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

QrizB

suffolk.lass_2 said:

I have just recieved a letter from Calor. My rate for LPG is going up to 67p/litre (excluding VAT) from 26 September 2022. With no cap for those of us not on mains gas we are going to have a tough time and I am cynical enough to think 'discretionary' means hoops to go through and very few will be eligible for any help.

We calculated in another thread that 10.3p/kWh cap on mains gas is equivalent to an LPG price of around 73p/litre and a heating oil price of around 107p/litre. If those without mains gas receive equivalent support, any assistance is likely to be calculated in these terms.

John_Philip_Howarth said:

So what happens if my fixed tariff is 38.37p/kWh for electricity which is more than the EPG and my gas tariff is 9.84p/kWh which is les than the EPG. This is on Eon online v14. The overall annual cost on my fixed tariff works out at £25 less than the EPG based on my usage. 

I would expect you to receive support for your electricity but not for your gas.

We will have to see what the details of the scheme turn out to be.

Miser1964

Interesting to see that market price for gas is dropping all the time. The cost of the Price Guarantee could be far lower than feared at these prices. If market price keeps dropping, then capping unit prices so the average bill is £2,500 may not cost the taxpayer very much at all!

QrizB

Miser1964 said:

Interesting to see that market price for gas is dropping all the time.

Thast's just the price for October delivery, and it's still 4x higher than it was at this time last year. Don't count your chickens yet.

wrf12345

Has the govn signed up to give the energy companies the difference between the Ofgem cap and their cap for the next three months or the difference between the energy price and their cap? They have said how the energy prices are calculated are under review, so it would be a bit silly to change it and then pay the difference between the two caps... I am sure that Ofgem would have gone out of their way to ensure that tax payers money is not wasted and the energy companies are not exploiting the govn!

ZiggyUk

People have to stop thinking of this price guarantee in terms of now and the October cap and start thinking of it as the next two years.  The energy market is broken and they can't fix it in 2 weeks.  They likely don't want to fix it but that's another story....

In October, the OFGEM price cap will go to 52p and 15p, so the price guarantee will bring that down by 17p and 4.5p respectively.....in Jan, it may end up 60p and 17p, so the price guarantee discount will go to 25p and 6.5p....in Apr, 58p and 18p, so discount will be 23p and 7.5p.....and so on.....by Jan 2024, the OFGEM cap may be 42p and 11p, so the discount will be 7p and 0.5p.  If, by some miracle, the OFGEM cap drops below 35p and 10.5p, there will be no discount.

I think the government are thinking that, if people signed up for a higher cap, say 65p and 20p, they must have thought that was affordable to them so whilst they will benefit from the discount, as they should due to the fact they'll be paying it back for the next 20 years, this is an affordability crisis.  It's also ease.....it's much easier for energy suppliers to continue with the systems they have and simply plug one or two numbers (kWh gas and kWh electric) each quarter and multiply them by the discount and apply a rebate.....yes, there will be winners and 'losers' but the 'losers' in this case thought they were going to be paying 66p and 20p, for example, and will now be paying 49p and 15.5p so they are winning too.... 

Timeblast

ZiggyUk said:

I think the government are thinking that, if people signed up for a higher cap, say 65p and 20p, they must have thought that was affordable to them so whilst they will benefit from the discount, as they should due to the fact they'll be paying it back for the next 20 years, this is an affordability crisis.  It's also ease.....it's much easier for energy suppliers to continue with the systems they have and simply plug one or two numbers (kWh gas and kWh electric) each quarter and multiply them by the discount and apply a rebate.....yes, there will be winners and 'losers' but the 'losers' in this case thought they were going to be paying 66p and 20p, for example, and will now be paying 49p and 15.5p so they are winning too.... 

Those people can just move back to variable rate and pay 34p and 10p. British Gas is allowing people on fixed to go back to variable without exit fees, not sure about others. 

ZiggyUk

Timeblast said:

ZiggyUk said:

I think the government are thinking that, if people signed up for a higher cap, say 65p and 20p, they must have thought that was affordable to them so whilst they will benefit from the discount, as they should due to the fact they'll be paying it back for the next 20 years, this is an affordability crisis.  It's also ease.....it's much easier for energy suppliers to continue with the systems they have and simply plug one or two numbers (kWh gas and kWh electric) each quarter and multiply them by the discount and apply a rebate.....yes, there will be winners and 'losers' but the 'losers' in this case thought they were going to be paying 66p and 20p, for example, and will now be paying 49p and 15.5p so they are winning too.... 

Those people can just move back to variable rate and pay 34p and 10p. British Gas is allowing people on fixed to go back to variable without exit fees, not sure about others. 

So much is being said about unit rates and standing charges but the true horror for me was one of the comments I read that come January, some people on prepayment who last winter would have put £50 on their meter and expect it to last about 12 days would now have it last 2 days    

I guess fixing at these levels and providing targeted support is the best I could hope for given the complexity of the energy market.  I personally would like to see more messaging on people trying to not use electricity at peak times as that is disproportionately affected by gas prices and gas peaker plants load expensive electricity into the system at these times so conserving during 4-7pm could bring the overall national cost down.

[Deleted User]

ZiggyUk said:

Timeblast said:

ZiggyUk said:

I think the government are thinking that, if people signed up for a higher cap, say 65p and 20p, they must have thought that was affordable to them so whilst they will benefit from the discount, as they should due to the fact they'll be paying it back for the next 20 years, this is an affordability crisis.  It's also ease.....it's much easier for energy suppliers to continue with the systems they have and simply plug one or two numbers (kWh gas and kWh electric) each quarter and multiply them by the discount and apply a rebate.....yes, there will be winners and 'losers' but the 'losers' in this case thought they were going to be paying 66p and 20p, for example, and will now be paying 49p and 15.5p so they are winning too.... 

Those people can just move back to variable rate and pay 34p and 10p. British Gas is allowing people on fixed to go back to variable without exit fees, not sure about others. 

So much is being said about unit rates and standing charges but the true horror for me was one of the comments I read that come January, some people on prepayment who last winter would have put £50 on their meter and expect it to last about 12 days would now have it last 2 days    

I guess fixing at these levels and providing targeted support is the best I could hope for given the complexity of the energy market.  I personally would like to see more messaging on people trying to not use electricity at peak times as that is disproportionately affected by gas prices and gas peaker plants load expensive electricity into the system at these times so conserving during 4-7pm could bring the overall national cost down.

Did you notice the most recent news on this?  It seems that offering people a 52p per unit discount isn't considered enough motivation to shift demand away from the peak - the conclusion was that it would need to be somewhere nearer a £2 per unit payment for enough people to change their behaviour.

youravinalarrrf

[Deleted User] said:

Did you notice the most recent news on this?  It seems that offering people a 52p per unit discount isn't considered enough motivation to shift demand away from the peak - the conclusion was that it would need to be somewhere nearer a £2 per unit payment for enough people to change their behaviour.

https://www.bbc.co.uk/news/business-62876194

youravinalarrrf

These regional rates may be of use for calculating your accurate direct debit amounts from 1st October 2022. They include 5% VAT and assume payment by direct debit. Found here https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/#unitrates NB Don't use the calculator at the bottom of the page.

Rates for North Wales & Mersey missing above are here