I am on a fixed tariff, what does Martin mean...

Andrea15

[Deleted User] said:

payless said:

Do wonder if they should cap the units subsided per household though 

Almost implausible - although given the way announcements are made at the moment I couldn't say impossible.

Compare a rich singleton who spends days in the office and therefore is quite a low user (and all their units would be subsidised) with a family where someone has a medical condition and needs to stay supervised at home all the day and therefore is a much higher user (and would have to pay expensive unsubsidised rates).

I think that is the way it should be, though. *If* it is true that there is no enough energy to go around, you need to decrease usage. The bachelor executive who is hardly ever at home will use very little anyway, while the family of 6 might use loads.
Of late I have happened to enter a few houses and I have noticed that some people had then heating on even when it was not needed at all (no older people visible) and were going around the house in their underwear.

[Deleted User]

Andrea15 said:

Deleted_User said:

payless said:

Do wonder if they should cap the units subsided per household though 

Almost implausible - although given the way announcements are made at the moment I couldn't say impossible.

Compare a rich singleton who spends days in the office and therefore is quite a low user (and all their units would be subsidised) with a family where someone has a medical condition and needs to stay supervised at home all the day and therefore is a much higher user (and would have to pay expensive unsubsidised rates).

I think that is the way it should be, though. *If* it is true that there is no enough energy to go around, you need to decrease usage. The bachelor executive who is hardly ever at home will use very little anyway, while the family of 6 might use loads.
Of late I have happened to enter a few houses and I have noticed that some people had then heating on even when it was not needed at all (no older people visible) and were going around the house in their underwear.

Yes, it's just impossible with a brute force tool like a flat cap to determine who needs to use more (which everyone agrees should be permitted I hope) and who chooses to use more (which should be discouraged).

facade

payless said:

Thinking like a politician…..
( taking electric as example). So knock 15p per unit off svt and not fixed rates….  There will be a large proportion of people who think “ I did a deal to protect myself , which was hedged so no cost to government or company , yet I will pay the extra tax in future” 

give everyone something ( option to switch, or amount off all tariffs). , and probably keep votes.. the extra cost will be a fraction of overall cost and easier to calculate subsidy to retailers.

Do wonder if they should cap the units subsided per household though 

I am clearly a simpleton, but why can't they just set a new cap, that applies to everyone irrespective of deal, and subsidise the difference between the new cap and the cost price (+ a bit for operating costs).

The cap being the maximum we can be charged, so if you have already got a cheaper fix you keep paying your fixed price*, if you have a dearer fix you pay the new capped price. Then the reseller could move the affected onto the SVT or leave them on their now capped fix, it won't matter.

Yes this would mean they are forced to go against signed contracts at higher prices, but it would be the price of getting the subsidy at all, without which the reseller would go bust, as customers would jump ship.

The green levy is irrelevant to us, abolishing it means the amount of the subsidy is less, as the difference between cost price and selling price (minus the levy) is less.

The VAT goes on after the cap anyway, so wouldn't affect the subsidy.

*I assume that when we took out out lower fixes the resellers pre-purchased the gas at a low enough price to still make a profit on their cheap fixes, and I doubt if they paid more than market price to purchase gas for the dear ones.

gefnew

this is eon next take on it in a blog.
- Blogs - E.ON Next Community (eonnext.com)

[Deleted User]

facade said:

payless said:

Thinking like a politician…..
( taking electric as example). So knock 15p per unit off svt and not fixed rates….  There will be a large proportion of people who think “ I did a deal to protect myself , which was hedged so no cost to government or company , yet I will pay the extra tax in future” 

give everyone something ( option to switch, or amount off all tariffs). , and probably keep votes.. the extra cost will be a fraction of overall cost and easier to calculate subsidy to retailers.

Do wonder if they should cap the units subsided per household though 

I am clearly a simpleton, but why can't they just set a new cap, that applies to everyone irrespective of deal, and subsidise the difference between the new cap and the cost price (+ a bit for operating costs).

The cap being the maximum we can be charged, so if you have already got a cheaper fix you keep paying your fixed price*, if you have a dearer fix you pay the new capped price. Then the reseller could move the affected onto the SVT or leave them on their now capped fix, it won't matter.

Yes this would mean they are forced to go against signed contracts at higher prices, but it would be the price of getting the subsidy at all, without which the reseller would go bust, as customers would jump ship.

The green levy is irrelevant to us, abolishing it means the amount of the subsidy is less, as the difference between cost price and selling price (minus the levy) is less.

The VAT goes on after the cap anyway, so wouldn't affect the subsidy.

*I assume that when we took out out lower fixes the resellers pre-purchased the gas at a low enough price to still make a profit on their cheap fixes, and I doubt if they paid more than market price to purchase gas for the dear ones.

That's what most people think will happen - but the official documents haven't yet been published.  It was also slightly confused by Martin's tweets and email that said "fixes will get the same discount per pound".

