£2500 Price Cap Martin's view

[Deleted User]

sienew said:

Deleted_User said:

sienew said:

eastcorkram said:

Deleted_User said:

TheGardener said:

The way energy is sold is confusing. The way petrol is sold is simple and everyone I ever met 'gets it' The terminology of bills, units, kWh etc needs to be simplified.
People do need to understand a kWh is simply a unit of measurement just like a litre of petrol, a pound of sugar and a kg of rice. It's not rocket science. 
I agree with everyone who has commented on this and that the 'cap' price is meaningless. Where cash is involved, people will soon learn how many units they need to put the CH on for a month or use a washing machine.

Has anyone seen Currys new 'energy calculator' when you look at white goods online? The industry is moving (ok, baby steps) to promote efficiency, and now half the UK have bought an energy monitoring smart plug, the manufacturers might get a bit more accurate on their claims of energy consumption of their product rather than have bad publicity and risk small claims being made for 'misrepresentation' 

What on earth needs to be simplified?

You buy energy in units called kWh and each kWh has a price.  You buy petrol in units called litres and each litre has a price.

If you buy more kWh then you spend more money.  If you buy more litres then you spend more money.

The only slightly confusing part (and I have no idea why it's confusing) is standing charge.  That's just saying that you rent your connection to the electricity grid for £170 per year and rent your connection to the gas grid for £100 per year.

It is entirely trivial.

What needs to be simplified is the way the cap is referred to in terms of annual spend.

Imagine if it was petrol that was getting expensive, to the point where everyone was panicking and saying we won't be able to afford it . Then the government say, don't worry, we're going to cap the price of petrol. They'd surely cap the price per litre. They wouldn't then try to manufacture a figure of what the average driver uses in a year.

It's a little different though as most people only drive 1 car. So maybe it costs me £50 at the petrol station, I know roughly how far I can get on that (measured in either miles or days) and if it goes up to £60 next week I know there has been a rise.

Energy is a little different as most people have 30+ things using electric and gas use varies significantly by day. It's very difficult to know how much each is using and how that translates to % of bill or cost. My gas use today (it's 3pm and I've used none) is very different to what it will be in January when I have the heating on most of the day.

Not really.  If I drive more in a week, I know that I will need to spend more on diesel that week.  If I drive faster, I know that my tank will run dry faster.

Let's put it this way now. The way energy works is you pay a "fixed" direct debit (based on estimate usage). That's like driving 10 miles this week and 10000 miles in January but somehow having to pay now for it using some often very rough predictions based on an estimate of what you drove last year, despite you potentially having a different car (boiler), more economical car (insulation), using the car different (change in circumstances), potentially drive more/less (depending on how cold/warm winter) or never driven before (new house/moved).

You know your car usage more because if you drive more tomorrow you know you'll have to fill your car again tomorrow. You aren't somehow filling up your car today guessing/estimating that you might take a drive out in January.

Fixed DD is a bit unusual, but not a lot different from taking out an installment plan.  I don't agree with the cap being explained as annual usage, as unit rate would seem to make more sense (beyond the E7 problem noted by mmmmikey).

The similarities in the energy vs petrol analogy are many, the differences few and niche.  Still doesn't get to the original point I replied to:  "The terminology of bills, units, kWh etc needs to be simplified."

If people really struggle to understand that there a such a thing as units, and that each unit can have a price, worrying about how predictive billing structures and credit agreements are devised seems a pointless pursuit.

scobie

artyboy said:

The_Green_Hornet said:

bomdabass said:

Any chance I can just pay the going rate and opt my children out of 20 years of higher bills?

Any chance I can just pay the going rate and opt out of artificially high bills when prices inevitably fall?

The unintended consequences of this will be massive and none of them good

One possible option would be to emigrate but then that is probably a bit of an extreme solution.

Getting less extreme by the day, I would say...

Not extreme at all.  It’s exactly my plan - retire in Thailand by the end of 2024 or early 2025.  House already bought over there and paid for just waiting for me. 

daz378

The government had to fix at a realistic rate to save the economy....couple of million on the dole from failed businesses....although I'm relieved  they have...those who can afford solar   will find it very tempting in the current environment....government  subsidies  will add to debt...sustained debt  could affect currency and our credit rating ...but at least the rest of Europe has the same problem

[Deleted User]

Irratus_Rusticus said:

Simplicity I hear? Abolish calorific value. If it adds so very little to bills (okay one bill) and nobody understands it and it has to be an average best guess anyway, surely, at the point of billing, why inflict it on the innocent masses? Goodness knows they make the formula really LARGE on the bills, don't they.

Yeah, I could get behind that.  Not sure whether I'd prefer just using an assumption and keeping both bills in kWh (so comparison between fuels is easier) or not having any conversion calculations at all and billing gas in m3 (or cu ft, litres, buckets, coke cans or wheelie bins).

