Economy 7 rates v the energy price cap

Hi, Forum newbie here.
Hoping that some one can confirm if this is correct and what to do next.
I live in an electric only flat with an economy 7 contract with Octopus. The 2 old storage heaters in the bedrooms stopped working some time ago and so were replaced with modern electric panel heaters, which use day rate electricity. This leaves 2 older storage heaters in the living and kitchen areas and an immersion heater (which i don't use) on the economy7 meter.
I was suspicious of the economy7 meter readings so confirmed (by switching off the consumer unit) that the meter still increments usage when nothing is on. For this I've requested an engineer to confirm the malfunctioning meter.
Q is how to agree when this first started to fail. (as an example last august's bill was significant when there should also have been no usage) Im expecting some negotiation for a refund if the engineer can confirm the faulty meter. 
But the main questions is if the rates I'm being charged are correct and what i can do about it if they're not... Last year I was paying 33.33p/Kwh (day rate) and 13.87p/Kwh (night rate) when the unit price cap was 27.35p/Kwh. These figures have recently changed to 35.06p/Kwh (day rate) and 15.xxp/Kwh (night rate) while the price cap is 28.62p/Kwh.
The explanation from Octopus was
"As you have a cheaper night rate of 16p it averages out the day rate of 35p to be within the price cap yearly. We want customers on an economy 7 to always benefit from a lower night rate and this is how we are able to do so.
It is also how it keeps it fair for all of our customers. If you'd like to be swapped to a flat rate falling within the reported price cap please let me know. "

Is this correct and allowed? Is the price cap not the maximum that is allowed to be charged per unit? Surely its 'allowed' (&right) to charge less at night when demand is low and the wind is still generating? And how can they estimate the balance of usage to determine the average rate is correct?
I don't think that given my usage profile that the E7 rate is beneficial for me, but i cant see how it would ever be for anyone if this is allowed and legal.
Am i missing something? What should my approach be going forward, should i just change to the standard tariff and can anything be done about previous rates charged?
Any insight would be much appreciated.
Thanks
«1

Comments

  • la531983
    la531983 Posts: 1,672
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    edited 11 January at 11:12AM
    Yes the price cap is for traditional rates (one rate), they are doing nothing wrong. Were you expecting BOTH the cheaper night and more expensive day rates to be below the standard rate price cap?

    If you arent benefitting by being on an E7 tarriff (can you load shift to evening), move onto a normal one rate tariff.
  • Netexporter
    Netexporter Posts: 1,042
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    If you are using less than 60% of your electricity on the off-peak rate then you will probably be better off on the SVT.
  • la531983
    la531983 Posts: 1,672
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    edited 11 January at 11:13AM
    And no, nothing can be done about previous rates being charged, the procedure they were following was correct.

    Loads of people are better off on E7. People with storage heaters, people who can wash/tumble dry and/or cook in the night, people charging cars etc etc. 
  • Veteransaver
    Veteransaver Posts: 328
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    Unfortunately you can't have the same rate price cap rate in the day, and get cheaper over night electric. If you could then everyone would just be on the E7 tariff.
    It varies by tariff but unless you can use over about 50% of your total electric use in the E7 cheap period, it isn't normally worth having.
    Ie you'd really need storage heaters and or immersion heater usage overnight to make it worthwhile
  • MWT
    MWT Posts: 9,124
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    I was suspicious of the economy7 meter readings so confirmed (by switching off the consumer unit) that the meter still increments usage when nothing is on. For this I've requested an engineer to confirm the malfunctioning meter.
    Q is how to agree when this first started to fail. (as an example last august's bill was significant when there should also have been no usage) Im expecting some negotiation for a refund if the engineer can confirm the faulty meter. 

    Do you have one meter which has two readings, one for day and one for night, or two separate meters?
    Also, it isn't uncommon to have a separate smaller consumer unit for the heaters on the E7 night rate so did you make sure that everything was turned off when you did your test?

  • Scot_39
    Scot_39 Posts: 1,683
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    Firstly there are 2 electric caps - one for single rate and one for multirate - primarily e7 - so based on a cost split assumption by Ofgem 58% day 42% night (for e7 only though not other multirate tariffs)

    And so the average price on the multirate cap is  different from the single rate and the difference can vary significantly. 

    Last Jan many saw big rises in epg rates on e7, because the average  price difference shifted over 2p in many regions.

    Suppliers are then allowed to set peak and off peak rates to meet the total average over the year - despite the cap being quarterly. 

    Some may well use the nominal 42% - others will not - e.g. to get a competitive edge or to weight the figures seasonally - suiting those with different day night splits differently.

    So e7 deals despite Ofgem total cap are still and we're even during epg worth comparing and switching.  The classic example being when EDF night rates went sub 10p in a few regions under EPG discounting, the last of which just went in Eastern.

    And as always have to meet the total, a lower off peak rate at one supplier will mean it also has a higher peak rate.  A pivot or see saw around average. 
  • dunstonh
    dunstonh Posts: 115,695
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    "As you have a cheaper night rate of 16p it averages out the day rate of 35p to be within the price cap yearly. We want customers on an economy 7 to always benefit from a lower night rate and this is how we are able to do so.
    It is also how it keeps it fair for all of our customers. If you'd like to be swapped to a flat rate falling within the reported price cap please let me know. "

    Is this correct and allowed?

    It is impossible to have the price cap applied to E7 in the same way as single rate.   If you did then everybody in the country would move to E7.

