Unit rate above price cap (again)

voidcoder

I know, I know. Same old question asked multiple times on forums here. Please don't hit hard. I still can't find figure the answer. Most answers come down to a) unit rates being regional hence the difference and b) suppliers not updating their websites fast enough so tariffs are out of sync with reality. None of which I think apply here.

So I'm paying by direct debit. My 2 years fixed electricity only contract with Octopus Energy just expired. Octopus automatically moved me to "Flexible Octopus" with 38.63p/kWh and 42.11p standing charge. The new rate took effect immediately as you can see how much you are charged daily on the smart meter.

My understanding "Flexible Octopus" is the so called "Standard" tariff which is covered by EPC, not?

Which brings up the actual question at hand: according to MSE article here: What is the Energy Price Cap? <links not allowed>, the current 1 July - 30 September 2023 electricity price cap for my region is 30.72p/kWh and standing charge is 43.66p.

So how come Octopus can charge 38.63p/kWh which is 10p above the price cap for the current period for my region?

Can someone please explain? Tried googling around and looking on the forum here and seems can't seems to find a definitive answer.

Thanks

QrizB

Welcome to the forum.

I suspect that you have an Economy 7 supply with two separate rates; a higher one in the daytime and a lower one at night.

The commonly-quoted cap is for single-rate electricity. Dual-rate tariffs have a different cap based on the weighted average of the two rates.

la531983

Page 7 here 

https://www.sustainabilityfirst.org.uk/images/Economy_7_and_the_price_cap_final_120123_PWP.pdf

This related to the cap back in Jan 2023 but gives you an idea of how it works. 

dunstonh

So how come Octopus can charge 38.63p/kWh which is 10p above the price cap for the current period for my region?

The price cap is shown on single rate tariffs.     it doesnt work the same way for multi-rate tariffs.
If you have a multi-rate tariff, then the price cap exists but the calculation is different to reflect the fact that there are two (or more rates).     The most common multi-rate tariff is economy 7.   

Think of the price cap as a see saw. 

• Single rate tariffs are when the see-saw is horizontal.  i.e. the same height all the way across =  the price cap the same.
• Economy 7 sees a lower off peak rate and a higher peak rate.    That is like pushing down on one side of the seesaw to get the lower rate but that pushes up the other side.   The balancing bit in the middle is the price cap.   So, the more you push down on one side, the more it pushes up on the other but the balancing calculation cannot exceed the price cap.   
• So, the peak rate is allowed to exceed the single rate price cap but on a calculation that takes into account the off peak rate to give you an average that equates to the price cap.
  

If the peak rate couldn't exceed the single rate price cap then everybody would just move to Economy 7 which would put the off-peak rate up and reduce the benefits of the Economy 7 tariff.    

voidcoder

Oh right. So it is the Economy 7 thing then! Does that mean I can go back to Octopus and ask them to move me to non - Economy 7 "Flexible Octopus" to benefit from lower EPC cap?

Thanks

la531983

voidcoder said:

Oh right. So it is the Economy 7 thing then! Does that mean I can go back to Octopus and ask them to move me to non - Economy 7 "Flexible Octopus" to benefit from lower EPC cap?

Thanks

I think you are slightly missing the point tbf, your rates ARE capped but in a different way due to the split rate, which may benefit you depending on how much you use overnight. The point of being on Economy 7 is that you run things overnight to benefit from the cheaper night rate. Are you actually doing this?  
Post your usage on each rate and someone on here can advise if you would be better off moving to a single rate tariff or not. 

We are assuming you are on Economy 7 here, your bill likely has two prices, guessing the night rate is around 22p or in that ballpark.

Scot_39

Check your tariff meter type, then prices against the tables in the post at

https://octopus.energy/blog/energy-price-cap-july-2023/


Looks like you may have an E7 meter and a dual rate tariff has been applied.

Your numbers match Eastern region E7 peak rates for DD payment method.

It also has an off peak rate of 16.2p and their weighted average 29.2p which I think they use 42% night for - but not sure on that.

Which is below the 30.72p SR price - but not by much.

But I use 75% off peak and others on e7 post here they use as much as 90%+  annually.  Which makes a big difference to average.