The green levy is relevant because it is being paid by people on fixes below the cap - the question is what should be done about those tariffs.

facade

[Deleted User] said:

The green levy is relevant because it is being paid by people on fixes below the cap - the question is what should be done about those tariffs.

Those of us on a cheaper fix are still getting gas cheaper, for the price we agreed. I certainly didn't think about the green levy when I took the fix, and don't give two hoots whether Octopus make 8% more off me or not, same as I wouldn't care if they made less because they hadn't pre-bought enough gas.

I'd still be getting my gas at the price I agreed, you can't expect to eat your cake and still have it

[Deleted User]

facade said:

[Deleted User] said:

The green levy is relevant because it is being paid by people on fixes below the cap - the question is what should be done about those tariffs.

Those of us on a cheaper fix are still getting gas cheaper, for the price we agreed. I certainly didn't think about the green levy when I took the fix, and don't give two hoots whether Octopus make 8% more off me or not, same as I wouldn't care if they made less because they hadn't pre-bought enough gas.

I'd still be getting my gas at the price I agreed, you can't expect to eat your cake and still have it

You appear to be pragmatic about this - many others are not.  If others get a new cake, they want some of that one too.

[Deleted User]

This is stil hypothesis of course, but what I'm coming round to thinking is this....

1. The Government has made basically two separate announcements but rolled the presentation of them into one which is where a lot of the confusion comes from and gives rise to the debate.

2. One announcement concerns the so-called green levies, and the other concerns subsidising wholesale energy costs so the price cap can be lowered.

3. For now, focus on the green-levies. These are described by Ofgem is "policy costs" - i.e. something the energy suppliers do because they have to as a result of government policy, not because it makes them money. This includes for example the Warm Homes Discount which is a £150 discount for vulnerable people.

4. Before yesterday's announcement, the policy was that energy suppliers had to fund the Wram Homes Discount etc. by dividing the cost of the scheme amongst the rest of their customers. Folloiwng yesterday's announcement, the government has said that they still want the energy suppliers to administer things like the Warm Homes Discount, etc. but they will pay for it. In return, they expect the energy suppliers to pass on the cost saving to their customers - i.e. the Government is doing this for our benefit not the suppliers.

5. That leads to the question of where the money comes from when customer pay (standing charges or unit rates) and how you pass the savings on. As a matter of policy the Governement has said they want all customers to benefit whether their tariff is fixed or not. You can debate whether you think this is fair or not but that is what they have said.

6. In the case of SVR customers things are relatively straightforward and easy because the SVR can just be adjusted accordingly. The SVR is about to go up anyway (with or without the Lizzie change) so it's fairly easy to present as most customers won't even notice as what they'll see is a lower increase rather than a decrease in their bills.

7. In the case of fixed rate customers, the whole question of how high the standing charges is set is very visible and all the debate around the fairness of them is opened up. Should the Green Levies cost reduction be passed on as a reduction in standing charges? This seems logical, but would leave many people with a zero standing charge, so how are other fixed costs such as network costs, customer services, etc. etc. being paid? And should it all be passed on via electricty bills? And all the other heated and contentious debate about standing charges that has been done to death on this and other forums laving lots of people unhappy, with the only obvious solution being some kind of compromise.

8. So there's a raft of complexity and decision making to be made around how you pass on this green levy reduction to all customers, and suppliers will have to go through each and every fixed tariff and work out an algorithm for doing it. Rather them than me!

9. I suspect that this is the thing we're waiting to happen, and I also expect that this has already been decided and what we're actually waiting for is the suppliers to work their way through different tariffs so they can answer the obvious "how much will I pay per kWh question", update websites and train staff etc.

10. Is this aspect of the announcement that I suspect is causing the confusion and why I now think that what Martin suggests might happen (i.e. you won't be any worse off but may be better off staying on your fixed tariff).

11. As far as EDF's website is concerned, telling their customers who have a tariff below £2500 they can keep it so don't worry makes sense as it saves a whole load of unnecessary worry. Nobody is going to complain if EDF pop up and say good news, you'll pay £10 per month less in future, but people will complain if an expectation of receiving a reduction  is set and not delivered on.

12. The other announcement, the Lizzie £2500 cap is fairly easy to adminsiter - it's just a question of raising SVRs less than they would otherwise have been, and reducing fixed tariff rates to the SVR cap level if they are currently higher. Even this will upset some people's sense of fairness as they will see other people's position improve and want some improvement too, but that's just the way it is. You can't please everyone, and others would prefer to see money saved and thentargetted the most vulnerable through other schemes than allowing people with fixes to pay less.

Bottom line is, if Martin's tweet/email had made it clear that all the debate was around green levies (if that is indeed the case, this is just hypothesis) everything would make sense.

Wel maybe not quite everything....