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

wrf12345

"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."

It would help if having a night rate discount did not mean that the day rate went up, that is what puts people off... and the non availability of smart meters does not help.

Gappychris

Hi all,

Im currently on a time of use tariff, fixed for 12 months at the beginning of September. 

Current electricity rates are generally 41p/kWh during the day, with a 6 hour night time rate of 7.5p/kWh. 

Does anyone know if the energy price guarantee will be applicable to my tariff and affect my day rate?

All advise great fully received, thanks. 

MattMattMattUK

[Deleted User] said:

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.

That is what I think is insane, if the network was happy to pay me 52p per kWh to she load between 17:00 and 20:00 I would happily shed several kWh, although I do not usually have that much to shed!

Onebrokelady

wrf12345 said:

"I hate the government for doing this to us. I fixed because I had so much anxiety over the coming rises. Now they have come out with all this new confusing information last minute before 1st October. The government has known this was coming for months and should have decided then to put people minds at ease, but instead they were going on holiday or arguing over who should be prime minister. "
If you are fixed you can change to the new std tariff in Oct free of charge, if it is cheaper than your fix then why do you hate the govn, they have just saved you lots of money?

They haven't saved us anything ,we are still being charged much more than we were back in April ,they just scared everyone with news of massive bill rises in October and January then slipped in an cap at £2500 disguised as a reduction when it's actually still an increase , they've pulled a fast one and people are actually grateful. 

Onebrokelady

[Deleted User] said:

SnakePlissken said:

Exacly, why wait until the winner was announced, bewteen them they could have made an announcement.

Depends if Rishi had different plans - unless they all wanted to do exactly the same thing they couldn't do anything specific.

SnakePlissken said:

And why not use a windfall tax like Europe is doing.

We already have one of those - it's what's paying your £400.

SnakePlissken said:

It appears as always to be about benefiting the 1% of top incomes in the UK. And getting the majority to pay the debt over the coming decade(s ?) Rather than hitting those who have made obscene profits from this. And for whom were there not a war in ukraine wouod not have been able to sell energy at such a high cost.

The big profits were not made by UK companies.  We can't go and tax overseas companies just because we don't like the price they sell things at.

SnakePlissken said:

And why is electricity not being decoupled from the gas price on the market?

They are trying to work out a good way do it, but if gas is use to make half of all electricity (v. rough numbers) then wouldn't you expect the price to be at least a little linked?

So is the £400 coming directly from the energy companies profit then,or have the government borrowed this money to be paid back later via taxes ,I'm confused 

[Deleted User]

So do I have this right?

 

A high energy user typically a better off household with a large home gets the largest amount off their energy bill in cash terms and due to standing charges in percentage terms. And will also be paid to reduce their energy use during peak hours. And the government plans to give them a big tax cut.

While a low energy user typically a low paid worker out at work all day who lives in a flat gets the smallest amount off their energy bill in cash terms and due to standing charges in percentage terms. Has little ability to get paid for reducing peak use due to low usage and being at work during the day and not wanting to disturb neighbours by say running the washing machine or vacuum at unsocial hours. And is going to get a tiny or non existent tax cut.

While the poorest households typically those unable to work due to illness or disability who are unable to afford the energy guarantee prices are left worried if this winter's direct handouts will be enough for them to afford to eat and heat, and worried that there is no mention of this winter's handouts being repeated next winter. And their benefits will go up less due to the energy price guarantee reducing headline inflation.

And the energy price guarantee gets paid for by borrowing to be paid back over the next 20 years through higher taxes. While taxes on the better off and businesses get reduced.

daveyjp

Onebrokelady said:

wrf12345 said:

"I hate the government for doing this to us. I fixed because I had so much anxiety over the coming rises. Now they have come out with all this new confusing information last minute before 1st October. The government has known this was coming for months and should have decided then to put people minds at ease, but instead they were going on holiday or arguing over who should be prime minister. "
If you are fixed you can change to the new std tariff in Oct free of charge, if it is cheaper than your fix then why do you hate the govn, they have just saved you lots of money?

They haven't saved us anything ,we are still being charged much more than we were back in April ,they just scared everyone with news of massive bill rises in October and January then slipped in an cap at £2500 disguised as a reduction when it's actually still an increase , they've pulled a fast one and people are actually grateful. 

Agree.  Has everyone forgotten that 12 months ago the cap was about £1,200.

[Deleted User]

Onebrokelady said:

[Deleted User] said:

SnakePlissken said:

Exacly, why wait until the winner was announced, bewteen them they could have made an announcement.

Depends if Rishi had different plans - unless they all wanted to do exactly the same thing they couldn't do anything specific.

SnakePlissken said:

And why not use a windfall tax like Europe is doing.

We already have one of those - it's what's paying your £400.

SnakePlissken said:

It appears as always to be about benefiting the 1% of top incomes in the UK. And getting the majority to pay the debt over the coming decade(s ?) Rather than hitting those who have made obscene profits from this. And for whom were there not a war in ukraine wouod not have been able to sell energy at such a high cost.

The big profits were not made by UK companies.  We can't go and tax overseas companies just because we don't like the price they sell things at.

SnakePlissken said:

And why is electricity not being decoupled from the gas price on the market?

They are trying to work out a good way do it, but if gas is use to make half of all electricity (v. rough numbers) then wouldn't you expect the price to be at least a little linked?

So is the £400 coming directly from the energy companies profit then,or have the government borrowed this money to be paid back later via taxes ,I'm confused 

The £400 is being paid for by the windfall tax on oil and gas producers.  Who do you mean by "energy companies"?

All the rest of the recent announcements - we don't know how that's being paid for yet.

[Deleted User]

Deleted_User said:

So do I have this right?

 

A high energy user typically a better off household with a large home gets the largest amount off their energy bill in cash terms and due to standing charges in percentage terms. And will also be paid to reduce their energy use during peak hours. And the government plans to give them a big tax cut.

While a low energy user typically a low paid worker out at work all day who lives in a flat gets the smallest amount off their energy bill in cash terms and due to standing charges in percentage terms. Has little ability to get paid for reducing peak use due to low usage and being at work during the day and not wanting to disturb neighbours by say running the washing machine or vacuum at unsocial hours. And is going to get a tiny or non existent tax cut.

While the poorest households typically those unable to work due to illness or disability who are unable to afford the energy guarantee prices are left worried if this winter's direct handouts will be enough for them to afford to eat and heat, and worried that there is no mention of this winter's handouts being repeated next winter. And their benefits will go up less due to the energy price guarantee reducing headline inflation.

And the energy price guarantee gets paid for by borrowing to be paid back over the next 20 years through higher taxes. While taxes on the better off and businesses get reduced.

That's one way to spin it.

You could also say that a well-paid bachelor working in finance, and living in a new-build and well-insulated penthouse flat in London will not be using much energy and therefore only get a little saving.  But an older couple on a single income, with a child requiring specialist medical equipment, living in a poorly-insulated bungalow in a rural area will be using a lot of energy and therefore will get a much bigger saving.

Neither comparison is particularly useful.

Onebrokelady

[Deleted User] said:

Onebrokelady said:

[Deleted User] said:

SnakePlissken said:

Exacly, why wait until the winner was announced, bewteen them they could have made an announcement.

Depends if Rishi had different plans - unless they all wanted to do exactly the same thing they couldn't do anything specific.

SnakePlissken said:

And why not use a windfall tax like Europe is doing.

We already have one of those - it's what's paying your £400.

SnakePlissken said:

It appears as always to be about benefiting the 1% of top incomes in the UK. And getting the majority to pay the debt over the coming decade(s ?) Rather than hitting those who have made obscene profits from this. And for whom were there not a war in ukraine wouod not have been able to sell energy at such a high cost.

The big profits were not made by UK companies.  We can't go and tax overseas companies just because we don't like the price they sell things at.

SnakePlissken said:

And why is electricity not being decoupled from the gas price on the market?

They are trying to work out a good way do it, but if gas is use to make half of all electricity (v. rough numbers) then wouldn't you expect the price to be at least a little linked?

So is the £400 coming directly from the energy companies profit then,or have the government borrowed this money to be paid back later via taxes ,I'm confused 

The £400 is being paid for by the windfall tax on oil and gas producers.  Who do you mean by "energy companies"?

All the rest of the recent announcements - we don't know how that's being paid for yet.

I meant whoever it is that are reporting massive profits