Impact of revised EPG for E7 tariffs - spreadsheets to the ready!

[Deleted User]

OK, so here's a challenge for the spreadsheet number crunchers amongst you in relation to changing the headline EPG cap from £2500 to £3000and it's impact on E7 tariffs. I'm trying to estimate what it means for E7 rates and it's nothing like as easy as adding 20%.....

1. The Ofgem headline cap for October was £3549 for a dual fuel customer and for those on a single rate electricty tariff you could work out an average price per kWh for electricity (I don't have the rates to hand)

2. The EPG similarly effectively defines a price per kWh for electricity that is 17.85p/kWh lower in order to hit the £2500 headline cap

3. For E7 tariffs this 17.85p/kWh is applied as a flat rate discount to the rates the suppliers set using the Ofgem October

4. This leads to some disproportionately high % discounts to E7 rates and some "silly" low prices

5. e.g.  as an EDF customer in the East Midlands I would have been paying 24.75p/kWh overnight at the Ofgem cap but I am now paying 6.9p/kWh at the EPG rate - a discount of 72% and of course I'm smiling like a Cheshire cat because 97% of my electrcity is bought overnight

Move forward to next April and I'm guessing the smile will be wiped off my face and my bill may be doubled.....

1. Assume the Ofgem headline cap is £3702 as per the Cornwall Insight forecast

2. Assume gas and electricity prices go up equal amounts in % terms

3. Assume that the E7 overnight ofgem rate of 24.75p goes up the same % as single rates (i.e. before the EPG rate)

4. Make whatever assumptions you want about standing charges

Questions.....

1. What will the new Ofgem cap rate be per kWh for single rate electricity?

2. ditto E7 overnight rate as above

3. What discount in p/kWh be applied by the EPG to get the single rate down so the £3000 target is hit?

4. Assuming the same p/kWh discount is applied how much will I pay per kWh for E7?

5. What would this look like if the headline cap was £3000?

6. ditto £4000?

7. What additional assumptions do you need to make to estimate this?

8. What extra info (if any) do you need to make a reasonably estimate?

Working on this now but going round in circles

p.s. hope that we can use this thread to crunch the numbers and model some rates and stay out of a debate about the rights and wrongs of it all - we did that to death with the October EPG

[Deleted User]

Impossible to calculate - OFGEM doesn't cap the night rate, it only caps the effective total at the deemed 58:42 ratio.  Any (and every) plausible combination of day & night is possible.

[Deleted User]

[Deleted User] said:

Impossible to calculate - OFGEM doesn't cap the night rate, it only caps the effective total at the deemed 58:42 ratio.  Any (and every) plausible combination of day & night is possible.

Thanks, yes - impossible to calculate accurately, but I guess you can make the reasonable assumption that EDF E7 day and night rates are in the same proportion to each other and the single rate tariff, and work from this, which is where I'm going with this? As far as I can see they have always been broadly consistent with each other until the EPG changed things with the flat rate discount?

I'm trying to get an estimate for budgeting purposes - for now I've just assumed my costs will double in April which is just a finger in the air guesstimate and probably good enough for practical purposes given my bill is low. But I'd like to have a better stab at it

Certainly not a life changer for me - just posted it here as I suspect it will be an interesting challenge for some of the spreadsheet modellers here......

[Deleted User]

They've always been in wildly different proportions from each other - that was one of the reasons for comparing and switching if you were on an E7 tariff.  It's not really a challenge to just make up random numbers.

Or is what you are asking for "a calculator for what will happen to my specific E7 tariff with my supplier in my region"?

[Deleted User]

Deleted_User said:

Or is what you are asking for "a calculator for what will happen to my specific E7 tariff with my supplier in my region"?

Ah yes - I wasn't very clear - it's this that I was meaning. I can also see that I've overcomplicated it. Where I've got to is.....

First.....

1. The current average EPG rate for single rate electricity is 34p/kWh

2. The headline cap will go up from £2500 to £3000 which is a 20% increase

3. If you assume as a starting point that everything within the cap goes up by 20% then the new EPG rate will be 40.8p/kWh

4. Cornwall Insight are predicting a new rate of 58.69p/kWh

5. So the Government subsidy will be 58.69-40.8 = 17.89p/kWh (much the same as now but coincidental as derived from Cornwall estimate)

Then.....

1. The Ofgem rate (pre EPG) for single rate was 52p

2. The Cornwall prediction for single rate from April is 58.69p - an increase of 13%

3. Comparing the EDF rates from the Apr 22 and Oct 22 price caps, the single rate, day rate and night rate all went up by 85% (within 0.5%)

4. So it seems reasonable to assume that if the single rate goes up by 13% from Oct to Apr so will the day and night rates

5. The Oct day and night rates (Ofgem, pre EPG) are 65.16p and 24.75p so a reasonable estimate for these for April might be 73.93p and 28.08p

6. To get the E7 rates (for EDF in the East Midlands) subtract the subsidy of 17.89p/kWh as above from these rates to give

56.04p/kWh (Day) and 10.19p/kWh (Night)

By way of comparison, current EPG rates are 47.31p/kWh and 6.9p/kWh, so the increase to me would be 18% and 48% respectively.

The underlying point is that if the method used in Apr is the same in October, depending on your region you could see a bigger hike than the headline figures might suggest if you're an E7 user.

Does this make sense or am I talking complete nonsense?

Assuming the logic is OK I'll put it in a spreadsheet and model different scenarios.....

[Deleted User]

That is plausible logic. You could make other assumptions (for example electricity standing change halving as previously scheduled) - but there’s no real reason to believe that your assumptions are any better or worse.

pochase

This will not work.

For example EDF heavily reduced the night rates for some regions from April cap to EPG, meaning a wide gap between (expensive) day and night rates. They did not have the very low night rates for all regions, for some the gap between day and night was smaller.

So in April they might decide to change the regions with the low night rates, or now. Completely up top them how the do it as long as they stick with the 58%/42%.

You can only calculate what the day rate should be a a certain night rate, or the other way around. But that will not help you as the supplier can do whatever they want here. They could set the savings for night to almost nothing (1p cheaper than the new single rate) or they could set it to 1p with a hige day rate.

[Deleted User]

pochase said:

This will not work.

For example EDF heavily reduced the night rates for some regions from April cap to EPG, meaning a wide gap between (expensive) day and night rates. They did not have the very low night rates for all regions, for some the gap between day and night was smaller.

So in April they might decide to change the regions with the low night rates, or now. Completely up top them how the do it as long as they stick with the 58%/42%.

You can only calculate what the day rate should be a a certain night rate, or the other way around. But that will not help you as the supplier can do whatever they want here. They could set the savings for night to almost nothing (1p cheaper than the new single rate) or they could set it to 1p with a hige day rate.

It would work, but it might not be true.  It’s just making an assumption about the ratio chosen.

[Deleted User]

OK thanks both, comments much appreciated. I'll have a go at improving the spreadsheet over the next few days, Mike