Economy 7

CSI_Yorkshire

JSHarris said:

[Deleted User] said:

I'm not sure this was morally defensible behaviour , even if the OFGEM rules allowed it.

Business decisions are never fair on everybody. If you don’t like what is on offer then the answer lies in our own hands:  ditch and switch.

I agree, but the last year or so has made switching a great deal harder than it used to be.  I couldn't find a single price comparison site working when I was looking.  Trying to find out tariffs was a heck of a lot harder than it should have been.  Even using the "get a quote" feature from many suppliers either wasn't working or wouldn't provide tariff information.

I stuck at it for the best part of a day, but had the luxury of free time to do this, being retired.  Even then finding tariff information was a lot harder than it should have been.  Only one supplier made finding this information easy (Octopus), all the others hid it or only made it available on request.  Not fun having the ring around a dozen suppliers (with the inevitable call centre frustration) just to find out what their tariffs were and whether they were taking on new customers (many weren't at the time).

So what you actually mean is "comparison sites weren't available so I couldn't find the best deal for my circumstances".  That may well be true, but it doesn't mean that suppliers following the rules is "morally indefensible".

Did you also have complaints when the EPG first came in and off-peak rates for some people dropped massively?

JSHarris

CSI_Yorkshire said:

JSHarris said:

[Deleted User] said:

I'm not sure this was morally defensible behaviour , even if the OFGEM rules allowed it.

Business decisions are never fair on everybody. If you don’t like what is on offer then the answer lies in our own hands:  ditch and switch.

I agree, but the last year or so has made switching a great deal harder than it used to be.  I couldn't find a single price comparison site working when I was looking.  Trying to find out tariffs was a heck of a lot harder than it should have been.  Even using the "get a quote" feature from many suppliers either wasn't working or wouldn't provide tariff information.

I stuck at it for the best part of a day, but had the luxury of free time to do this, being retired.  Even then finding tariff information was a lot harder than it should have been.  Only one supplier made finding this information easy (Octopus), all the others hid it or only made it available on request.  Not fun having the ring around a dozen suppliers (with the inevitable call centre frustration) just to find out what their tariffs were and whether they were taking on new customers (many weren't at the time).

So what you actually mean is "comparison sites weren't available so I couldn't find the best deal for my circumstances".  That may well be true, but it doesn't mean that suppliers following the rules is "morally indefensible".

Did you also have complaints when the EPG first came in and off-peak rates for some people dropped massively?

I think we're at crossed purposes.  My concern at the time was based on my experience that many people who are vulnerable (at least around here) use E7 for storage heating and hot water.  I know this to be a fact, I've done many periodic inspections at their homes over the years.  Those people are least able to pay a 300% hike in their heating and hot water bills.  They are also very often the least able to navigate their way around the maze of suppliers to try and get a better deal, especially as most, if not all, the price comparison services were shut down.

That's what I meant when I referred to this being morally indefensible.  Suppliers know that a fair proportion of their E7/E10 customers are in this group - heck, they have even funded periodic inspections and safety checks for these same customers in the past.  It's entirely my personal view, and I don't for a moment expect everyone to agree with me, but it did seem callous for some suppliers to take advantage of a potentially vulnerable group of customers like this.

In my case I was lucky enough to have the time to spare, plus the determination to dig around to get accurate tariff information, that the jump in price had zero impact (I switched a day or two before the new tariff came into effect).  Others will be less fortunate, and I'm wholly opposed to any company or organisation exploiting those that fall into this category.

CSI_Yorkshire

That's just an argument for there being a social tariff, similar to the (relatively forgotten) ones available for broadband and phone lines.

It's not an argument for fixing the differential between peak and off-peak on E7, or the magnitude of change in either rate.

If there was seen to be a need to fix (or cap) the differential, this could easily be done through the existing cap designs and OFGEM have decided that it is not necessary.  Following the designs and opinions of the regulator is not exploitation.

JSHarris

CSI_Yorkshire said:

That's just an argument for there being a social tariff, similar to the (relatively forgotten) ones available for broadband and phone lines.

It's not an argument for fixing the differential between peak and off-peak on E7, or the magnitude of change in either rate.

If there was seen to be a need to fix (or cap) the differential, this could easily be done through the existing cap designs and OFGEM have decided that it is not necessary.  Following the designs and opinions of the regulator is not exploitation.

Not sure where you have got the idea that there should be any sort of fixed ratio between peak and off-peak; I've not posted anything to this effect.  The point about a need for social tariffs is a good one, but unless mandated by the government/OFGEM I doubt it would happen.

My principal point remains as stated.  Increasing the heating and hot water costs by over 300%, with three weeks notice, for vulnerable people seems morally indefensible to me.  I fully accept that there is nothing unlawful about exploiting the letter of OFGEMs rules.  It's purely the moral principle of this I find unacceptable, in the same way as I find tax avoidance by the wealthy morally indefensible. 

Others may well be of the view that everyone is fair game when it comes to making a profit.  They are free to hold that view.  I assume they have no concern for those that cannot afford to heat their homes or have hot water as a consequence of this maximising profit mentality.

CSI_Yorkshire

What level of increase in the off-peak rates would you consider acceptable?

JSHarris

CSI_Yorkshire said:

What level of increase in the off-peak rates would you consider acceptable?

