Energy Price Cap - OFGEM reduced average usage from 1 January 2024

999pez

In the latest MSE weekly email we are told that the Energy Price Cap has gone up to £1928 for average usage. I can't find any mention on MSE but from 1 January 2024, OFGEM has reduced the 'average usage' used for the calculations from 12000KWH to 11500KWH for gas and from 2900KWH to 2700KWH for electric. This is a reduction of nearly 5%. Without this artificial usage reduction the actual monetary increase in the CAP would be more. I am surprised this hasn't been publicised by MSE as it seems to be a way of hiding the larger increase.

MultiFuelBurner

It's happened with my crisps as well 150g down to 140g and don't get me started on the size of a boost bar........

Edited joking of course it's not a new thing for this price cap as explained below

QrizB

999pez said:

In the latest MSE weekly email we are told that the Energy Price Cap has gone up to £1928 for average usage. I can't find any mention on MSE but from 1 January 2024, OFGEM has reduced the 'average usage' used for the calculations from 12000KWH to 11500KWH for gas and from 2900KWH to 2700KWH for electric. This is a reduction of nearly 5%. Without this artificial usage reduction the actual monetary increase in the CAP would be more. I am surprised this hasn't been publicised by MSE as it seems to be a way of hiding the larger increase.

The old cap was £1834, the new cap is £1928, an increase of £94. both numbers were calculated using the 2023 TDCVs of 2700kWh of electricity, 11500kWh of gas. That's a 5% increase.

You can read it from the horse's mouth here: https://www.ofgem.gov.uk/sites/default/files/2023-11/Default Tariff Cap Letter for 1 January 2024.pdf

The TDCVs used for the cap changed back in October; see: https://www.ofgem.gov.uk/sites/default/files/2023-10/Energy Price Cap Letter for 1 October 2023 (new TDCV) (1).pdf

If the cap had been calculated using the old TDCVs, it would still have been a 5% increase.

999pez

The old cap was £1834, the new cap is £1928, an increase of £94. both numbers were calculated using the 2023 TDCVs of 2700kWh of electricity, 11500kWh of gas. That's a 5% increase.

You can read it from the horse's mouth here: https://www.ofgem.gov.uk/sites/default/files/2023-11/Default Tariff Cap Letter for 1 January 2024.pdf

The TDCVs used for the cap changed back in October; see: https://www.ofgem.gov.uk/sites/default/files/2023-10/Energy Price Cap Letter for 1 October 2023 (new TDCV) (1).pdf

If the cap had been calculated using the old TDCVs, it would still have been a 5% increase.

I didn't realise the OFGEM reduction in quoted average usage was effective from October 2023 so thanks for that correction. However, it will still have the effect of showing an artificially lower 'average' figure than otherwise would have been the case prior to October 2023. I do of course appreciate that how much you end up paying is entirely down to your own usage. Sadly I use as little as possible so my usage hasn't reduced despite what OFGEM say!

MattMattMattUK

999pez said:

The old cap was £1834, the new cap is £1928, an increase of £94. both numbers were calculated using the 2023 TDCVs of 2700kWh of electricity, 11500kWh of gas. That's a 5% increase.

You can read it from the horse's mouth here: https://www.ofgem.gov.uk/sites/default/files/2023-11/Default Tariff Cap Letter for 1 January 2024.pdf

The TDCVs used for the cap changed back in October; see: https://www.ofgem.gov.uk/sites/default/files/2023-10/Energy Price Cap Letter for 1 October 2023 (new TDCV) (1).pdf

If the cap had been calculated using the old TDCVs, it would still have been a 5% increase.

I didn't realise the OFGEM reduction in quoted average usage was effective from October 2023 so thanks for that correction. However, it will still have the effect of showing an artificially lower 'average' figure than otherwise would have been the case prior to October 2023. I do of course appreciate that how much you end up paying is entirely down to your own usage. Sadly I use as little as possible so my usage hasn't reduced despite what OFGEM say!

The "average" figure is almost worthless as a metric and should really be dropped, although the government and Ofgem deemed the general public too stupid to be able to properly understand unit rates and standing charges, hence the mythical average. 

FreeBear

MattMattMattUK said:

999pez said:

The old cap was £1834, the new cap is £1928, an increase of £94. both numbers were calculated using the 2023 TDCVs of 2700kWh of electricity, 11500kWh of gas. That's a 5% increase.

You can read it from the horse's mouth here: https://www.ofgem.gov.uk/sites/default/files/2023-11/Default Tariff Cap Letter for 1 January 2024.pdf

The TDCVs used for the cap changed back in October; see: https://www.ofgem.gov.uk/sites/default/files/2023-10/Energy Price Cap Letter for 1 October 2023 (new TDCV) (1).pdf

If the cap had been calculated using the old TDCVs, it would still have been a 5% increase.

