£2500 Price Cap Martin's view

MWT

Mstty said:

What could be fair to all, as we are all going to have to pay this back, is a pence reduction on whatever tariff you are on inline with the October price cap to £2500 reduction being muted.

I get the concept, and it has merit, but the implementation, especially on multi-rate tariffs would be very difficult to manage and would have some very odd edge-cases...

My father-in-law is on a 3p/kWh gas tariff until next April, his supplier would end up having to pay him more, the more he used...

Mstty said:

I doubt anyone in Whitehall has thought about that as it also takes away the option of energy suppliers getting people off fixes they have hedged onto SVT and pocketing more money. They must be rubbing their hands together.

I suspect that much like the way they handle the SoLR reclaims, the suppliers are going to have to disclose their energy purchase costs and calculate the support rebate accordingly, so those that have hedged well should not profit excessively from that hedging.

Mstty

MWT said:

Mstty said:

What could be fair to all, as we are all going to have to pay this back, is a pence reduction on whatever tariff you are on inline with the October price cap to £2500 reduction being muted.

I get the concept, and it has merit, but the implementation, especially on multi-rate tariffs would be very difficult to manage and would have some very odd edge-cases...

My father-in-law is on a 3p/kWh gas tariff until next April, his supplier would end up having to pay him more, the more he used...

Mstty said:

I doubt anyone in Whitehall has thought about that as it also takes away the option of energy suppliers getting people off fixes they have hedged onto SVT and pocketing more money. They must be rubbing their hands together.

I suspect that much like the way they handle the SoLR reclaims, the suppliers are going to have to disclose their energy purchase costs and calculate the support rebate accordingly, so those that have hedged well should not profit excessively from that hedging.

That makes sense, secretly I was hoping for 18-20p per kWh off my electricity fixed rate of 29.24p.....but then I woke up🤣🤣

bytesplicer

As far as I can see this freeze and the way it's paid for will result in, down the line, the poor low energy users paying off the energy costs of the wealthy high energy users for possibly decades.  So the energy companies benefit from the loans, the wealthy benefit with immediately cheaper bills and knowing long term that their energy bills are being split with the poor, and not a fair split at that.  She really hates the poor and thinks of them as stupid, saying she doesn't want to give handouts while doing exactly that to the people who don't need it.

MWT

bytesplicer said:

As far as I can see this freeze and the way it's paid for will result in, down the line, the poor low energy users paying off the energy costs of the wealthy high energy users for possibly decades.  So the energy companies benefit from the loans, the wealthy benefit with immediately cheaper bills and knowing long term that their energy bills are being split with the poor, and not a fair split at that.  She really hates the poor and thinks of them as stupid, saying she doesn't want to give handouts while doing exactly that to the people who don't need it.

Wait and see if this is going to be recovered from general taxation or from a levy on the bills, that will tell you who is going to be paying for it in the long-run...

facade

bytesplicer said:

As far as I can see this freeze and the way it's paid for will result in, down the line, the poor low energy users paying off the energy costs of the wealthy high energy users for possibly decades.  So the energy companies benefit from the loans, the wealthy benefit with immediately cheaper bills and knowing long term that their energy bills are being split with the poor, and not a fair split at that.  She really hates the poor and thinks of them as stupid, saying she doesn't want to give handouts while doing exactly that to the people who don't need it.

If they add say 0.5p to the cost per kwh  for the following 10 years as the loan recovery (or whatever it needs to be), or even raise VAT on energy by a few % then everyone will pay back their fair share*, the low energy users received less subsidy and pay back less 0.5p's or VAT  the high energy users took more and pay more back. How would that not be a fair split?

An unfair split would be putting it all on the standing charge.

*yes you could use a million kwh a week whilst it is subsidised, and then cut back to zero when it is time to pay the piper, but most energy users won't change their usage much.

Grumpy_chap

I think the price cap actually needs to be simpler - the reference to the annual £2.5k (or whatever figure it will be) is unhelpful and confusing. 

There should be one unit rate and one standing charge rate and irrespective of where in the country you are, with same changes for variation between payment types irrespective of supplier. 
It is not as though anyone can actually change supplier at the moment.
Suppliers should also be forced to allow consumers to change to the most effective payment type - I have been stuck on "pay-on-receipt-of-bill" since EDF took over as SoLR and they don't facilitate return to direct debit.

bytesplicer

facade said:

bytesplicer said:

As far as I can see this freeze and the way it's paid for will result in, down the line, the poor low energy users paying off the energy costs of the wealthy high energy users for possibly decades.  So the energy companies benefit from the loans, the wealthy benefit with immediately cheaper bills and knowing long term that their energy bills are being split with the poor, and not a fair split at that.  She really hates the poor and thinks of them as stupid, saying she doesn't want to give handouts while doing exactly that to the people who don't need it.

If they add say 0.5p to the cost per kwh  for the following 10 years as the loan recovery (or whatever it needs to be), or even raise VAT on energy by a few % then everyone will pay back their fair share*, the low energy users received less subsidy and pay back less 0.5p's or VAT  the high energy users took more and pay more back. How would that not be a fair split?

An unfair split would be putting it all on the standing charge.

*yes you could use a million kwh a week whilst it is subsidised, and then cut back to zero when it is time to pay the piper, but most energy users won't change their usage much.

Depends on, as MWT says if it is from taxation or a levy on bills, you're assuming the latter.  Even if it is a unit cost the amount of time to pay off the loan (for everyone) will be proportionate to the energy used, so low energy users will be paying elevated unit costs for longer and so will still be splitting the bill unfairly for what is being used while the freeze is in effect.  That would be annoying but I guess not as bad, but as you say a standing charge alteration would be very unfair, and based on the standing charges now, themselves based unfairly on consumers inexplicably paying a price for the big six getting more customers from all the little energy firms that went bust, it's fully possible they might opt to go this way.  Given that Truss won't even reduce the damage even slightly with a windfall tax 'on principle' I have a strong feeling she won't be choosing the most just way to pay for this freeze.  Maybe being too pessimistic but that has been beaten into me over the past few years!

murphyslaw2020

GingerTim said:

I take it from that that Martin won't be campaigning for a blanket cancelling of exit fees on fixed tariffs...

why should he? You made choice to take a fixed price.

Mstty

I can see the arguements from both sides but this potential price freeze is unprecedented so everyone should have the option to transfer to it,as they will all be paying for it in the future, without penalty.

phillw

[Deleted User] said:

#8 - The government is now taking all the investment risk for private companies in the industry.  They have, in effect, completely cancelled the free market in this sector.  Why then bother having different suppliers at all?

The government isn't responsible for working conditions at the energy companies, plus there is still money flowing to shareholders.

If anything this is the perfect setup for conservatives.