To not understand energy tariffs??

[JCWildWest]

Help needed. I don't get it. I'm trying to get it, I feel like I'm being swizzed, but we all are.

I read Martin Lewis, but I still don't get it. Our fixed tariff ends next week, the new tariff quoted seems to be above the current price cap at unit rate per day. It increases our bill by £150 per month.

I don't understand the price cap? Why are they allowed to charge more than the price cap?

I've never had to worry about paying the energy bills, just cracked on and paid them, now I can't get my head round them and I'm trying to be savvy but I just don't understand 😥

The price cap applies to the standard variable tariff, which is a tariff that has no fixed term and can change.

Companies can charge whatever they like for a fixed tariff regardless of price cap, but if you don't pick a specific tariff you go on the variable tariff, which is subject to the price cap.

Companies want you to fix at a unit rate above the price cap so they can make more profit out of you, is the short answer.

@ThreeLittleDots that's what I thought it looks like, but that can't be right!

I read Martin Lewis is advising people to lock in on fixed rate tariffs if they are only 30% higher than the current cap due to cap expecting to rise in Autumn.

I've got no idea what to do for the best. Going on to SV still doubles our bill. Locking in now almost trebles it!

Fixed price contracts can be higher than the price cap. The real question though is whether 12 months (or whatever length) on that level is cheaper than a few months on the current cap and the rest of the year on the higher cap from October.

It depends if they have quoted you for a fixed rate or whether they have given the option of the standard variable rate. Its only the SVR that is covered by the price cap.

Current SVR is around:

Electricity 27.84p/kwh and 49.38p standing charge
Gas 7.33p/kwh and 27.22p standing charge

I'm so stressed how we can just 'suck up' our energy bill doubling (or nearly tripling) overnight. We don't have a lot we can cut back on.

Our car has just died too, I don't know how we are going to cope.

that can't be right

They are businesses, out to make as much profit as they can. There are no fixed tarrifs lower than the price capped standard variable rate as they lose money at this rate.

Fictitious values:-

For an average household the cap is £7 a day currently. This is expected to go up to £12 a day in October.

you could fix at £10 a day now, essentially gambling that you’ll pay less if there is an increase above the £10 rate. However, In the short term you’ll pay above the rate and there is no guarantee you’ll be under the rate in future.

Energy use is measured in kWh. Your energy company will have agreed an amount that you will pay per kWh of usage for both gas and electricity. This is known as a tariff. Tariffs can be fixed rate or variable. A fixed rate means that the amount you pay per kWh is agreed between you and the energy company for a set period and will not change during that period. A variable rate means that the price per kWh can fluctuate based on the price of gas / electricity.

the government has an energy cap. This is a limit on the amount an energy company can charge per kWh on variable rates. This cap changes every 6 months. It went up in April and will go up in October, allowing the energy companies to charge you more.

The government quotes the energy cap as a value - they say in October the energy cap is to go from £2k to £2,800. This is unhelpful. It sounds like you’ll never get charged more than £2,800 but it is based on the cost of an average house’s energy bills and based on an average kWh usage. If you use more gas and electricity than average your bill will be much more than average, if you use less it will be less than average.

one other thing to note is that part of your energy bill is a standard charge. This is an amount the energy companies get to charge you every day regardless of usage. It’s supposed to reflect the cost of energy infrastructure. So if you use nothing, you still get charged every day. This is incorporated into the £2,800 average.

I suggest you take a look at recent bills to get an idea of usage, Google the energy cap levels now and in October and that might give you an idea of how big your bills might be.

We changed all the lightbulbs in our house to energy saving lightbulbs and saved £85 a month. Crazy!

Sigh, this sucks. We aren't even that bad off financially in comparison to some, we've just had a few hiccups recently which are going to make things worse. I dread to think how it is going to affect some people.

I'm going to start being the energy police in our house!

@Fairisleflora youve given a really good explanation!

Thank you for the explanations they've been very helpful