Is it possible to “Crystal Ball” The Price Cap?

shipontherocks

For those who have been following this space for a while and have developed an intuition for the numbers, could you please help me make this choice?

Octopus’s Snug Octopus(E7 tariff) currently offers:

Night Rate: 9p

Day Rate: 31.27p

Standing Charge: 44.78p

These prices will surely change every 3 months for the next 12 months.

On the other hand, EDF can fix the prices for the next year:

Night Rate: 14.02p

Day Rate: 31.85p

Standing Charge: 45.73p

Based on what we know, to quote MSE:

After October's rise, most analysts are now predicting the Price Cap will come down slightly in January (down 3%-ish), then rise again in April (up 5%-ish).

Is it possible to estimate how Snug Octupus prices will change based on how prices usually follow the Price Cap? 

If Octopus' Night Rate stays under 14p, I think I’m better off switching to it.

Thanks and sorry for giving anyone a headache just by having to look at all these numbers.

ZiggyTheBadger

I have been looking at available fixes recently, at the end of out previous fixed period. The Octopus Snug is intended for storage heaters. If you use a good portion of your electricity for that, the Octopus Snug looks like a good deal. It's not what I looked at, because we use gas heating, but the principles are the same when you're comparing any fixed tariff with a variable one.

You could fix your overnight use at 14p per kWh with EDF for the next year

If the Octopus Snug does closely follow the cap, then it will increase the announced 2% in October - that's the 9p plus 2% of the 9p, in other words the October price will be 102% of the July price, so 9 times 1.02 or 9.18p in October.

A January 2026 fall of 3% would be 97% of the October rate, so 9.18 x 0.97 or 8.90p 

An April 2026 rise of 5% would be 105% of the January rate, so 8.90 x 1.05 or 9.35p

July 2026, who knows?

As a table, I would expect something like below.

July(25)	Oct(25)	Jan(26)	April(26)
9.00p	9.18p	8.90p	9.35p

One caution is that forecasts vary, there's a summary on MSE below, but none of those forecasts are big changes, and none would result in a rise to an overnight rate over 14p per kWh within the next 3 quarters. Most households would use most energy to heat in December to March, so the tariff period that matters most is the (estimated) lower 8.9p in January. 

https://www.moneysavingexpert.com/utilities/energy-price-cap-prediction/

Unless you need the absolute certainly of a fix, for whatever reason, the Octopus Snug looks the cheaper deal based on the price cap estimates for a storage type electrically heated household. The reality will depend on unknown factors. Things like demand in a colder than average winter, or how wars will develop and so on will affect the actual tariff, but as they will all variable tariffs. As a variable rate, Snug doesn't come with any penalty for switching, although the fixed offers will be different in 6 months time. 

Scot_39

You need to be wary of what some of those predictions include and do not include.

Some are far more linked to just tracking wholesale prices and exclude other factors - as they often come out of the blue - such as when Ofgem - like the extra £15 on net zero balancing costs added last week for Q4 - or Govt tax to bill social policy - like the £17 change to support the extension of WHD - kick in on other components of the bill.

So in past Cornwall insights have warned about not forecasting based on everything on our bills - and they again under predicted the rise this time - based on their final Q4 prediction just 1 week before the official cap announced.

And appear to be less keen to show the next 3 quarters predictions than they used to be

Many of the suppliers often publish their own cap forecasts - as well as non suppliers like CI style groups - they are all - even for the Jan quarter - to some extent - just crystal ball gazing.

By the way Snug Octopus is not linked to cap in same way as say E7 - so whereas E7 SVT peak and off peak rates and SC have and likely will change (my E10 certainly have) - that 9p night rate - the day rate sorry cannot remember - at least on Snug hasn't changed AFAIK for a while - it was 9p during the pre-launch phase in Feb 25 - when I started a thread on it - and so may not in Oct etc.

https://forums.moneysavingexpert.com/discussion/6569093/snug-octopus-new-tariff-for-older-meter-alcs-nsh-inc-1-hr-afternoon-winter-boost

So updating from the figures in that post

Feb prelaunch

a night rate of 9p/kWh.  There flexible e7 night rate 13.1p - 4.1p more = a big difference

a day rate of just 26.58p  - vs 23.77p current Ofgem SR vs current e7 29.5p peak.

And 54.57p SC

Today

a night rate of 9p/kWh.  There flexible e7 night rate 13.9p - 4.9p more = a big difference

a day rate of just 29.56p  - vs 24.26p current Ofgem SR vs current e7 31.24p peak.

And 45.32p SC

So it looks like if anything not only is the day rate going up potentially Ofgem shuffling charges between SC and and unit rates - with SC down by c9.2p - but possibly by more than e7 to hold the 9p night rate - as Snug day up c3p and E7 day up c1.7p, but the night also up c0.8p.  If that is I got both sets of figures right.

If I could hold my current use mix - c75% off peak on Snug that I get on E10 (far from guaranteed) the 9p off peak freeze and the reduced SC would be more important than the day.

shipontherocks

ZiggyTheBadger and Scot_39

Thank you both for your replies.

ZiggyTheBadger, that’s the kind of analysis I was hoping for.   I do use Storage Heaters, so it makes Snug Octopus look a better choice.

Scot_39, that’s the kind of analysis I was worried about.   Those wild Snug Octopus Standing Charge fluctuations give me pause.

Still, based on my energy use, assuming Snug Octopus’s Night Rate stays below 10p, its Day Rate & Standing Charge would have to increase to above 35p and 55p, respectively, for the EDF fixed tariff to come out a winner.

If I’m reading what you are both saying correctly, I think it’s worth betting that for the next year Snug Octopus will stay below those numbers?

Thanks again.

Scot_39

Those SC variations are not unique to Snug.

My own multirate electric SC decreased over 10p between Jan and Jul caps.