Not sure about gas bills / cap - how does it work?

NeedSomeHRadvice

Hi,

My parents combined gas and electric bill is usually £1000 / year.  EDF recently sent us a new expected bill with the price rises if our energy use stays the same as £4000 / year - this was before the cap was announced. 

With the recent announcement of the cap to £2500 / year I was hopeful that I would not be paying the £4000/yr but only £2500. But my relative has told me that the "average" bill will be £2500 /yr and that it is not capped, so my parents bill (if they continue to use the same energy as last year) will be £4000/year.

Is this correct? Please tell me it's capped! They are too scared to put the central heating on and it's cold.

Thanks

Getting_greyer

Check the estimated usage that EDF sent along with the 4k cost. It may be way over what you're actually using.  

The EPG cap sets a cap on the daily standing charge and also the unit rate. 

Can't remember off top of my head but I think the average bill is based off of around 12000 kwh of gas and 2900 kwh of electric.  So anyone's usage that was exactly that would expect an annual bill of £2500.

There's loads of better information including the capped prices on the MSE main page.  Tell parents to check their average annual usage via previous meter reads then they can work out a rough cost for the year using the capped prices.

Spoonie_Turtle

They need to not be scared, but work this out to find out the reality.  What are their new rates for next year, and what is their annual usage?  Usage (kWh) x unit rate (p/kWh) + 365 x standing charge = total gas bill.
They'll need to do the same for electricity as well.

It's not a cap on overall bills, but a cap on unit rates and standing charges.  It's an amount based on a theoretical 'typical' use, 12,000kWh gas, 2,900kWh electricity, plus standing charges.  If you use more, you pay more, if you use less, you pay less.

Edit: turns out I cross-posted with the previous commenter.

Also remember this winter they will have £400 credited through their electricity account, and if either or both of them are pensioners they'll get an increased Winter Fuel Payment too.

Incidentally, as you thought it was a cap, if you have your own energy bills you should probably check your rates and usage to work out what to expect too.

Ebe_Scrooge

This confuses a lot of people, and the "adverts" (for want of a better word) are perhaps a little unclear.  As above, the cap is is the maximum that can be charge for each unit, but you still pay for how many units you use.

A somewhat daft but simple analogy might help to explain.......

Baked beans currently cost 30 pence per tin.  An average family buys 100 tins of baked beans per year, so their annual BBB (baked bean bill) is £30.

Heinz announce that they are doubling the price to 60 pence per tin, meaning the average BBB would now rise to £60 per year.

But the BMB (bean marketing board) step in and say to Heinz, "No, you can only raise the price to 40 pence per tin".  So the new increased "average" BBB will now be only £40 instead of the £60 that it would have been if Heinz had their way.

Now, the families who only buy 50 tins of beans per year would have been paying £15 per year, and are now going to pay £20.

The families who usually buy 200 tins per year used to pay £60 per year and are now paying £80.  But everyone is still paying the same price for each tin of beans.

lindatoo

As has already been said your parents bill will depend on what they use, If you can get their usage in Kwh for both gas and electricity, you can use the tool on this page to calculate the new costs https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/ . It gives costs before and after the £400 government grant and works out the expected direct debit. Look at their latest bill and one from the same time the previous year, that will give you the meter readings, from that you need to calculate the Kwh. If you need help with the calculation, post the numbers on here someone here will help you work it out. When you have the kwh for both gas and electricity, you can enter it into the tool together with the region they live in and you will get an idea of what they will pay if they make no changes to their usage. The tool doesn't take into account any additional help they may be entitled to, eg.they may get the extra winter payment as well, further reducing their costs.

poppellerant

NeedSomeHRadvice said:

Hi,

My parents combined gas and electric bill is usually £1000 / year.  EDF recently sent us a new expected bill with the price rises if our energy use stays the same as £4000 / year - this was before the cap was announced. 

