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Energy price cap freeze on a fixed tariff

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  • robbo990 said:

    If you’re on a fixed tariff

    If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.

    These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.

    Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme.


    https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022

    we're with BG 1 year fix until 31.05.23, electricity only, 0.33236p/kwh inc vat.  Based on this latest info, I'm presuming that our tariff won't be reduced as we're already under the average of 34p being quoted?
  • Astria
    Astria Posts: 1,448 Forumite
    1,000 Posts Second Anniversary Name Dropper
    edited 11 September 2022 at 2:03PM
    robbo990 said:

    If you’re on a fixed tariff

    If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.

    These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.

    Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme.


    https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022

    This is so confusing, why couldn't they just drop all fixed tariffs in excess of the cap to the cap level for the duration of the price freeze? That would have been so much easier and wouldn't have meant a mass of people whose tariffs where > 52p from attempting to quit their fixed tariff.

    robbo990 said:

    If you’re on a fixed tariff

    If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.

    These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.

    Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme.


    https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022

    we're with BG 1 year fix until 31.05.23, electricity only, 0.33236p/kwh inc vat.  Based on this latest info, I'm presuming that our tariff won't be reduced as we're already under the average of 34p being quoted?
    That depends on your supplier and their interpretation of the requirement. I've only seen EDF mention it so far on their press released page, and they mentioned a floor but not what the floor was. Maybe they are still deciding that.

  • Problem is interpreting this if you fixed at a higher rate than the new cap, it will be reduced. But, if like me, you fixed in June and paid 4 months, at a 25% higher rate than the cap then, but your fixed rate is a fraction of a penny less than the new cap, then tough luck.
  • MWT
    MWT Posts: 10,273 Forumite
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    PeteHl said:
    Problem is interpreting this if you fixed at a higher rate than the new cap, it will be reduced. But, if like me, you fixed in June and paid 4 months, at a 25% higher rate than the cap then, but your fixed rate is a fraction of a penny less than the new cap, then tough luck.
    To be honest we still don't really know exactly how this is going to affect the current fixes, so just have to wait a few more days...

  • in_my_bumble_opinion
    in_my_bumble_opinion Posts: 1,386 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 11 September 2022 at 3:43PM
    we're with BG 1 year fix until 31.05.23, electricity only, 0.33236p/kwh inc vat.  Based on this latest info, I'm presuming that our tariff won't be reduced as we're already under the average of 34p being quoted?
    I think the fair thing would be that you would see a reduction applied. You signed a contract based on all the information available at the time. The government have stepped in causing a paradigm shift for consumers/suppliers. In a real sense, they have interfered in the contract between you and BG. So how are they going to compensate you for interfering in your contract? I reckon anyone who has a fix above the current SVT (not the Oct rates) has to see a discount applied. That would cover pretty much all fixes made over the last several months. No reduction would surely put the government on dodgy legal ground. 

    The only question is if they apply a floor. But I'm not sure a floor is that straight-forward because it would obviously mean a sliding scale of winners/losers because the discount applied would then have to be on a sliding scale....again, dodgy ground legally I would have thought.

    I just wonder if they may end up having to apply those quoted unit rate reductions across ALL fixed tariffs currently out there, with no floor? It's the simplest way to do it and the least problematic, legally (at least from where I'm sitting). Any other solution I've read thus far just doesn't stack up for me. 
    ''He who takes no offence at anyone either on account of their faults, or on account of his own suspicious thoughts, has knowledge of God and of things devine.''
  • in_my_bumble_opinion said:

    No reduction would surely put the government on dodgy legal ground. 

    Yeah, it really wouldn't.  In the same way as it isn't interfering with your contract if they change the tax rules when you are already employed, or the BoE changes interest rate when you already have a mortgage.

    In fact, surely in the case of a fix that doesn't get a discount they're actually doing nothing to the contract and it is remaining exactly as was signed.
  • I’m sure once it’s confirmed there’ll be winners and losers like every other thing…
  • Personally, I don't think anybody's contracted fixed unit rates will be reduced and that they will stay exactly the same as they are now.

    What will probably happen is that a rebate will be applied when a bill is generated equivalent to the government's Energy Price Guarantee subsidy.
  • Sea_Shell
    Sea_Shell Posts: 10,028 Forumite
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    Personally, I don't think anybody's contracted fixed unit rates will be reduced and that they will stay exactly the same as they are now.

    What will probably happen is that a rebate will be applied when a bill is generated equivalent to the government's Energy Price Guarantee subsidy.

    Interesting take on what might happen.
    How's it going, AKA, Nutwatch? - 12 month spends to date = 2.60% of current retirement "pot" (as at end May 2025)
  • in_my_bumble_opinion
    in_my_bumble_opinion Posts: 1,386 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited 11 September 2022 at 5:25PM
    in_my_bumble_opinion said:

    No reduction would surely put the government on dodgy legal ground. 

    Yeah, it really wouldn't.  In the same way as it isn't interfering with your contract if they change the tax rules when you are already employed, or the BoE changes interest rate when you already have a mortgage.

    In fact, surely in the case of a fix that doesn't get a discount they're actually doing nothing to the contract and it is remaining exactly as was signed.
    It's not the same as your two examples at all. People become employed and take out mortgages knowing those two things can and will happen over a period of time. 


    ''He who takes no offence at anyone either on account of their faults, or on account of his own suspicious thoughts, has knowledge of God and of things devine.''
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