I didn't realise the OFGEM reduction in quoted average usage was effective from October 2023 so thanks for that correction. However, it will still have the effect of showing an artificially lower 'average' figure than otherwise would have been the case prior to October 2023. I do of course appreciate that how much you end up paying is entirely down to your own usage. Sadly I use as little as possible so my usage hasn't reduced despite what OFGEM say!

The "average" figure is almost worthless as a metric and should really be dropped, although the government and Ofgem deemed the general public too stupid to be able to properly understand unit rates and standing charges, hence the mythical average. 

Based on some of the one post wonders that pop up complaining about their bills, I think the government/OFGEM may have underestimated public stupidity at times.

My annual gas consumption is down on last years figures, but electricity is up a little. Last month's bill was still some 40% higher than the previous month. Might be because the heating is firing up a lot more to keep Miss A warm and she is using a lot more hot water than me.

wild666

This must be the average of the two totals as electric is 7.4% and the gas is just under 4.3% which would be nearer a 6% drop than 5% on the average usage figures

QrizB

wild666 said:

This must be the average of the two totals as electric is 7.4% and the gas is just under 4.3% which would be nearer a 6% drop than 5% on the average usage figures

I don't know where you are getting those numbers from, and it doesn't really matter. £1928 is a 5.13% increase on £1834.

Scot_39

999pez said:

The old cap was £1834, the new cap is £1928, an increase of £94. both numbers were calculated using the 2023 TDCVs of 2700kWh of electricity, 11500kWh of gas. That's a 5% increase.

You can read it from the horse's mouth here: https://www.ofgem.gov.uk/sites/default/files/2023-11/Default Tariff Cap Letter for 1 January 2024.pdf

The TDCVs used for the cap changed back in October; see: https://www.ofgem.gov.uk/sites/default/files/2023-10/Energy Price Cap Letter for 1 October 2023 (new TDCV) (1).pdf

If the cap had been calculated using the old TDCVs, it would still have been a 5% increase.

I didn't realise the OFGEM reduction in quoted average usage was effective from October 2023 so thanks for that correction. However, it will still have the effect of showing an artificially lower 'average' figure than otherwise would have been the case prior to October 2023. I do of course appreciate that how much you end up paying is entirely down to your own usage. Sadly I use as little as possible so my usage hasn't reduced despite what OFGEM say!

That the two cap levels - before and after change are no longer directly comparible is true.

Why forecasters like Cornwall Insights were producing two sets of tables during transition period at old and new TDCVs to help those interested in detail.

There seemed real confusion in media when the new TDCV would apply - I definitely remember some articles saying it was going to be delayed from Oct. 

In reality I didn't care - only the unit and sc rates matter to me as I don't match / consume the headline duel fuel tdcv anyway.


But the reality is the new cap is according to Ofgem based on more up to date household consumption data than old - but iirc ignores at least one year due to Covid's disruption.

So perhaps a fairer way to look at - is that the old cap figure was "artificially high".



And all that ignores the fact it isn't just one cap.

Ofgem produces 3 caps in tables for suppliers - not for consumers (it tried to produce a consumer friendlier version - but got the initial version quite wrong) - gas, single rate electric and multi register electric - for all 14 main DNO supply regions and 3 payment methods.
For both SC and total cap for energy class and a set number of units - that doesn't match current or in SR electric case even the old duel fuel mid size tdcv anyway.

(They also have 3 tdcv levels for duel fuel and 3 for all electric iirc more accurately profile class 2 multiregister metered homes)

That's 252 cap numbers - not one - of which only 2 or 4 (for those with mains gas) are relevant to any one house supply.

Some press articles gave the 3 payment method averages, some even deemed to give electric multiregister cap a mention.

Few if any pointed out the scale of regional differences.



So I'd rather they just got people used to thinking of it as it is a per kWh / standing charge cap than an otherwise largely meaningless single headline or 3 or 4 notional averages in better articles.

It isn't as above fixed by region or payment method either.

Theres very big discrepencies - c60% difference on electric SC for instance - from London c£134 ex vat to N Wales and Mersey c£216.

The most often quoted figure is duel fuel.

Millions have no mains gas.

The duel rate electric cap - on total - so weighted average peak off peak price (which vary from supplier to supplier) isn't the exact same SC and kWh rate !!!!!! by pennies quarterly at times around the single rate electric cap.


But for those wanting an easy number - media and politicians in the EPG era - dumbing down seems to be the default headline /  soundbite approach.

The problem is then with the change in TDCV being nearly as of Oct or now as of Jan as significant circa latest Jan price changes - really risks obscuring or adding to the simple message confusion.

debitcardmayhem

Does anyone know, indeed care if the tdcv takes into account that this year has 366 days👁️

QrizB

debitcardmayhem said:

Does anyone know, indeed care if the tdcv takes into account that this year has 366 days👁️

No and no, respectively   0.27% of £1928 is £5.28, give or take.