Help - I dont think I understand the price cap.

Floob

Please can someone help me out, I'm trying to understand what the cap relates to.
I thought it was the price Ofgem sets as the ceiling for each unit of gas and electric. i.e. 15p per gas unit:


However, all I can ever see in the news articles is a figure that an "average" family would use. (I really dont know what an average family is).
So is it not the case that the cap relates to units? I thought if there was a unit price, anyone could work out their spend as they just multiple that by what they expect to use (based on units used over comparable period last year etc..)

The BBC have an article today about the £2,500 cap - but no mention of a unit cap - so is there no unit cap and you have to work out how much of an average family you are?
(I'm not allowed to post links yet otherwise I'd link to it.)

elsien

Because the unit prices and how the cap will work in practice hasn’t been released as yet. 

There will be updated unit and standing charge costs in due course. 

BUFF

The cap £ headline figure is based on an "average" consumption of 2900kWh electricity & 12000kWh per annum but in reality pretty much everybody diverges from that.

It is the standing charges & unit rate charges that are capped not the amount per household - if you use more kWh you will pay more, use less & you will pay less than the headline figure.
Standing charges & unit rate charges also vary slightly be region (& often supplier) so that £2500 average headline figure is actually an average of averages, Once we know the new rates (they are not yet released) you & everybody else who knows their annual consumption will be able to work out their own figures.

[Deleted User]

The way it has worked for the previous caps is that OFGEM set a maximum total cost for a typical user of each fuel type, billing method and region and publishes a massive list of tables.

From these, we can work out what the unit price caps end up being.

There's another thread here https://forums.moneysavingexpert.com/discussion/6385872/new-capped-prices where a similar question was asked - and if you see @QrixB around the forum, there is a link in their signature to an explanation which is much better than mine.

Floob

OK, hang on, so we are saying the cap is a cap of unit price, and articles prefer a headline of "£2,500!!" instead of "8p" ?

So we just keep an eye on these unit costs, and ignore the very broad estimate of what an average family uses?
www.ofgem.gov.uk/check-if-energy-price-cap-affects-you

[Deleted User]

Not quite @Floob - the cap is a cap of total cost but for a specific number of units.  It's not even the same number of units as the one used to calculate the headlines (for a particularly niche reason about not over-rewarding investment capex).

So the cap is in £££, which we turn into p/kWh, which then gets turned into a different number of £££ for headlines.

[Deleted User]

Oh yes, and there's not one cap, there are five pages (no joke, five pages) of very slightly different caps depending on where you live, how you pay for your fuel and whether you have multi-rate meters or not.

That's how it has worked for all the caps so far anyway, we don't yet know how Liz's new cap is going to be done - they could come up with an entirely new method.

Floob

Ah ok - so its officially set as ££ for x units cap, which can then be represented as a cost per kWh.
So it would be realistic to calculate an estimated cost based on your likely usage multiplied by that unit cost.

And then if you want a much quicker, finger in the air idea, you could look at the headlines?

[Deleted User]

Yes, it has previously been set as a ££ for 0kWh (from which you can calculate the standing charge) and ££ for m kWh (3100 for electricity, 12000 for gas) to calculate the unit price.

The number you see in the headlines is based on 12000 for gas and 2900 for electricity, and includes the standing charge of course.

QrizB

Deleted_User said:

... if you see @QrixB around the forum, there is a link in their signature to an explanation which is much better than mine.

Did someone call?

Yes, I've written an explainer and it's linked from my signature (below).

[Deleted User]

If it helps my rate is 34.8 per kWh 
I’m on E7 pre pay smart meter 
That’s my day rate 
my annual usage is around £2400 or
6700 kwh 
It’s not estimated as it’s pre pay 

 

I’ve actually just switched to the standard variable rate so mine should go down to about 29pper kwh 

but then it will go back up in Oct with the new price per unit