Much easier to understand energy prices if it was always talked about in terms of price per unit

TheElectricCow

InvertedVee said:

Agree with most of what's been written.

I understand that a 4-pint bottle of milk costs £1.65 but I have no idea what a statement like "the average annual cost of milk has risen to £225" means.

I think out of all the explanations I’ve seen of people trying to explain the whole average price cap situation to others, this is probably most effective understandable analogy for the average consumer I’ve read so far.

Many people may know how much they pay for their milk when they buy it, but unless they like to get somewhat involved they probably haven’t given much thought to what their annual milk spend/consumption is. Fewer still are likely to compare the amount of milk they buy each year with what other people buy, so would have little basis for what an average milk purchase may be. 

And just like with energy there’s so many variables between each person in the prices they pay and the amounts of milk they purchase that few households are likely to find themselves at the actual average point. Using the average as a metric may mathematically be accurate but really doesn’t mean much to anyone other than relatively small number who like to have a visual snoop through other people’s trolleys at Tesco.

What_time_is_it

The milk analogy is a really good one.

If the price of milk were set every 3 months and April would see a price rise of 35p a bottle to £2.00, but July and October were forecast to see the price falls back to £1.45 and then £1.35, it would be really weird to report the April price rise as an "annual increase of £50 on the price of milk".
But this seems to be the approach with energy.

We are all going to have to get more savvy or it will be something else that confuses and disengages people.

Sea_Shell

The problem with that analogy is that you don't buy milk "on account" billed monthly and pay for it using a fixed monthly direct debit, on the assumption (or past data) of how much you'll use 😉

ariarnia

Sea_Shell said:

The problem with that analogy is that you don't buy milk "on account" billed monthly and pay for it using a fixed monthly direct debit, on the assumption (or past data) of how much you'll use 😉

i think milk and more still have 20% off for the first order for new customers. just sayin

What_time_is_it

Sea_Shell said:

The problem with that analogy is that you don't buy milk "on account" billed monthly and pay for it using a fixed monthly direct debit, on the assumption (or past data) of how much you'll use 😉

Not these days, but we used to!

Sea_Shell

Ok, so some people do buy milk on account.


So swap milk for.....Baked Beans!! 😉

Scot_39

Talking about single averages allows politicians and media to gloss over the non trivial regional differences in standing charges etc now c£132-215 for electric and provide a simple message.

Although they couldn't even get that right - was it a cap or a rate cap etc.

The unit rates are key - but many people are very naive about how many 10p or 34p they use daily, weekly or annually.

And whilst many might say it's just 10p or 34p for another unit - or simply I need or want the heating on - that soon adds up - when it becomes £5-10 a day - £150-£300 or even more in winter per month etc for those on low or even increasingly median and above income.

And so warning people it could add up to £4279 or £3280 Ofgem  or £2500 / £3000 EPG also has an important role in society too.

Hence the Ofgem three typical duel fuel use levels - the medium of which is used for headline duel fuel cap and epg figures.

Given the wide range of personal needs, home sizes, insulation standard, and around a c3-4 degree C average annual temp difference North to South in UK, there are probably few homes in the c28m on grid supply that actually use those typical amounts - it's just a guide.

When Ofgem do the press release they specify the cap and the average unit rates and standing charges.

The current one at 

https://www.ofgem.gov.uk/publications/ofgem-announces-latest-quarterly-price-cap-update

says

"From 1 April the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 51p  per kWh for electricity customers and a standing charge of 53p per day. The equivalent per unit level for a typical gas customer is 13p per kWh with a standing charge of 29p per day. "
 

If the media don't cover it - that's the nature of media.

It also specifies the three levels for DD, pay on receipt and prepay.

The Ofgem site also cross references and gives links to the gov  EPG.


When the govt announced the epg - it specified the nominal medium use level "cap" (that the "actual" cap the min of epg or Ofgem - currently  EPG predicted to switch back to Ofgem in July) and the regional unit rates for gas and SR electric.

Both sets ignored the EBSS, or the £300 additional WFP etc etc

All the figures are out there.

Use what suits you best.

What_time_is_it

Here is a post from a local news Facebook site that illustrates the misunderstanding that many people have. It also shows how misunderstanding something leads to a feeling of alienation and helplessness as well as anger at things being out of their control:

"I heard a lady yesterday announce bills going up by £40 a month from April, but don't worry she said it's going to be warmer and lighter at night so you won't use as much ! ( how patronising is that. ) pay more but don't use as much. Taking the mick now." (2 angry face emojis)

Scot_39

What_time_is_it said:

Here is a post from a local news Facebook site that illustrates the misunderstanding that many people have. It also shows how misunderstanding something leads to a feeling of alienation and helplessness as well as anger at things being out of their control:

"I heard a lady yesterday announce bills going up by £40 a month from April, but don't worry she said it's going to be warmer and lighter at night so you won't use as much ! ( how patronising is that. ) pay more but don't use as much. Taking the mick now." (2 angry face emojis)

Funny mix but can see how it comes about.

£40×12 = £480.  The change in EPG £500 for now.

It should be warmer, so people should be using less on heating - don't see that as patronising at all.
It should in fact probably be seen as solid factual advice, given to help reassure many, they are not immediately falling off another cliff edge.
Especially those on non annualised DD plans struggling with winter use level bills at current £2500 cap rates.

But that matters little to those paying annualised DD - so for them does go back to £500 pa EPG / £40 pm..


Forecasts are only forecasts.

Europe and even Southern California in cold snaps right now (snow in Barcelona and LA).
No one knows what Putin might do in Ukraine or anyone else elsewhere.
Markets so easily spooked. ( Allows profit by short / long futures gamblers and producers.)

ariarnia

Scot_39 said:

The unit rates are key - but many people are very naive about how many 10p or 34p they use daily, weekly or annually.

doesnt help that in home displays seem to quite often not have the right rates. i no part of the problem is that the rate is currently discounted but makes it harder for people who do want to casually keep track of use to get a grip on it.