    The price cap still applies but in a different way.   It is weighted with a ratio for off peak and peak being applied and that has to meet the price cap.

    Is the price cap not the maximum that is allowed to be charged per unit? 
    Not in the case of E7.     

    Think of a see saw and the price cap applies to the middle of the see saw.  Single rate is level, so the middle of the see saw is the same as both ends.  With E7, you effectively have one side of the see saw pushed down which causes the other side to be pushed up.  However, the middle of the see saw remains the same.  

    Surely its 'allowed' (&right) to charge less at night when demand is low and the wind is still generating? And how can they estimate the balance of usage to determine the average rate is correct?
    It is allowed, which is why E7 gets cheaper off peak rates.   The ratio calculations are set using defined calculations. 

    I don't think that given my usage profile that the E7 rate is beneficial for me, but i cant see how it would ever be for anyone if this is allowed and legal.
    I'm on E7 and I keep logging on a spreadsheet and have compared single rate to e7 for many years.    At my current 8p off peak rate, the annual cost on my usage is £2,724.  On single rate it would be £5,109.      We are around 79% off peak.

    Am i missing something? What should my approach be going forward, should i just change to the standard tariff and can anything be done about previous rates charged?
    Easy to work out.   You have the two registers.    Take two readings a year apart (Actual readings, not estimate) for both registers.   Multiply the off peak use by the off peak rate.  Do, the same with the peak use and peak rate.     Then compare the total of both registers with the single rate.

    The ratio where E7 beats single rate varies with suppliers.  So, we cannot say how much off peak you need to be better.  You need to work it out for yourself using your own figures.



    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.
  • Gerry1
    Gerry1 Posts: 9,765
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    I live in an electric only flat with an economy 7 contract with Octopus. The 2 old storage heaters in the bedrooms stopped working some time ago and so were replaced with modern electric panel heaters, which use day rate electricity. This leaves 2 older storage heaters in the living and kitchen areas and an immersion heater (which i don't use) on the economy7 meter.
    Old style NSHs aren't brilliant for bedrooms because they're probably too warm when charging up and you're asleep.  You've probably made the right decision but for the wrong reasons.  Often bedrooms stay warm enough during the day if you leave the doors open so you just use a fan heater or panel radiator for a few minutes when going to bed and getting up.
    However, don't be tempted to use panel heaters or those German ones filled with moonrock, fairy dust or snake oil.  They may look nice but will be cripplingly expensive to run.
    Old style NSHs are cheap and easy to repair.  Just follow the Storage Heater Sanity Test to detect any failed elements.
    You'll be charged a hefty fee if the meter is tested and found to be OK.  Start by doing the Meter Sanity Test, especially if the meter is not inside your flat.
    You're probably better off using the NSHs and immersion heater only on E7.  Just find two readings a year apart (actual, not estimated) and do the sums to compare single rate against E7.
    How do you heat your hot water?  Hope you don't have an instantaneous electric shower on peak rate: much cheaper to use the immersion heater on E7.
  • MWT said:
    I was suspicious of the economy7 meter readings so confirmed (by switching off the consumer unit) that the meter still increments usage when nothing is on. For this I've requested an engineer to confirm the malfunctioning meter.
    Q is how to agree when this first started to fail. (as an example last august's bill was significant when there should also have been no usage) Im expecting some negotiation for a refund if the engineer can confirm the faulty meter. 

    Do you have one meter which has two readings, one for day and one for night, or two separate meters?
    Also, it isn't uncommon to have a separate smaller consumer unit for the heaters on the E7 night rate so did you make sure that everything was turned off when you did your test?

    Thanks for this. I do have 2 separate consumer units and the e7 one was the one switched off. Seems from all the comments, that there's nothing amiss with the rates charged at least, its just that with my usage patterns its not worthwhile for me.
  • Gerry1 said:
    I live in an electric only flat with an economy 7 contract with Octopus. The 2 old storage heaters in the bedrooms stopped working some time ago and so were replaced with modern electric panel heaters, which use day rate electricity. This leaves 2 older storage heaters in the living and kitchen areas and an immersion heater (which i don't use) on the economy7 meter.
    Old style NSHs aren't brilliant for bedrooms because they're probably too warm when charging up and you're asleep.  You've probably made the right decision but for the wrong reasons.  Often bedrooms stay warm enough during the day if you leave the doors open so you just use a fan heater or panel radiator for a few minutes when going to bed and getting up.
    However, don't be tempted to use panel heaters or those German ones filled with moonrock, fairy dust or snake oil.  They may look nice but will be cripplingly expensive to run.
    Old style NSHs are cheap and easy to repair.  Just follow the Storage Heater Sanity Test to detect any failed elements.
    You'll be charged a hefty fee if the meter is tested and found to be OK.  Start by doing the Meter Sanity Test, especially if the meter is not inside your flat.
    You're probably better off using the NSHs and immersion heater only on E7.  Just find two readings a year apart (actual, not estimated) and do the sums to compare single rate against E7.
    How do you heat your hot water?  Hope you don't have an instantaneous electric shower on peak rate: much cheaper to use the immersion heater on E7.
    Thanks for this Gerry1. There was no mention of a charge for the engineer visit, but that hasnt been arranged as yet, just waiting for him to call and arrange a time. I'll check on that then. The meter is definitely ticking over, so my only unknown really is how, but there should be nothing between the meter and the consumer unit. Unfortunately i dont have a mixer shower, so the power for that is all on day rate :-(, obs not ideal, but probably not worth retrofitting either. Any other hot water needs are straight from the kettle!
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