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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To not understand ofgem price cap

43 replies

Kanfuzed123 · 07/03/2022 17:36

Right it’s not exactly and aibu but I’m posting for traffic as I don’t know what to do about my energy bills.

Currently on the variable tariff with octopus, we can lock into a fix for£190 a month, is this a good deal? Would you take it or chance it?

Could someone explain the ofgem price cap to me? I don’t understand how it’s a price cap when suppliers are going to be charging more even in light of the price cap increase

OP posts:
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8
dementedpixie · 07/03/2022 18:15

You need to look at the price per kWh that octopus are offering and compare it to the price cap price per kWh. Price cap only applies to non fixed rates ie. The standard variable rate tariff.

I will show you my offering from Octopus which I am declining for the moment. I have put the average price cap rates too for comparison

To not understand ofgem price cap
To not understand ofgem price cap
Singlebutmarried · 07/03/2022 18:41

@dementedpixie

You need to look at the price per kWh that octopus are offering and compare it to the price cap price per kWh. Price cap only applies to non fixed rates ie. The standard variable rate tariff.

I will show you my offering from Octopus which I am declining for the moment. I have put the average price cap rates too for comparison

I’ve fixed at this tariff

Elec is 23% more than Svr and gas 28%more.

But as the rate is due to increase again in October I’m hedging my bets that I’ll make the difference back between oct 22 and apr 23.

It’s all a bit of a gamble.

dementedpixie · 07/03/2022 18:52

My offerings are 30% (electricity) and 38% (gas) higher than the new price cap so I'll stay on the cap until October brings more bad news

Original poster
Kanfuzed123 · 07/03/2022 19:12

But I don’t understand what a price cap is if companies can go above it? That’s probably really stupid of me but I don’t get it

OP posts:
Singlebutmarried · 07/03/2022 19:15

@Kanfuzed123

But I don’t understand what a price cap is if companies can go above it? That’s probably really stupid of me but I don’t get it
The price cap is what the companies standard variable rate cannot exceed.

They can do whatever they want with thurs fixed rates.

Singlebutmarried · 07/03/2022 19:16

**their

Meredusoleil · 07/03/2022 19:25

How can they do whatever they want with their fixed rates?!?

Surely, when you take our a fixed rate, say for 12 or 24 months, they can't then touch that price tariff for the duration of that period?

I'm also with Octopus. My fixed was due to expire back in December, so way before that, like in August, I asked to renew with another fixed rate as had heard the prices would be going up. So that's what I did.

What I don't understand though, is my monthly DD has already had to be increased compared to last year AND despite that, I'm still in overall debit as the it's been so bloody cold, the heating is on a lot even though it's supposed to be nearly Spring ffs!

Can someone explain how the works to me please? When I asked Octopus about it they said I had very much done the right thing to protect myself from further price hikes in the future. But now I'm not so sure 🧐

WonderWomansBoobs · 07/03/2022 19:27

This is what Scottish power is offering me, but the electric standing charge and gas unit price (I think that's the right way round) are higher than the price cap?

To not understand ofgem price cap
Hugasauras · 07/03/2022 19:29

Fixed rates are fixed for their duration, but energy companies set that initial fixed rate to whatever they want. Your direct debit is not fixed as it still depends on usage. It's just the unit rates that are fixed.

If you are on a fixed rate, your unit rate will not change for the duration of the fix but your direct debit may if you use more energy than was estimated.

marqueses · 07/03/2022 19:32

@Kanfuzed123

But I don’t understand what a price cap is if companies can go above it? That’s probably really stupid of me but I don’t get it
They can offer whatever fixed contracts they like but can't go above the cap rates for variable customers

There's no compulsio to take a fix, each person has to weigh up their own circumstances

FourTeaFallOut · 07/03/2022 19:32

There are 14 regions in the country and each has a cap rate that is similar but different. Usually when people talk about the cap, it's an average of them all. So someone could be different amounts with the same usage on the variable cap.

FourTeaFallOut · 07/03/2022 19:34

And then there are fixed tariffs which are not beholden to the cap at all and fix unit and standing charges for the term of the contract.

marqueses · 07/03/2022 19:34

@WonderWomansBoobs

This is what Scottish power is offering me, but the electric standing charge and gas unit price (I think that's the right way round) are higher than the price cap?
What are the cap standing charge rates in your area? Those ones look similar to others I've seen, are you sure they are above the cap?
dementedpixie · 07/03/2022 19:35

@Kanfuzed123 have you looked at the unit price and standing charge yet?

FourTeaFallOut · 07/03/2022 19:36

@WonderWomansBoobs

This is what Scottish power is offering me, but the electric standing charge and gas unit price (I think that's the right way round) are higher than the price cap?
You are being offered a fixed tariff there, it has nothing to do with the cap.
dementedpixie · 07/03/2022 19:37

No she's not, it says it's the variable rate. It is around the average price cap level

FourTeaFallOut · 07/03/2022 19:37

Sorry, ignore me, I'm wrong.

Hugasauras · 07/03/2022 19:38

That Scottish Gas one is the variable rate. It says at the top. So price cap applies.

FourTeaFallOut · 07/03/2022 19:40

Yes, you are right. I'm wrong. I'll put on my wrong coat and go Grin

Original poster
Kanfuzed123 · 07/03/2022 19:40

[quote dementedpixie]@Kanfuzed123 have you looked at the unit price and standing charge yet?[/quote]
Sorry no dh has the details and I’m nap trapped with dc2 xx

OP posts:
Original poster
Kanfuzed123 · 07/03/2022 19:41

So if the price cap applies to the variable tariff only, anyone on a variable tariff now would be bonkers to fix right because the variable rate is going to be cheaper than the fixes?

OP posts:
dementedpixie · 07/03/2022 19:43

It depends how much higher the fixed rates are as there will be another price cap rise in October.

marqueses · 07/03/2022 19:46

@Kanfuzed123

So if the price cap applies to the variable tariff only, anyone on a variable tariff now would be bonkers to fix right because the variable rate is going to be cheaper than the fixes?
Not necessarily, you hve to look at the whole period of the fix. No one knows what will happen at the October fix. It may well be worth paying more now to save in the long run.

Like any kind of fixed rate you are gambling on unknowable future situations

Original poster
Kanfuzed123 · 07/03/2022 19:49

Martin Lewis said they’re predicting another 20% increase in October?

OP posts:
Difficultcustomer · 07/03/2022 19:52

Possibly OP. Making up figures -

if the variable tariff is 10p per unit in April and you are offered 20p to fix from April for 12 months. that might seem like a bad deal. It may still be a bad deal if the cap is raised in October to 16p. However if the cap goes to 25p your energy company have to use 20p from October until the end of March (the full 12 months).

If you don’t fix 20p now that may not be available in October. OTOH if you do fix there can be fees to end a contract early.

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