MSE News: Government changes how the Energy Price Guarantee should be applied to Economy 7 tariffs

MSE_Petar Posts: 324
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MSE Staff
The Government has changed its guidance on how energy suppliers should apply the Energy Price Guarantee (EPG) discount to Economy 7 tariffs from April. It comes after founder Martin Lewis raised the issue with the Energy Secretary, as many Economy 7 users saw bills rise unfairly in January.

Read the full story:
'Government changes how the Energy Price Guarantee should be applied to Economy 7 tariffs'

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  • dealyboy
    dealyboy Posts: 1,674
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    Right I'll be the first (unless somebody sneaks in) to ask a question, if somebody is prepared to answer an EPG for dummies question.

    As an E7 user currently, I know that if my night rate usage is 42% and day rate is 58% I am paying the same as (or perhaps slightly lower than) a single rate customer, i.e, on the EPG rate. If my night rate usage is above 42% then I gain and if below I lose.

    Now that the EPG discount is to be equalised between day and night rates E7 tariffs, does that mean E7 rates will change and that the equivalence rate will be 50% day and night rate usage from April 1st, so that if I still use 42% night I will lose and I will have to use over 50% night to be a winner, but not so big a winner as before ?
  • dunstonh
    dunstonh Posts: 115,588
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    edited 30 March 2023 at 5:53PM
    Hopefully it is good news but I do fear that the aggressive reductions in off-peak pricing from some suppliers will be scaled back and that will make those with a higher ratio of off-peak use lose out.

    Most of those that have been moaning about it are the borderline off peak users that just scrape in under E7.   Not those with a heavy majority of use off peak.   It will be interesting to see the price changes and who the winners and losers will be.

    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • mmmmikey
    mmmmikey Posts: 1,582
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    Checking the EPG discounts for EDF - E7 - East Midlands they already apply the same 16.6p + VAT discount to both day and night rates from April onwards, and that is what they did from Oct-Dec. It was only from Jan-Mar that they applied a smaller discount to the night time rate, presumably because if they had applied the whole amount to some regions it would have made night time electricty in those regions < 0 - i.e. you would be paid for doing it. So this change will make no difference at all for EDF customers but the underlying situation is still that high night time users are only seing big increases now because their pries had previously gone down when others were going up substantially. High night time users (like me) are the winners in this situation, not in any way unfairly disadvantaged - the issue is that the % increase needed to bring things back to normal is in some cases huge.
  • Suppliers can still set their pre EPG day/night rate how they like as long as they are compliant with the price cap so they can easily get around this if they want
  • dealyboy
    dealyboy Posts: 1,674
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    edited 31 March 2023 at 10:42AM
    Sorry ... dumb question No. 2 ...

    Does this mean they are changing the break even point of 58:42 to 50:50 so that all E7 users will be worse off?

    Or is it that the 58:42 day:night will be retained but that the price difference between day and night tariffs will narrow? ... so that those on an E7 tariff with night usage below 42% will pay less (but still more than SVT) and those above 42% will pay more.

    ... or neither  :/
  • wrf12345
    wrf12345 Posts: 346
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    It is a pity the government did not conclude that having a low night rate is pointless if the day rate is more than the normal capped rate for - a long time fraud on consumers but just about what you expect from the energy companies.
  • I’ll be honest, I don’t quite understand the full implications of this change from the way it’s been described in the MSE article.

    I presume most/all suppliers have released their April rates by now so surely this isn’t an upcoming change but one we can already see the practical results of? And from what I gather, it sounds like all this would do is reduce suppliers abilities to offer the highly competitive off-peak rates we’d seen from the likes of EDF going down to mere pennies in some regions.

    Would appreciate if someone with a stronger understanding of how the EPG interacts with E7 could provide a bit more insight.
  • Swipe
    Swipe Posts: 4,980
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    Yep, the late submission of the article is a bit confusing considering the prices for 1st April have already been published.
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