The Weekend Question

Mstty

How much will you be worse off this year?

It is a good time to work out how the pocket is affected and plan and budget for the upcoming year.

For us we won't get the £400 EBSS payment so the loss is simple as we have a fix until April 2024. We will try and mitigate that by a further reduction of 10% energy usage if we can which could take circa £200 off our annual bill. Best case scenario energy costs us £200 more this year.

For others it is clear the governments EPG decision to raise the notional cap to £3000 from £2500 is a bug challenge.

That leads me to the question at £3000 could you get by or is that the breaking point? Bearing in mind no £400 EBSS payment or £150 council tax refund for band D and lower.

Alnat1

Energy prices are expected to fall from July onwards so the increase over the next 3 months shouldn't be as bad as the headlines make it appear.

Hopefully the weather with be warmer, no heating required so less energy used. If the energy companies play fair, it should only mean around £10 a month rise on a fixed DD over the year for the mythical "average user".

TheElectricCow

That’s an interesting question to look at from my position, albeit my energy habits are far from the norm so I may be in a fairly unique situation.

On the whole over this two year period (i.e. the year just gone with the one coming up) it doesn’t look like I’ll actually be any worse off at all, as all the “free” money that’s been given out this year has more than covered my annual energy costs. But if we’re directly comparing last year to the year ahead, that would naturally show the actual cost to myself has increased dramatically.

My credit has been steadily building over winter which I expect to will last me to next Sep/Oct at this rate, potentially less if we have a particularly hot summer and need additional cooling over last year but I’ve also taken steps to improve my air con efficiency in preparation for the summer ahead to mitigate this.

At present I’ve paid £418 into my energy account since moving in at the beginning of last year, and have so far received £671.39 in energy credit from various sources (plus the £150 council tax refund which I chose not to spend on energy), so overall really can’t complain about the situation too much considering my electric bill is still being paid for me. 

That said, the only reason that’s the case is simply because I’ve chosen to make concessions and cut down use each time the price has gone up in order to keep my monthly bills more or less the same as they were a year ago - not something that’s really an option in the face of further increases from this point while maintaining the same quality of life.

Hoping to see costs being a little lower next winter but in any case I’ll probably be switching over to E7 by then (or a tracker if a suitable one becomes available) and shifting most of my use anyway so the costs may balance out for the year.

MattMattMattUK

Mstty said:

How much will you be worse off this year?

Covid cost me about £100k, Brexit cost me around £90k and my income is now less than a third of what it was, although I am rebuilding it is going to take years to get back to where it was so in reality the increases in energy costs seem fractional compared to the loss on my income that was inflicted by the government.

In terms of energy I was paying 11p per kWh for electricity before this all started, currently on the EPG rate the same as everyone else. My energy bills have gone from £60 pcm with a refund every six months when I was in credit to £150 pcm, although I will also get a rebate as my average usage over the winter months will hover at around £126 pcm. All in my additional energy costs are going to be an additional £600-800 pa vs 2020 despite reduced usage.

Mstty said:

It is a good time to work out how the pocket is affected and plan and budget for the upcoming year.

I do a budget ever year, budget vs actual, I track it every month, I stick to it so I always know where I stand, everyone should have a proper budget that accounts for actual as well as budgeted. 

Mstty said:

For us we won't get the £400 EBSS payment so the loss is simple as we have a fix until April 2024. We will try and mitigate that by a further reduction of 10% energy usage if we can which could take circa £200 off our annual bill. Best case scenario energy costs us £200 more this year.

For this year, the whole of 2023, I will be roughly the same as 2022 because although there will be one quarter with higher costs (Q2) it is a quarter with lower usage, before the predicted price drop in Q3 and Q4, though that does depend if Q4 is mild or cold.

Mstty said:

For others it is clear the governments EPG decision to raise the notional cap to £3000 from £2500 is a bug challenge.

That leads me to the question at £3000 could you get by or is that the breaking point? Bearing in mind no £400 EBSS payment or £150 council tax refund for band D and lower.

I will not approach £3k energy bills but if I did I would be fine, I would cut back on energy or in other areas of expenditure, even take a part time job if needed, as I have done in the past. 

The thing when it comes to energy bills is that their rise has been trivial compared to the rises people are facing on their mortgage payments. People have had their energy bills go up £50-150 pcm, but for many mortgages are going up more more than twice that. Energy bills doubled but from a much lower starting point and with the ability to mitigate that by reducing usage, mortgage payments might have increased 30% but from a number which is far higher initially and which there is no way to "cut down" on short of moving home which is incredibly disruptive and expensive. I know the media attention seems to be focused on energy prices but they are trivial when compared to what is happening to mortgages. The largest example of that is that the increase in energy bills was expected to suck £3 billion pcm out of the economy, just on residential mortgages the interest rate rise will suck £4.9 billion pcm out of the economy, commercial mortgages were expected to be somewhere similar and that does not count international lending on commercial property. 

Spoonie_Turtle

No idea.

We overpaid for a month and a half on Tracker before we knew about the EPG - have still saved overall though so thankfully it's not a decision I regret.  But our usage will change now, with a thermostatic shower being installed with the wet room instead of the electric shower we had before - it will massively increase our hot water usage anyway, and even more so because it will allow all of us to shower as often as we need rather than being limited to once or a twice a week due to illness (or some felt limited to 'almost never' because the bath made ominous creaking noises and scared them!).  So whether our usage will go down because it's not a power-hungry shower, or whether the increase in hot water needed will offset the energy savings, I don't know.  

I also can't really budget, being on Tracker - I guess I could use the EPG rates with last year's annual usage but reality will no doubt be different anyway.  We are very fortunate that my benefits keep us comfortably afloat because I'm not well enough to live much of a life that requires any expense; if I didn't still live with my parents no doubt I'd be struggling, but then if I were well enough to do that I might not get those benefits

markin

Wouldn't anyone under the  'Average' be better off and the people over it Worse off, So a 50/50 split really?

bob2302

markin said:

Wouldn't anyone under the  'Average' be better off and the people over it Worse off, So a 50/50 split really?

No, that would imply that the level of subsidy has been set such that the median household breaks even. If the mythical typical household is now spending £2500 pa, then £400 is not going to do that.

Spoonie_Turtle

Spoonie_Turtle said:

… But our usage will change now, with a thermostatic shower being installed with the wet room instead of the electric shower we had before …

They sent us the wrong ahower and are actually installing an electric one, so usage may well go up with all of us being able to shower.  I'm almost disappointed, but it will mean no need to fiddle with the hot water settings anyway.  And now we're back to 'what do we do with the heat pump with its vampire load in summer?'.

Nebulous2

Energy isn't that big a factor for us, looking at our overall circumstances. It will be two years at the end of March since I retired. I took a part-time job and then reduced my hours last April. 

We have a financial cushion and expected to use it to fund the gap between me stopping and state pension age, but that hasn't been needed. 

Energy usage and costs have been down this year from last year, by using less and having the good fortune to get a two year fix in October 21. 

We could cope with £3k for the coming financial year, but would hope that we don't need to.