Mstty

[Deleted User] said:

Irratus_Rusticus said:

Simplicity I hear? Abolish calorific value. If it adds so very little to bills (okay one bill) and nobody understands it and it has to be an average best guess anyway, surely, at the point of billing, why inflict it on the innocent masses? Goodness knows they make the formula really LARGE on the bills, don't they.

Yeah, I could get behind that.  Not sure whether I'd prefer just using an assumption and keeping both bills in kWh (so comparison between fuels is easier) or not having any conversion calculations at all and billing gas in m3 (or cu ft, litres, buckets, coke cans or wheelie bins).

Yep seems sensible as in the calorific value standardised and m3, after all water is charged in this way.

GingerTim

ab1234567890abcdefgh said:

[Deleted User] said:

mmmmikey said:

Deleted_User said:

Mstty said:

Deleted_User said:

TheGardener said:

The way energy is sold is confusing. The way petrol is sold is simple and everyone I ever met 'gets it' The terminology of bills, units, kWh etc needs to be simplified.
People do need to understand a kWh is simply a unit of measurement just like a litre of petrol, a pound of sugar and a kg of rice. It's not rocket science. 
I agree with everyone who has commented on this and that the 'cap' price is meaningless. Where cash is involved, people will soon learn how many units they need to put the CH on for a month or use a washing machine.

Has anyone seen Currys new 'energy calculator' when you look at white goods online? The industry is moving (ok, baby steps) to promote efficiency, and now half the UK have bought an energy monitoring smart plug, the manufacturers might get a bit more accurate on their claims of energy consumption of their product rather than have bad publicity and risk small claims being made for 'misrepresentation' 

What on earth needs to be simplified?

You buy energy in units called kWh and each kWh has a price.  You buy petrol in units called litres and each litre has a price.

If you buy more kWh then you spend more money.  If you buy more litres then you spend more money.

The only slightly confusing part (and I have no idea why it's confusing) is standing charge.  That's just saying that you rent your connection to the electricity grid for £170 per year and rent your connection to the gas grid for £100 per year.

It is entirely trivial.

Entirely trivial for yourself.

I would suggest the vast majority require educating on energy usage, costs and payment formats. Taking into account regional variations and explanation of what an average house usage is that caps are based upon.

It is clear from this forum many have no idea except the amount they pay per DD and can rarely lay their hands on their last year's usage.

We can all look down from a lofty position of knowledge and deem others plebs but in reality a bit of useful education and help here goes a long way.

I was looking on YouTube for a cartoon type video to explain price caps, energy costs and the like. 

Maybe there is a need for a Martin Lewis caricature type explanation video. 

I agree that the explanation of the cap is entirely unhelpful - I would prefer it being explained as a unit price cap - but the post I replied to stated "The terminology of bills, units, kWh etc needs to be simplified."

Unfortunately the situation is complicated somewhat by Economy 7 Tariffs. For single use tariffs whether you express the cap as the maximum charge for someone using (a) 0kWh per annum and (b) 3100kWh per annum or just a daily standing charge and cost per kWh it comes to the same thing. It's just a question of presentation. But for Economy 7, suppliers can choose from an infinite range of higher day/lower night or lower day/higher night options in order to comply with the cap. So for Economy 7 users you can't express the cap as a cost per kWh figure and the best way to do this is, errrr.....

Yep, multi rate is a pain to predict and explain right now.  I'm not sure I have any decent solution to suggest, but presentation of the single rate cap as kWh not annual cost might remove some of people's confusion.  In my opinion, it would be the most useful single step towards removing the idea of all-you-can-eat.

I'm just going to report all your posts as trolling, (or more accurately abusive or unfriendly) becuase it's clear your only purporse here is to wind everyone up.

I suspect the mods will do nothing, but to everyone else, please report this person for trolling, because that's what they're doing.

Your latest post on the credit file board is hardly the modicum of friendliness.

[Deleted User]

Not quite sure what that poster has against saying the OFGEM caps are quite hard to explain for multi rate tariffs, and that reporting the cap as a unit price might help.

Seems to have a very different understanding of the term trolling.

Mstty

I had a dream last night (joking I didn't just thought of it now)

We all know the price cap for October has gas national average at 14.8p kWh and electricity national average at 51.8p kWh.

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 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.

[Deleted User]

Mstty said:

I had a dream last night (joking I didn't just thought of it now)

We all know the price cap for October has gas national average at 14.8p kWh and electricity national average at 51.8p kWh.

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 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.

A couple of people had brought it up on this forum, but I haven't seen any rumours of it being considered by TPTB.

Mstty

That would be too good to be true to be honest.