paying £1200 ish on the 28p rate it would still be a massive increase?

Cap the unit rates to make the 'average user' cost £2500.  To something around 11p for gas and 35p for electricity if my maths was correct.

Its a just under 27% increase, so gas should be nearer to 9p.

That's not how the cap works, so I don't believe you.

Best number I could give now would be 9.72p gas, 34.19 electric, as a national average including VAT.

That assumes the standing charges remain as predicted for the October cap, which was a very small rise over the current cap.

And assumes which split between gas and electric as a proportion of the total cap?

I mean at the moment in the April cap you have variations such as:

North West = £933.79 gas and £974.11 electricity     (49% gas)
Mersey       = £936.39 gas and £1038.84 electricity   (47% gas)

or in the October cap:

North West = £1785.25 gas and £1665.67 electricity   (52% gas)
Mersey       = £1787.09 gas and £1758.23 electricity   (50% gas)

Based on the national average in the original October cap decision which was 52.4% gas, 47.6% electric after deducting the standing charges.

QrizB

Found the reference. See this document, bottom half of page 3.

https://www.ofgem.gov.uk/sites/default/files/docs/2020/01/tdcvs_2020_decision_letter_0.pdf

In plain language (which Ofgem dont seem fond of), the medium TDCV used to be 3100kWh for electricity and this was also the upper benchmark for the price cap. In 2019/20 they reviewed the TDCVs and decided that household electricity use had fallen; the medium TDCV was reduced to 2900kWh/yr. However, Ofgem decided to continue using 3100kWh/yr when calculating the price cap.

It might not make much sense, but that's just how it is.

Mstty

Deleted_User said:

Mstty said:

Deleted_User said:

Mstty said:

Deleted_User said:

Chrysalis said:

Deleted_User said:

Chrysalis said:

Deleted_User said:

Zaul22 said:

Sorry if this has already been answered somewhere else in this massive thread, but is Truss expected to cap the unit rates just like Ofgem, or cap the total bill so for people paying £1200 ish on the 28p rate it would still be a massive increase?

Cap the unit rates to make the 'average user' cost £2500.  To something around 11p for gas and 35p for electricity if my maths was correct.

Its a just under 27% increase, so gas should be nearer to 9p.

That's not how the cap works, so I don't believe you.

How does it work then?

;

At the moment there's a capped annual bill for someone who uses 0kWh of electricity (divide by 365 to get the standing charge), 3100kWh of electricity (minus the first amount and divide by 3100 to get the unit cost), 0kWh of gas, and 12000kWh of gas.  That's 4 different amounts, in pounds.

The relevant numbers for the October cap are about £170, £1700, £100 and £1800.  That's where the headline figure of about £3500 comes from - £1700 + £1800.

If the gov caps the headline figure to £2500, we don't know which of the four numbers they will change and by how much.

You can assume any set of changes to those four figures, and each will give you a different unit price.  Just applying a flat percentage, which is calculated after summating and averaging four different factors (and actually more which cover region, single fuel, payment method etc.) isn't now it's done.

Doesn't Ofgem work with the typical domestic consumption values TDCV which is 2900kwh for electricity not 3100kwh for their calculation.

It says 3100kWh in the header of their tables.

Not sure what source that is but Ofgem set the price cap and here's a document which stated the TDCV

https://www.ofgem.gov.uk/publications/ofgem-updates-price-cap-level-and-tightens-rules-suppliers

It's the OFGEM tables linked in the third paragraph of the page you posted, and on the left hand sidebar of the same page, and on the page with the official notification of the decision rather than the press release.

[Text removed by Forum Team]

Not sure what you are inferring in your last paragraph but yes both 2900 and 3100 are used by Ofgem in their explanations was trying to get to the bottom (theorise) what the government will use for their fake cap of circa £2500.

I wonder if they will just split the percentage equally between gas and elec to reach their mythical cap target or as Ofgem did for October land the greater increase on gas than electricity.

ariarnia

TheGardener said:

 If we are to believe that a reduction in consumption is the only way to avoid power shortages in the winter (as in Macron's recent threats to the French consumers) 

i'm not sure its as simple as that. its reported the french consumers are being urged to cut usage so france can send gas to germany (i'm guessing their part of the war effort). not sure that same message would play as well here or is as likely given attitudes to europe after brexit? 

https://www.france24.com/en/europe/20220905-macron-urges-french-to-save-energy-says-ready-to-send-gas-to-germany

[Deleted User]

QrizB said:

Found the reference. See this document, bottom half of page 3.

https://www.ofgem.gov.uk/sites/default/files/docs/2020/01/tdcvs_2020_decision_letter_0.pdf

In plain language (which Ofgem dont seem fond of), the medium TDCV used to be 3100kWh for electricity and this was also the upper benchmark for the price cap. In 2019/20 they reviewed the TDCVs and decided that household electricity use had fallen; the medium TDCV was reduced to 2900kWh/yr. However, Ofgem decided to continue using 3100kWh/yr when calculating the price cap.

It might not make much sense, but that's just how it is.

Looks like it's because the TDCV is the median(-ish) but they wanted the cap to be calculated from a number closer to the mean (which they say is higher even than the old 3100) for reasons of controlling supplier profit.  They then seem to say that because people understand the TDCV, that's what the press release numbers should be based on.

Oh yes, and then we have VAT to (or not to) account for.

They like to keep things convoluted!

Chrysalis

MWT said:

Deleted_User said:

Chrysalis said:

Deleted_User said:

Zaul22 said:

Sorry if this has already been answered somewhere else in this massive thread, but is Truss expected to cap the unit rates just like Ofgem, or cap the total bill so for people paying £1200 ish on the 28p rate it would still be a massive increase?

Cap the unit rates to make the 'average user' cost £2500.  To something around 11p for gas and 35p for electricity if my maths was correct.

Its a just under 27% increase, so gas should be nearer to 9p.

That's not how the cap works, so I don't believe you.

Best number I could give now would be 9.72p gas, 34.19 electric, as a national average including VAT.

That assumes the standing charges remain as predicted for the October cap, which was a very small rise over the current cap.

Yeah 11p does seem too high actually, Your figures seem likely to be closer.  I under estimated but I dont think it would be to degree 2p unit of under estimation on gas.

MWT

Chrysalis said:

MWT said:

Deleted_User said:

Chrysalis said:

Deleted_User said:

Zaul22 said:

Sorry if this has already been answered somewhere else in this massive thread, but is Truss expected to cap the unit rates just like Ofgem, or cap the total bill so for people paying £1200 ish on the 28p rate it would still be a massive increase?

Cap the unit rates to make the 'average user' cost £2500.  To something around 11p for gas and 35p for electricity if my maths was correct.

Its a just under 27% increase, so gas should be nearer to 9p.

That's not how the cap works, so I don't believe you.

Best number I could give now would be 9.72p gas, 34.19 electric, as a national average including VAT.

That assumes the standing charges remain as predicted for the October cap, which was a very small rise over the current cap.

Yeah 11p does seem too high actually, Your figures seem likely to be closer.  I under estimated but I dont think it would be to degree 2p unit on gas.

I adjusted the numbers to account for the 2900/3100kWh shift used in most of the press reports rather than just using the Ofgem spreadsheet, so if the £2500 is also on the basis of 2900kWh electric/12,000kWh gas then I get the following as a national average figure, inc. VAT:

10p gas / 35.3p electric.