Eon Next electricity rates increasing on 1st Jan 2023

paul_h

I've just had an email from Eon Next telling me that my rates will be increasing on 1st Jan 2023. I'm on standard variable tariff, Economy 7 in East Mids region.

From the email...

"Your energy prices will go up on 1 January.

The energy price cap is reviewed every three months and Ofgem recently announced that due to rising costs it will go up in January. The government will increase the Energy Price Guarantee (EPG) discount to offset the price cap rise and keep average household bills at around £2,500 a year.

However, whilst the typical bill amount is the same, some people’s prices will increase. This is because Ofgem’s price cap calculations take into account changes in the costs to provide energy to customers in different regions of Britain and by different payment methods, while the EPG discount is the same for all customers."

Now I know that Ofgem has raised the cap for the next quarter, but I honestly thought that the EPG would mean that the unit rates would be fixed until April? Day rate is increasing by just over 1%, and the night rate by over 16%. SC remains the same. Eon estimate that this will add just over £170 to my annual bill, but as their 'projection' grossly underestimates my night usage for no apparent reason, it's going to be more like a £400 increase. The night unit estimate in the projections has been steadily decreasing over the last 6 months, and now is well under half what we have used every year for the 20-odd years we have lived here.

Can anyone explain in reasonably simple terms what's going on?

[Deleted User]

Simple terms?  You misunderstood the EPG, and you misunderstood what is and isn't changing in January.

The only thing that isn't changing is the mythical £2500 cost for a typical household using dual fuel, averaged across all regions.  Everything else is changing.

[Deleted User]

stewie_griffin said:

The price cap varies across the country, but the epg is the same for everyone. Let’s say for Mrs Jones the price cap goes up from £2500 to £3000. The epg increases by the same amount (£500) for her so her bills stay the same. If Mr Smiths price cap goes up to £3500 then overall his price will increase to £3000 since the epg is the same. The actual amounts are much less than this I believe buts it’s just to show why some peoples prices are increasing.

Erm, nope.  The EPG is not the same for everyone.  It's a massive range of different things that apply to different tariffs in different ways.

It's because people have assumed that it is the same for everyone that we have all this confusion.

paul_h

Deleted_User said:

Simple terms?  You misunderstood the EPG, and you misunderstood what is and isn't changing in January.

Thanks for that gem of wisdom, that's a really helpful detailed explanation

I'm not thick, I just haven't had time to delve beyond the policy headline. The email was a bit of a surprise, I expected a 'price guarantee' to, well, guarantee the unit price for the period of the EPG.

Mstty

paul_h said:

Deleted_User said:

Simple terms?  You misunderstood the EPG, and you misunderstood what is and isn't changing in January.

Thanks for that gem of wisdom, that's a really helpful detailed explanation

I'm not thick, I just haven't had time to delve beyond the policy headline. The email was a bit of a surprise, I expected a 'price guarantee' to, well, guarantee the unit price for the period of the EPG.

First to reply can sometimes be the sarciest person on the forum. However this is being posted a lot so a quick scroll down sometimes help.

[Deleted User]

paul_h said:

Deleted_User said:

Simple terms?  You misunderstood the EPG, and you misunderstood what is and isn't changing in January.

Thanks for that gem of wisdom, that's a really helpful detailed explanation

I'm not thick, I just haven't had time to delve beyond the policy headline. The email was a bit of a surprise, I expected a 'price guarantee' to, well, guarantee the unit price for the period of the EPG.

Oh, no doubt, it's been very poorly explained - you can see that by all the threads here with similar questions to yours.

The "price guarantee" didn't actually guarantee anything, the "price cap" wasn't actually a cap in many circumstances, and the £2500 magic number didn't apply to anyone directly.

You're on E7, so the £2500 never even got close to applying to you anyway.  What you had was a p/kWh discount from the OFGEM multi-rate tariff level for your area calculated based on the difference between the single-rate OFGEM tariff level for your area in October and the EPG rate for your area in October.  What's changing now is the OFGEM levels (as they were always scheduled to change every three months), which results in a different p/kWh discount taken off a different multi-rate tariff level.

The only thing that the "price guarantee" says about January is that "the £2500 average regional bill for a typical level of dual fuel usage paying by direct debit" isn't changing - as I said, not much of a guarantee at all.

Almost everyone's prices are changing in January.

Simple terms, unfortunately, it is not. 

paul_h

Mstty said:

First to reply can sometimes be the sarciest person on the forum. However this is being posted a lot so a quick scroll down sometimes help.

Thanks, I'll have a further look. I did have a quick scan and found a few posts regarding pre-existing fixes below the cap and the EPG, wasn't sure if the same issues applied.

paul_h

Deleted_User said:

The "price guarantee" didn't actually guarantee anything, the "price cap" wasn't actually a cap in many circumstances, and the £2500 magic number didn't apply to anyone directly.

I think there lies the problem. I was fully aware that the mystical £2500 cap was only a cap on unit rates, but not that everything else was so fluid.

Thanks for the clarification.

shroffn

We're on Economy 7 and I see that our rates, day rate and night rate, are going up by 6.8% and 13.1% respectively. Standing charge unchanged (gas rates unchanged). Those on singe rate will see a 0.8% increase and no change to standing charge. What does this mean for us? Right now, to at least match the single rate, we must average 26.3% of usage on right rate. This is going to jump to 39.0% come January. Our average over the last 12 months is 28.9%. Looks like we are being forced off of Economy 7? I would guess that many others on dual/multi-rate electricity will find exactly the same. Our supplier is Shell Energy.

MattMattMattUK

shroffn said:

We're on Economy 7 and I see that our rates, day rate and night rate, are going up by 6.8% and 13.1% respectively. Standing charge unchanged (gas rates unchanged). Those on singe rate will see a 0.8% increase and no change to standing charge. What does this mean for us? Right now, to at least match the single rate, we must average 26.3% of usage on right rate. This is going to jump to 39.0% come January. Our average over the last 12 months is 28.9%. Looks like we are being forced off of Economy 7? I would guess that many others on dual/multi-rate electricity will find exactly the same. Our supplier is Shell Energy.

You have the option to change to a supplier where the ratio is different, however E7 price cap targets 52% day, 48% night usage. With your night usage being as low as it is you were never a prime candidate for E7 and your gains would have always been marginal. You are not being forced to do anything, you have a choice, different suppliers have different E7 splits, however you will only really benefit if your usage significantly favours night usage, which yours does not. 

Mstty

shroffn said:

We're on Economy 7 and I see that our rates, day rate and night rate, are going up by 6.8% and 13.1% respectively. Standing charge unchanged (gas rates unchanged). Those on singe rate will see a 0.8% increase and no change to standing charge. What does this mean for us? Right now, to at least match the single rate, we must average 26.3% of usage on right rate. This is going to jump to 39.0% come January. Our average over the last 12 months is 28.9%. Looks like we are being forced off of Economy 7? I would guess that many others on dual/multi-rate electricity will find exactly the same. Our supplier is Shell Energy.

Yes you could be on the tipping point due to how much you can use the split of rates to making it more efficient to go single rate.

This has always been the case for those that don't shift the notional amount to night use.