MSE News: Energy price cap to rise in January – your energy rates could change slightly

[Deleted User]

superkoopauk said:

You can compare and contrast maximum unit rates here (although nothing published for E7).  I think it is safe to say suppliers will price to these so plenty can expect to see an increase.  I fear the E7 increases will be worse

https://www.gov.uk/government/publications/energy-price-guarantee-regional-rates/energy-price-guarantee-regional-rates

https://www.gov.uk/government/publications/energy-price-guarantee-regional-rates/energy-price-guarantee-regional-rates-january-to-march-2023

That's a trivial increase - with the DD average not changing at all and the other averages changing by a 'massive' £20 and £39 per year (this has basically restored the 'direct debit discount').



For those interested in the change, here's the direct debit figures.  Gas basically unchanged and electricity seems rather strangely to be doubling down on the regional differences.  The already expensive regions (NW&M and London) have the biggest increase and the already cheaper regions (Northern & North Scot) with the biggest decrease.

Can I ask why, when the cap figures are changing by so little, you are fearing the likely change to E7?

And to note, they've never published E7 unit rate caps because there's never been an E7 unit rate cap.

mmmmikey

....assuming the same methodology is used for E7 customers as before, it's quite possible that E7 users will see bigger % changes than most, particularly to night rates. Applying a fixed rate discount has a proportionally higher effect to a lower p/kWh amount. We haven't seen the numbers yet and the energy companies may adjust this effect out to some extent by changing night/day proportions, but I wouldn't be surprised to see E7 customers who's usage is skewed towards night time usage paying a worthwhile amount less from January onwards. The flip side is that E7 customers are likely to see a much bigger hike in April when the EPG ends.

I think.....

EDIT - what I should have said was that SOME E7 users who have a higher than average night or day usage may see bigger % changes - anyone in the middle probably won't see much change at all.

mmmmikey

As a follow up, just playing with some numbers....

In the past, when the single rate tariff has gone up by x%, EDF have also raised their E7 rates by x%.

The Ofgem price cap for January represents a 29% increase over the October figures.

E7 Ofgem rates for October (for me) were 24.75p/kWh (night) and 65.16p/kWh (day).

If you ignore the EPG and assume EDF do what they did before and these increase by 29%, that would take them to about 32p/kWh (day) and 84p/kWh (night)

Taking off the 31.8p/kWh EPG discount would leave me paying 0.2p/kWh (night) and 52.8p/kWh (day)

As someone who uses 95% of their electricity overnight I'd be happy to settle for that, although it seems unlikely that this will happen.

I guess the point is, get ready to see some strange figures for E7 rates

[Deleted User]

mmmmikey said:

As a follow up, just playing with some numbers....

In the past, when the single rate tariff has gone up by x%, EDF have also raised their E7 rates by x%.

The Ofgem price cap for January represents a 29% increase over the October figures.

E7 Ofgem rates for October (for me) were 24.75p/kWh (night) and 65.16p/kWh (day).

If you ignore the EPG and assume EDF do what they did before and these increase by 29%, that would take them to about 32p/kWh (day) and 84p/kWh (night)

Taking off the 31.8p/kWh EPG discount would leave me paying 0.2p/kWh (night) and 52.8p/kWh (day)

As someone who uses 95% of their electricity overnight I'd be happy to settle for that, although it seems unlikely that this will happen.

I guess the point is, get ready to see some strange figures for E7 rates

Or get ready to see almost no change in E7 rates, as the EPG cap (it happens to have been expressed as a discount in some places but it is seen as a cap) is the same in January as it is now.

As you say, in the past when single rate tariff has gone up, E7 rate has also gone up.  This time, single rate tariff (as seen by the customer) is not going up.

mmmmikey

Hi - I take your points of course, but in the case of E7 rates I think there's more to it than the way this is expressed. As I underastand it the E7 EPG October rates are calculated by applying a 17p flat rate discount to the E7 Ofgem October rates. On average, as you say, there will probaby be very little difference. But my point is really that within that average there could be some significant winners and losers if the same rules apply (and I'm not sure how big that "if" is). The more you deviate from the day/night split used by Ofgem, the bigger the potential for change to your rates. I guess we'll find out soon enough - hopefully EDF will publish their new rates in the next week or so. Far too early to crack open the Champagne (or even put it in the fridge) but I wouldn't be at all surprised to see my bill going down in January. (Or maybe going up, or possibly staying the same.....).

[Deleted User]

I see what you are saying, but again I would ask - now that E7 EPG October rates are calculated, and the EPG is barely changing, why should there be massive changes in E7 rates.

There could be, in the same way as a supplier could decide to change their E7 to charge 0.00000000001p/kWh in the night and the corresponding huge amount in the day, but I just can't see them bothering.

Unless, of course, what we've been told about how the government money is calculated is wrong, and the suppliers actually get paid this fictitious discount amount (rather than the difference between cost to purchase energy if the true cap was at EPG and actual cost to purchase energy - which is how it was explained before).  Then it would be in their interest to follow the OFGEM cap up in the background and claim that a bigger discount is required.

Scot_39

Deleted_User said:

I see what you are saying, but again I would ask - now that E7 EPG October rates are calculated, and the EPG is barely changing, why should there be massive changes in E7 rates.

There could be, in the same way as a supplier could decide to change their E7 to charge 0.00000000001p/kWh in the night and the corresponding huge amount in the day, but I just can't see them bothering.

Unless, of course, what we've been told about how the government money is calculated is wrong, and the suppliers actually get paid this fictitious discount amount (rather than the difference between cost to purchase energy if the true cap was at EPG and actual cost to purchase energy - which is how it was explained before).  Then it would be in their interest to follow the OFGEM cap up in the background and claim that a bigger discount is required.

The govt have updated there EPG summary saying they will be increasing the discount - from 17p to 31.8p (one assumes in both cases plus VAT)

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

Ignore the 8th Sept - it's now 27th Nov in reality.

And specifically for many of us on E7 and E10 - the section that applies is

"

If you’re on a variable tariff not subject to the price cap

Variable tariffs which were not subject to Ofgem’s price cap (which are known as having a derogation), for instance certain 100% renewable energy tariffs, will receive the full unit rate discount:

• from October-December 2022, unit rate discount of 17p/kWh for electricity and 4.2p/kWh for gas
• from January 2023 reductions of 31.8p/kWh for electricity and 6.4p/kWh for gas

If originally priced at a higher level than Ofgem’s price cap, then the resulting unit rates will be above the standard variable unit rates."

So basically - on ave - can expect the associated tariff rates to go up 14.8p+VAT - for people and govt to break even.

[Deleted User]

Scot_39 said:

Deleted_User said:

I see what you are saying, but again I would ask - now that E7 EPG October rates are calculated, and the EPG is barely changing, why should there be massive changes in E7 rates.

There could be, in the same way as a supplier could decide to change their E7 to charge 0.00000000001p/kWh in the night and the corresponding huge amount in the day, but I just can't see them bothering.

Unless, of course, what we've been told about how the government money is calculated is wrong, and the suppliers actually get paid this fictitious discount amount (rather than the difference between cost to purchase energy if the true cap was at EPG and actual cost to purchase energy - which is how it was explained before).  Then it would be in their interest to follow the OFGEM cap up in the background and claim that a bigger discount is required.

"

If you’re on a variable tariff not subject to the price cap

No - that section isn't about you.  That's about the tariffs that have never been subject to the price cap of any sort.

Multi-rate tariffs such as E7 did not have a derogation from the cap.

mmmmikey

Deleted_User said:

I see what you are saying, but again I would ask - now that E7 EPG October rates are calculated, and the EPG is barely changing, why should there be massive changes in E7 rates.

Hi - not meaning to be argumentative, just trying to understand it, so sorry for coming back again on this.....

As I undersatnd (or misunderstand) it, the new rates in January will be based on the January Ofgem rates and the October rates won't come into it any more.  There will be a higher discount from the Govt to bring them down to the same amount for single rate SVR customers, with the only changes from Oct to Jan being due to regional adjustments and different payment types which as you point out are small. This is entirely arbitrary for single rate users - it doesn't make any difference whether you get a 17p/kWh off 49p/kWh to arrive at a unit cost of 32p/kWh, or whether you get 32p/kWh off 64p/kWh to arrive at the same figure.

But applying a 32p/kWh as a flat per kWh discount across E7 day and night rates will have different proportional effects depending on whether you are a high night / low day user or vice versa. Similarly, if the suppliers break with what they've done before and try and factor this in by changing day and night rates relative to each other, that will also have a different effect for day and night users, although it could soften the difference. It all depends on what the suppliers do.

I guess it's a question of watch this space and see what the new rates are. Admittedly, far more significant for me with a 95%/5% night/day split than a more typical pattern.

Scot_39

As EOn next never replied to my email questions on the subject - I cannot guarantee that is or isn't true.

But I have an explicit line on my bill - for both day and night - giving me the discount as per that section.

Day Units                                           xx.xx kWh at DR                      £zz.zz

Energy Price Guarantee                    xx.xx kWh at 17p               -£y.yy

VAT                                                                                                    £w.ww

And that is the only section in the govt documentation - that says it will done in that way.