Powergen/e-on Customers Check Your Price Rises

shaunt

Hi,
Just got my electric bill from E-ON. The first thing that was a surprise was that on 8th Feb my prices had gone up as yet 16th March still haven`t had a letter from them telling me that the prices were going up, so much for customer service.
My problem with them is that they state (info from this web site) that the electric prices were going up by 9.7%.Here are the figures below that i`ve just taken from the new bill and correct me if i`m wrong but its gone up more than 9.7%.
WE ARE ON ECOMY 7 DOMESTIC HEATWISE TARIFF AS WE LIVE OUT IN THE STICKS AND HAVEN`T GOT GAS.
DAY PRIMARY UNITS- OLD PRICE 18.28p NEW PRICE 25.41p UP 7.13p APPROX 39%.
NIGHT UNITS- OLD PRICE 04.24p NEW PRICE 04.39 UP 0.15p APPROX 3.75%
AFTERNOON UNITS- OP 04.39p NP04.92p UP 0.53p APPROX 12%
NIGHT/EVENING- ALL THE SAME AS AFTERNOON UNITES
STANDING CHARGE- OP 06.92 NP 07.76 UP 0.84p APPROX 12%

So if you add up all the % rises(78.75%) and divide that by the amount of readings (5) you get the mean average which works out to 15.75% increase yet it states the price rise should be 9.7%.
So can someone please tell me what the hell is going on or does my calculator not work properly.
IS THERE ANY CHANCE THAT THE GOD OF THE MONEY SAVING WEB SITE COULD POS LOOK INTO THIS NOT ONLY FOR ME BUT ALL THE OTHER EON CUSTOMERS.
Speak soon
shaunt

Cardew

Firstly all companies have several weeks after they have increased prices to formally notify you.

Don't forget when you get that notification, if you inform E-ON you are leaving them, then your prices will revert to the pre-increase price until you leave; so late notification works against the company.

Secondly your calculator might work correctly, but your maths is incorrect!

You simply cannot add the percentage increases together like that and divide by 5.

To calculate any increase you need to know how much you spend on each category as well as the percentage price increase on each category.

To take an example.

If the price you pay for apples goes up by 30%, the price of pears by 10% and oranges by 2%, using your method you would add the percentages together(42%) and divide by 3 and say the cost of the fruit you buy had gone up by 14%.(the mean average was 14% to use your terminology)

Well that calculation would only be correct if apples, pears, and oranges cost exactly the same price, and you bought exactly the same the same amount of each fruit.

However if apples did cost 10p, and you bought 10 a year, your bill would have been £1 a year.

Pears did cost cost 20p and you bought 20 a year, your bill would have been £4 a year

Oranges cost 40P and you bought 100 a year so your bill would be £40 a year.

Using your method the total cost would be £45 and the increase at 14% would mean that you would pay an extra £6.30p

In fact on the total cost of £45 you would pay only £1.50p extra which is just 3.3% extra not 14%

The point being if the major part of your electricity expenditure was on night units(that only rose 3.75%) your total rise would be way under 9.7%

shaunt

Hi Cardew,
Thanks for the response and from the way it reads you seem to have more of an insight into the way electric firms works.
A couple of things stood out in your reply.

>>To calculate any increase you need to know how much you spend on each category as well as the percentage price increase on each category.

From what you`ve said above am i right in thinking that they use past bills to calculate what my bill goes up? If so thats like saying when you go to fill up for petrol if driver A drives 20k a year he has to pay more for his petrol that driver B who does 10k a year.Or am i barking totally up the wrong tree.

When someone tells me my electric is going up by 9.7% i expect it to go up by 9.7% and why should i need to know how much i spend on each category?
Or do electric companies have their own ways of working things out that they don`t want the consumer to know.
They haven`t given me abreakdown of price increase for each category but i think i`ll contact them and ask the question.
Regards
shaun

Cardew

shaunt,

You have misunderstood this statement:

To calculate any increase you need to know how much you spend on each category as well as the percentage price increase on each category

You worked out that your increase was 15.75%.

You came to that result by adding the percentage rises for 5 items(primary/night/standing order etc) in your bill and dividing by 5.

You simply cant do that.

As I tried to demonstrate with my apples/pears analogy that simply doesn't work.

Lets put it another way. You spend £1 a week on newspapers, £1 on sweets and £50 on cigars. so £52 in total.

Your papers go up by 100% to £2, Your sweets by 100% to £2 and your cigars by 10% to £55. so a total of £59

The way you calculated your rise in post #1 was, 100% + 100% + 10% = 210% dividide that by 3 so your rise was 70%.

Well of course your costs went up from £52 to £59 so your increase was 13% not 70%.

When companies quote 9.7% as in your case that is the average user.

Using your figures:(and using some silly examples)

If you used no electricity in a quarter before the rise, and no electricity after the rise(the house was empty) your bill would rise by 12% which is what the standing charge increased.

If you only used some primary units which went up 39% your increase, together with the Standing Charge increase, would be huge over 20%

However if you used huge amounts of night electricity which only went up 3.75% your overall increase would be well under the 9.75% E-ON said prices went up on average.

So yes, you and I could be customers on the same E-ON tariff and I could have an overall increase of way under 9.7%(because most of my expenditure was on night units) and you could have an increase of way over 9.7%.

However across all of their customers the average increase was 9.7%. So if their annual income was, say, £100million it will now be £109.7million.

shaunt

Thanks for getting back to me.So basically when they say their prices have gone up by 9.7% thats a lie it only applies to certain customers and all the rest they make it up as they go along. When my boss gives me a say a 5% pay rise i expect to get 5% not some figure hes worked out by throwing darts at a dart board.
I contacted e-on to ask them how they got the price rise and this is the response i got in a letter:
Quote:
WHILST I APPRECIATE YOUR CONCERNS I WISH TO ADVISE YOU THAT AS A COMPANY WE DO NOT NEED TO JUSTIFY OUR PRICES OR PRICING STRUCTURE.

So when you read that it really fills you with confidence

Cardew

shaunt wrote: »

Thanks for getting back to me.So basically when they say their prices have gone up by 9.7% thats a lie it only applies to certain customers and all the rest they make it up as they go along. When my boss gives me a say a 5% pay rise i expect to get 5% not some figure hes worked out by throwing darts at a dart board.
I contacted e-on to ask them how they got the price rise and this is the response i got in a letter:
Quote:
WHILST I APPRECIATE YOUR CONCERNS I WISH TO ADVISE YOU THAT AS A COMPANY WE DO NOT NEED TO JUSTIFY OUR PRICES OR PRICING STRUCTURE.

So when you read that it really fills you with confidence

Let us take the situation where your boss said you will get a 5% pay rise on your basic pay, and your overtime pay will increase by 95%.

If you work 1 hour a week overtime, would you expect your overall pay to go up by 50%(5% + 95% divided by 2 = 50%)

That is exactly how you worked out your 15.75% increase.

DGJsaver

The effort that Cardew has put into this thread deserves some `thanks`

Cheers Cardew

As ever:beer: