The new unit rates

MWT

JRChappers said:

...And why is it taking so long?

The cap starts with a whole bunch of base data collected and entered into spreadsheets and then the data is used to generate a large number of regionally adjusted numbers split by metering type, by fuel, by payment method etc. and then all  of those individual results are used to calculate a national average which comes, to lets say, £3.652.61.

The PM stands up and says 'make it £2,500'...

The spreadsheets don't work in reverse, you can't just change the final average and have it run backwards...

Throw in the removal of some of the base data like the green levy and you have enough work to do for it to be a little unreasonable to start asking 'why it is taking so long...' less than 24 hours later...

wrf12345

There is a green case for making gas more expensive and electric cheaper so the ratio moves towards 2 rather than 3, the frightening thing is that it is now in the hands of Ofgem whose past record is not inspiring (to be unusually polite) and they tend to never admit to getting things wrong.

QrizB

[Deleted User] said:

Brilliantly (?), they now seem to be announcing that it will all be done with commercial contracts and there will be no legislative changes made to implement the scheme - because legislation couldn't be finished fast enough during the period of mourning.

Well that certainly doesn't fill me with dread ...

[Deleted User]

Depends what OFGEM are told to do - they have a strict set of approved calculations that have now been thrown out of the window.

The balance was slightly shifted in the April to October cap change - from about 48% gas and 52% electricity  to almost the reverse (51% gas and 49% electricity).  I can't see it shifting more than a couple of percent more while gas is still a major fuel for generation unless perhaps the CfDs for existing plants appear much quicker than discussed.

Shedman

MWT said:

JRChappers said:

...And why is it taking so long?

The spreadsheets don't work in reverse, you can't just change the final average and have it run backwards...

Well they could, with decently prepared spreadsheets with adequate formulae in them, using goal seek, etc.   I'd hazard a guess that it's not that tricky a set of calculations compared to some of the financial modelling that we used to have to prepare for PFI projects, so a competent Excel modeller should be able to knock out the calculations relatively quickly.  

I suspect its more to do with the uncertainty that still needs clarifying about the fine detail so that the correct assumptions can be built in along with the review and approval for publication process.

[Deleted User]

Shedman said:

MWT said:

JRChappers said:

...And why is it taking so long?

The spreadsheets don't work in reverse, you can't just change the final average and have it run backwards...

Well they could, with decently prepared spreadsheets with adequate formulae in them, using goal seek, etc.   I'd hazard a guess that it's not that tricky a set of calculations compared to some of the financial modelling that we used to have to prepare for PFI projects, so a competent Excel modeller should be able to knock out the calculations relatively quickly.  

I suspect its more to do with the uncertainty that still needs clarifying about the fine detail so that the correct assumptions can be built in along with the review and approval for publication process.

They could, and some of us do, but as you say that would rely on there being no change to the assumptions, relative balance between components and things like that which are unlikely to have yet been decided.

We don't even know what the split between gas and electricity is supposed to be in the £2500

If you fancy having a go, the spreadsheet is here:
https://www.ofgem.gov.uk/sites/default/files/2022-08/Default_tariff_cap_level_v1.13.xlsx

[Deleted User]

....and the spreadsheet there is only part of the story. It calculates a set of "fair" maximum prices that energy suppliers can charge customers on their SVR based on current costs, fair profits, regional differences, single or dual rate tariff, payment method and so on.

A completely new aspect of this is the need to come up for a spreadsheet that ensures folk on fixed tariffs get any intended benefit (or not) as a result of the decision to fund green levies centrally through government funding rather than by funding them through energy bills.

And even once the original spreadsheet is updated, the rules for fixed tariffs have been agreed and all the sums have been done, there is still a need to (a) find a way to present this that is comprehensible and avoids the inevtiable "that's not fair, he's getting more than me" complaints as far as possible (b) train call centre staff (c) make sure that the answer to the obvious question "how much will I have to pay" is ready (as opposed to just the rules).

JRChappers

Thanks guys , it's obviously way more complicated than the hurriedly introduced cap reduction suggests.
Sorry to use that word cap again it now means even less to me .As someone last year using 27K KWh of gas 
I am super keen to get real numbers that mean something real. I have many fiends in a similar position who 
seem to think the max they are likely to pay is the cap say £3650 a year whereas in reality they are likely going
to be asked for £1000 in Dec,Jan,Feb or £7500 for the year. I suspect the fan will be getting very dirty when the 
rates sink in. 

Sea_Shell

Can, meet worms!
🙄😲🤔

QrizB

JRChappers said:

.As someone last year using 27K KWh of gas I am super keen to get real numbers that mean something real.

I would hazard a guess that your annual gas bill will be aqround £3000 under the Truss support scheme. Electricity will be additional to that.