With the recent announcement of the cap to £2500 / year I was hopeful that I would not be paying the £4000/yr but only £2500. But my relative has told me that the "average" bill will be £2500 /yr and that it is not capped, so my parents bill (if they continue to use the same energy as last year) will be £4000/year.

Is this correct? Please tell me it's capped! They are too scared to put the central heating on and it's cold.

Thanks

The government should have been more specific when making this announcement, so people better understood the cap.

What is being capped are the unit rates and standing charges.  They are not proposing that you can use as much as you want for £2,500 a year, and it would be ludicrous to think otherwise.

This page pretty much says the same thing as I have:

The energy price cap is misnamed – there's no cap on how much you pay. The cap is actually on the standing charges and the unit rates for gas and electricity, and this means if you use more energy, you'll pay more. Yet the cap is usually quoted as an annual figure, based on a typical amount of energy use (currently £1,971 a year, but rising in October to £2,500 under the energy price guarantee).

Quite simply, you have two choices:

1. Pay those prices to keep warm.
2. Wear a few extra layers and/or use a throw to keep you warm.

NeedSomeHRadvice

Thanks a lot, looks like I will have to tell my parents (pensioners) to keep the heating off as much as possible as they will certainly go over the £2,500 due to being at home all day.

It looks like I wasn't the only one confused, I was watching Question Time this week and someone in the audience said that Liz Truss also said that the household bill is CAPPED at £2,500 so she was either lying or misinforming. 

Now with Nord Stream 1 & 2 blown up (I wonder who would do a thing like that??) the bills will only rise further.

 Poppellerant:  There is a third option : maybe we can hold a referendum here and join the land where there's plenty of gas and oil! Do you think they'll let us?

GingerTim

NeedSomeHRadvice said:

.

It looks like I wasn't the only one confused, I was watching Question Time this week and someone in the audience said that Liz Truss also said that the household bill is CAPPED at £2,500 so she was either lying or misinforming. 

I don't think the problem is either of these things. Truss just isn't very bright.

400ixl

The bills will not rise further due to Nord Stream as the rate is capped. The only thing that can raise or lower the bill is the amount you use changing.

You need to get the typical annual usage for your parents and from that you can work out how much it will cost them.

A blanket telling them to keep the heating off as much as possible may not be necessary and cause them hardship if their usage is actually closer to the average.

Please get the figures and if you can't work out the cost come back with the information (Electric and Gas usage for a year, supplier and region of the country they live in). Someone will be able to help you calculate what the estimated cost will be.

Spoonie_Turtle

NeedSomeHRadvice said:

Thanks a lot, looks like I will have to tell my parents (pensioners) to keep the heating off as much as possible as they will certainly go over the £2,500 due to being at home all day.

It would be sensible to do some sort of energy audit and see exactly how much is being used, where it's going, and whether anything can be reduced or set up more efficiently rather than going straight to 'keep the heating off'.  Finding out their actual annual usage in kWh would be a great plave to start.

And no you most certainly are not alone in having misunderstood.  It seems quite a lot of the population from all walks of life (even people you'd assume would be quite clued up) have taken the Prime Minister's words at face value.  At least you've thought to question it, not everyone will think to do that until they end up in debt to their suppliers.

Miser1964

>My parents combined gas and electric bill is usually £1000 / year. <

That's a bit less than the average, so they'll probably be paying somewhere around £2,250 with the capped rates now being applied from 1st Oct. The net charge will likely by under £2,000 after the £400 payment to all households is applied. Your parents may see further reductions with cold weather payments. 

Average bill trends and the average bill with EPG 


>I will have to tell my parents (pensioners) to keep the heating off as much as possible<

Can I suggest you sit down and work out their actual incomes and outgoings? My parents, like many elderly people, became somewhat paranoid on costs despite pension and benefits that were more than adequate. I fitted a roomstat/programmer which was beyond their ability to tinker with so their flat remained at a comfortable temp.