Why not just increase the off-peak and peak rates by the same amount?  Or, better still (in terms of fairness) increase rates in direct proportion to the ratio of increases in wholesale prices. Other suppliers have been doing exactly this. 

As I mentioned initially, it was the way the peak rate was reduced significantly, whilst the off-peak rates was massively increased, in winter when people were relying on off-peak for heating and hot water, that I found offensive.

I can see no moral justification for it, from looking at wholesale prices.  In general the wholesale off-peak prices have risen by about  the same (actually very slightly less) than the wholesale peak prices.  I can't see any explanation (other than deliberate exploitation) for a supplier choosing to do as my old one did.

[Deleted User]

It's the working of the EPG mechanism that lead to the massive price hikes in off peak energy costs, not the Ofgem price cap, and that's down to the government not the energy suppliers. Applying the same flat rate discount to peak and off peak rate has a bigger % effect on the lower off peak rate, and removing it has the effect of a bigger increase. By way of an example, if you start with rates of night 20p and day 40p and apply a discount of 10p you get night 10p (a 50% discount) and day 30p (a 25% discount). Going the other way if you remove the 10p discount the night rate goes up from 10p to 20p (a 100% increase) and the day rate from 30p to 40p (a 33% discount). It's this effect that lead to the massive % increases you refer to.

The people that saw big increases (I was one of them seing a 250%ish increase in January) only saw the increase because they'd actually been paying considerably less over the winter as a result of the way the EPG mechanism works. Taking my example, I paid about 50% less in night rates in Oct 22 vs Apr 22, whereas day rate users paid about 33% more. So overall I won considerably, especially because I got the bargain basement prices in the winter months when prices were at their lowest.

It is true that if you strip out the effect of the EPG the ratio of night to change has increased in some cases, but not to anything near the extent that you might expect. In my case, for example, I've gone from night being 38% of day to night being 46% of day. This is with EDF who have consistently had lower night rates vs day rates than other suppliers in my area over the last few years and all they've done is align themselves with the market generally. The increase is easily explained by the increase in underlying costs - the reason that the combined day/night E7 rates set by Ofgem went up by more than the day rates must have been down to increases to the energy suppliers in buying night rate electricity for whatever reason.

I think you're closing statement is simplistic and somewhat naive. I personally find it quite insulting. I have a huge concern for those that can't afford heating, but my view it is the job of government to manage the distribution of wealth not private enterprise. I hope you will have the grace to reconsider your ill-chosen remarks.

EDIT I am referring to your comments in you last post but one

JSHarris

[Deleted User] said:

It's the working of the EPG mechanism that lead to the massive price hikes in off peak energy costs, not the Ofgem price cap, and that's down to the government not the energy suppliers. Applying the same flat rate discount to peak and off peak rate has a bigger % effect on the lower off peak rate, and removing it has the effect of a bigger increase. By way of an example, if you start with rates of night 20p and day 40p and apply a discount of 10p you get night 10p (a 50% discount) and day 30p (a 25% discount). Going the other way if you remove the 10p discount the night rate goes up from 10p to 20p (a 100% increase) and the day rate from 30p to 40p (a 33% discount). It's this effect that lead to the massive % increases you refer to.

The people that saw big increases (I was one of them seing a 250%ish increase in January) only saw the increase because they'd actually been paying considerably less over the winter as a result of the way the EPG mechanism works. Taking my example, I paid about 50% less in night rates in Oct 22 vs Apr 22, whereas day rate users paid about 33% more. So overall I won considerably, especially because I got the bargain basement prices in the winter months when prices were at their lowest.

It is true that if you strip out the effect of the EPG the ratio of night to change has increased in some cases, but not to anything near the extent that you might expect. In my case, for example, I've gone from night being 38% of day to night being 46% of day. This is with EDF who have consistently had lower night rates vs day rates than other suppliers in my area over the last few years and all they've done is align themselves with the market generally. The increase is easily explained by the increase in underlying costs - the reason that the combined day/night E7 rates set by Ofgem went up by more than the day rates must have been down to increases to the energy suppliers in buying night rate electricity for whatever reason.

I think you're closing statement is simplistic and somewhat naive. I personally find it quite insulting. I have a huge concern for those that can't afford heating, but my view it is the job of government to manage the distribution of wealth not private enterprise. I hope you will have the grace to reconsider your ill-chosen remarks.

If that's the case, then why is that this action was only taken by one supplier?

I spent the best part of a day looking around at other suppliers when this happened at towards the end of last year.  I didn't find a single one (other than the one we were with) that had reduced their peak rate price and hiked their off-peak rate price, let alone one that had done so to such a degree.

I'm not that fussed about what I pay, as our energy costs are so low that even big tariff changes don't have a significant impact (for example the combined total of the government grants and winter fuel payment increase last winter came to more than double our winter energy bill - to the direct benefit of our local food bank).

There is a valid argument that this particular supplier may have wanted to get rid of E7 customers, as several others have.  I have no idea if that motivated this pricing change or not.  If most of the suppliers seem to have been able to retain a peak to off-peak price differential of around 2:1 or thereabouts, why did this one supplier choose to set their winter 2022 peak to off-peak differential at 1.2:1?