Energy Bills Support Factsheet (updated Sept 9th) - confused!

What_time_is_it

On the government's Energy Bills Support Factsheet it says:

If you’re on a fixed tariff

If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme.

Can this be right? 

https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022

MattMattMattUK

What_time_is_it said:

On the government's Energy Bills Support Factsheet it says:

If you’re on a fixed tariff

If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme.

Can this be right? 

https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022

What makes you think it is not right?

What_time_is_it

MattMattMattUK said:

What_time_is_it said:

On the government's Energy Bills Support Factsheet it says:

If you’re on a fixed tariff

If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme.

Can this be right? 

https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022

What makes you think it is not right?

The way it is worded sounds like it will be a flat unit rate reduction for people of fixes. So if you fixed at 14.2p a unit for gas, you would now pay 10p a unit, but if you fixed at 10.2p a unit, you would now pay 6p. 

That would seem like a strange approach to me.

MWT

What_time_is_it said:

Can this be right? 

Focus on this bit... "...at a higher rate caused by recent energy price rises..."

We need to know 'higher than what' and the definition of 'recent' before we can do anything useful with the statement.

If they are talking about fixes that were taken above the original planned cap in the last month then it will make sense as even with these reductions they are probably going to mostly be above the new cap.

If recent goes much further back then it may not make sense.

Also keep in mind those numbers are for a single-rate electricity tariff, not E7 or other multi-rate tariffs...

[Deleted User]

What_time_is_it said:

MattMattMattUK said:

What_time_is_it said:

On the government's Energy Bills Support Factsheet it says:

If you’re on a fixed tariff

If you’re on a fixed tariff at a higher rate caused by recent energy price rises, your unit prices will be reduced by 17p/kWh for electricity and 4.2p/kWh for gas.These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October.Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme.

Can this be right? 

https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022

What makes you think it is not right?

The way it is worded sounds like it will be a flat unit rate reduction for people of fixes. So if you fixed at 14.2p a unit for gas, you would now pay 10p a unit, but if you fixed at 10.2p a unit, you would now pay 6p. 

That would seem like a strange approach to me.

That's exactly what they've proposed - with the caveat that the fix must have been "at a higher rate caused by recent energy price rises".

The other options would have been to do nothing - then everyone would leave the fixes - or to give different sized discounts to different people (which they may well end up doing anyway for people who have fixed near the new cap).

maisie_cat

It would seem a fair way to ensure that everybody gets the exact same "help" per kWh but I'll believe it when I se it.

What_time_is_it

Thanks MWT.

But it still seems odd to me to introduce a flat rate reduction, rather than simply move any fixes above the new Energy Price Guarantee back down to the same level.
It's the flat rate bit that confuses me.

Perhaps it's just a mistake and it will change when we get more information?

MWT

What_time_is_it said:

Thanks MWT.

But it still seems odd to me to introduce a flat rate reduction, rather than simply move any fixes above the new Energy Price Guarantee back down to the same level.
It's the flat rate bit that confuses me.

Perhaps it's just a mistake and it will change when we get more information?

It makes sense as a statement of the maximum the government is willing to pay, it just needs framing with more detail like is there a floor set at say the proposed new cap, and by 'recent' do they use that as short-hand for above the proposed new cap...?

What_time_is_it

Well, I guess we'll find out soon enough.
Personally I always prefer things to be as simple and as easy to understand as possible.
A statement along the lines of, "From 1st October if you are in a fixed price contract where your unit and standing charges are higher than the new Energy Price Guarantee, you will receive a reduction in both to align them with the new rates", would have worked just fine I think.

[Deleted User]

What_time_is_it said:

Well, I guess we'll find out soon enough.
Personally I always prefer things to be as simple and as easy to understand as possible.
A statement along the lines of, "From 1st October if you are in a fixed price contract where your unit and standing charges are higher than the new Energy Price Guarantee, you will receive a reduction in both to align them with the new rates", would have worked just fine I think.

Any "simple" approach that they chose to take would still end up being complicated with the number of variations that already exist.

Many people are already complaining about how unfair giving the same discount to everyone is.

Hollymead

I understand customers are faced with rising energy prices and will need to pay higher unit rates.
But why are companies increasing their standing charges when they are not changing the service they provide ?
Surely this profiteering needs to be stopped and if not then justify recovery via windfall tax.
Companies should be doing every thing in their power to manage & reduce the impact of high energy costs. Not make matters worse for their customers.