Now you may have been billed single rate at your request in the past, but dont remember any complaints here about Octopus switching people automatically back to dual rate at end of fix.

So check your old bills for both peak and off peak readings and rates.

Do you ever manually take readings - do you take 1 or 2 ?


And a smart meter IHD can only cope with one rate - so shows the current rate only - so you might need to look say between 1 am and 8am to see the night rate.  Or depending on meter model - cycle through the charging submenus - via buttons on actual meter.


So first confirm you are or are not on E7.

Then check if E7 is the right tariff for your energy use mix peak vs off peak.

Those with electric storage heating, or in many cases those with solar PV and especially with batteries or evs to charge, find e7 works for them.

I am sure if you want SR Octopus will offer it, but if you are using enough economy 7 off peak rated annually e.g. for electric heating and so use more than nominally around c42% off peak - its normally best to be on e7.

voidcoder

Yes, I'm using Economy 7. Not going to switch to non - Economy 7 until I do all the maths. For now only trying to figure why I'm above the EPC and what's needed to get back to EPC rate. It well may be at 10p/kWh difference! I can do my calc now that I know the options. 

As to "why" - the Sustainability First article sums it all up nicely. Thanks la531983! 

But this doesn’t provide fixed prices for Economy 7 customers if the Ofgem price cap for Economy 7 goes up more than single rate (as in January 2023)
• And some suppliers took the opportunity to significantly change day / night differentials at the same time 


Anyways I have my answer now. I'm long time reader and this was my first ever question. TBH wasn't expecting such a friendly response.

Many thanks everyone!

Scot_39

You are on EPC rates.

Just not the same EPC table rates.

The average price per unit for E7 users changes every quarter as does SR - but not by the same amount.  The price rise for many on E7 in Jan was because the e7 vs sr difference in average price closed by over 2p in many regions.  Its moved back nearly a penny in Apr here, not checked July.

In fact Octopus used to discount the SC a couple of percent and give capped unit rates.  And looking at edf tables still do (edf e7 SC is 43.76p in Eastern dd)

However their is a common misconception that the Ofgem cap which does have an inherent assumed 42 % split in their cap calculation then means every supplier under that cap should charges the same peak versus off peak rates.

It just doesn't work that way - as posters here often describe it - a see saw balance comes into play - a lower off peak rate balanced by a higher peak or vice versa.

If you are Eastern and a very heavy off peak user - you could for instance be better off with EDF - as they continue to offer a sub 10p off peak rate - but the see saw balance puts their day rate at over 50p 44p (oops the 50.6p was for the Apr to Jun period - I looked at wrong copy of their old table) to balance the total - c13p 7p more than yours. 

But its very much an anomaly with that one supplier in that one region.

And as one poster who benefits has said - it has to be a good deal - to put up with edf service and billing problems - which he himself has encountered.  If want to see edf rates for instance 

https://www.edfenergy.com/for-home/energy-price-guarantee

There a couple of heavy off peak users here who love the 8.6p - but they I guess use very very little at the 50.6 44p. 

And a marginal off peak user would be safer on your 16 vs 38p split - especially in summer in many cases.

spot1034

voidcoder said:

Yes, I'm using Economy 7. Not going to switch to non - Economy 7 until I do all the maths. For now only trying to figure why I'm above the EPC and what's needed to get back to EPC rate. It well may be at 10p/kWh difference! I can do my calc now that I know the options. 

As to "why" - the Sustainability First article sums it all up nicely. Thanks la531983! 

But this doesn’t provide fixed prices for Economy 7 customers if the Ofgem price cap for Economy 7 goes up more than single rate (as in January 2023)
• And some suppliers took the opportunity to significantly change day / night differentials at the same time 


Anyways I have my answer now. I'm long time reader and this was my first ever question. TBH wasn't expecting such a friendly response.

Many thanks everyone!

What you should do is take the number of units you have used at the day rate and multiply by the rate charged, then do the same for the night units (actually your bill will give you this information) and then just add the two amounts charged together, add the units together, then divide the total charged by the total number of units, and if the result is higher than the single rate for the tariff, you should consider changing to the single rate. Of-course your usage might vary according to what time of year it is so you need to take account of that, and the standing charge might be greater but in fact it's quite likely to be only a few pence per year in which case it's not worth worrying about.