Price cap, EPG and expensive fixed rate tariffs?

michaels

Not sure if this has been flagged but some who took expensive fixes may have stayed on them because they were receiving the per unit discount from the EPG taking them to the EPG level.

What is happening to the EPG now the price cap will come back into play?   Is it being retained and if so will it still be at 2.5k or will it revert to 3k (50% above the likely new price cap)?

People on fixes may be in for a nasty shock as everyone else's bills fall but theirs go up.  A lot of the immediately pre-crisis fixes had high early termination fees (£150 per fuel) so it is not as simple as simply ditching the fix.

Thoughts?

mmmmikey

Isn't that just the fix working exactly as it shoud be? A fix has never been a guaranteed maximum price, it's always just been an opportunity to lock in whatever the agreed price is for the duration of the fix. You pay for the certainty of knowing that whatever happens to energy prices you'll pay the same. If the price goes up, you'll pay less on the fix and if the price goes down you pay more. This is very widely understood and there are other threads running at the moment that discuss this very issue. At the time people chose to fix the market was particularly volatile so they stood to gain a lot if prices went up a lot but lose if prices went down. As it is, prices set look to go down and customers can decide if they still want the certainty of whatever price they agreed or whether they are going to be better off paying the exit fee they agreed to and either switch to a SVR or another fix. I don't see an issue - customers will get exactly what they paid for and there really is no difference in principle to the fixes these customers took on and any other fix, including those that are expected to start appearing now.

Chrysalis

Its an interesting and understandable question.

What I can say is only a few days ago I asked Octopus if agile would still have EPG subsidies post July, and it was a straight blunt no.  So it could be gov subsidises are dependent on if the intended target of the subsidies needs the help or not. (SVR)

Sorry if my answer doesnt provide any assurance, I think the best thing is to ask the supplier.

Ultimately a fixed deal is a gamble whilst it may seem to not be, market can go up or down, and government decisions are never more than a political promise.

bristolleedsfan

michaels said:

Not sure if this has been flagged but some who took expensive fixes may have stayed on them because they were receiving the per unit discount from the EPG taking them to the EPG level.

What is happening to the EPG now the price cap will come back into play?   Is it being retained and if so will it still be at 2.5k or will it revert to 3k (50% above the likely new price cap)?

EPG is increasing to £3000 from 1 July, being as price cap from 1 July will be less , EPG will sit in background until March 2024.

https://www.moneysavingexpert.com/utilities/energy-price-guarantee-need-to-knows/

Mstty

As I understand it (happy to be corrected)

Those on a fix will still have their prices reduced down to the notional £3000 price cap.

However in reality they really should consider leaving their fixes unless they are extremely risk adverse.

Of course this is not an high energy use time of year so if there is 3-6 months left and the fix has high exit fees it might be worth seeing it out.

mmmmikey

Certainly an interesting point for discussion. The whole question of how the EPG should work with fixes got quite heated and emotional when we went into it with lots of insults flying about. Hopefully we can have the discussion about what happens as we move away from the EPG in a more civilised way. So far so good 😃

Putting aside the EPG for a moment, how does the Ofgem price cap work for fixes? If you fixed at 35p/kWh but the Ofgem price cap sets the maximum at 30p/kWh how is that handled. Does anyone know?

brewerdave

mmmmikey said:

Certainly an interesting point for discussion. The whole question of how the EPG should work with fixes got quite heated and emotional when we went into it with lots of insults flying about. Hopefully we can have the discussion about what happens as we move away from the EPG in a more civilised way. So far so good 😃

Putting aside the EPG for a moment, how does the Ofgem price cap work for fixes? If you fixed at 35p/kWh but the Ofgem price cap sets the maximum at 30p/kWh how is that handled. Does anyone know?

As far as I'm aware, the price cap is ignored for fixes so the customer would pay 35p/kwh - as it was for those fortunate enough to fix well below the current cap a couple of years ago. In my case ,my fixed price (July 24) for gas is several p above the expected new price cap for July 23 so I'll probably swallow the exit fee as it should be covered by December by the lower prices . Fingers firmly crossed !!

michaels

bristolleedsfan said:

michaels said:

Not sure if this has been flagged but some who took expensive fixes may have stayed on them because they were receiving the per unit discount from the EPG taking them to the EPG level.

What is happening to the EPG now the price cap will come back into play?   Is it being retained and if so will it still be at 2.5k or will it revert to 3k (50% above the likely new price cap)?

EPG is increasing to £3000 from 1 July, being as price cap from 1 July will be less , EPG will sit in background until March 2024.

https://www.moneysavingexpert.com/utilities/energy-price-guarantee-need-to-knows/

Thanks, I thought the 3k EPG was still in play but there have been various pronouncements that it was ending. There will still be price shock for some who thought bills were due to fall and will be surprised to find their bill rising.

Some probably hung on to an expensive fix when the EPG came in and their was a brief window to avoid many early exit charges as it appeared to make no odds who will now be facing paying those exit charges after all.

Personally my electricity tariff still makes sense but my gas will become relatively expensive and with a high exit fee and it being a dual tariff I will need to do a lot of number crunching once new fixes come available.

bristolleedsfan

Mstty said:

As I understand it (happy to be corrected)

Those on a fix will still have their prices reduced down to the notional £3000 price cap.

Screenshot from MSE news that I posted together with link to article states the opposite.

bristolleedsfan

michaels said:

bristolleedsfan said:

michaels said:

Not sure if this has been flagged but some who took expensive fixes may have stayed on them because they were receiving the per unit discount from the EPG taking them to the EPG level.

What is happening to the EPG now the price cap will come back into play?   Is it being retained and if so will it still be at 2.5k or will it revert to 3k (50% above the likely new price cap)?

EPG is increasing to £3000 from 1 July, being as price cap from 1 July will be less , EPG will sit in background until March 2024.

https://www.moneysavingexpert.com/utilities/energy-price-guarantee-need-to-knows/

Thanks, I thought the 3k EPG was still in play but there have been various pronouncements that it was ending. 

EPG will sit in the background until March 24, in the event Price Cap soared again above EPG level EPG would then kick back in.

Mstty

bristolleedsfan said:

Mstty said:

As I understand it (happy to be corrected)

Those on a fix will still have their prices reduced down to the notional £3000 price cap.

Screenshot from MSE news that I posted together with link to article states the opposite.

Thanks I had missed that👍