Energy Price Guarantee (announced 8 Sep): initial reaction & questions

[Deleted User]

Interesting that you'd suggest doubling profits for retail suppliers.

hayley82

If this cap is fixed for two years, do we know what will happen if the cost of gas comes down (below the price of the cap) during this time? Would we be locked in at a higher cost until the end of the two years?

[Deleted User]

We don't know anything about that yet.

SnakePlissken

hayley82 said:

If this cap is fixed for two years, do we know what will happen if the cost of gas comes down (below the price of the cap) during this time? Would we be locked in at a higher cost until the end of the two years?

As the cap is set as maximum and will be based on a unit price.(when figures are eventually given on this)

The uk gov is saying they will pay difference to energy supply companies over the next 2 years on what it is costing them to buy energy on the market from energy producers.

Where the market rate to fall below the unit rate in the cap, then the government would not need to give suppport and energy suppliers would drop the unit cost to customers.

Similar to those on a fix prior to 2022 increases who are currently paying well below the capped unit rate. (But who will face increases when their fix ends and they go onto standard variable rate at the current capped unit rate)

(But if svr were to drop below current capped unit rate before their fix ends then they would pay what ever the svr unit rate is at that time)

The_Green_Hornet

According to a government spokesman legislation for the Energy Price Guarantee won't be introduced to parliament until the national mourning period has finished.

So don't expect any information any time soon.

Hummingbird18

It's ok. I phoned octopus this morning and I came out of my fixed deal, it took less than 2 minutes. I think it's the right decision because my fix was above the October price cap so I'm paying double now. Can't wait 10 days. 

mrsmac59

Hurray,just received e mail from British gas,as I am on a fix I can switch back to SVT without penalty,but to be mindful that it's the old price cap rate.Theyre working on the details what the energy price guarantee will mean for 'us' on a fix.Watch out for further e mails from them.I'll hold fast till I know the new rates.

Chrysalis

sebloak said:

If the green levy,s are being suspended, does that mean they will knock them off fixed tarrifs too?

It is part of the calculations for the subsidy so yes if the fixed tariffs get altered, according to the BBC the energy suppliers have been given a choice.  So if the fix doesnt get reduced they will allow you to exit penalty free.

youravinalarrrf

https://www.bbc.co.uk/news/business-62834191

Energy suppliers have told the BBC they are working through the detail and will contact customers before 1 October.

 

Timeblast

This is all very confusing but why are people jumping out of fixes so quickly?

I hear for example the electricity unit rate on 1st October will be capped around 34p
on variable. My fix currently is higher at 40p, but if fixed tariff gets the same discount as variable, around 30% (£3500 to £2500), that’s 12p making my fix 28p per unit?

Then in Jan (when the cap rises another 50% from Oct according to forecasts, but gov increases discount to keep artificial cap at £2500), while variable stays at 34p, fixed tariff in theory should get another discount, making it even cheaper?

When my fix ends in July next year I will probably go to variable. But until then it would be cheaper to stay on fixed. 

Please let me know if I have missed something above and I’m sorry if I am totally wrong and misunderstood.