To be worried about the number of people who think a ‘fixed’ energy tariff means the monthly price will always be the same - regardless of usage

[Butterflyfluff]

I know there are loads of threads about energy costs at the moment but I have noticed there are quite a number of people who think a fixed price tariff operates in the same way as say a monthly Netflix subscription.

With Netflix, you pay the same each month regardless of how much you watch.

With energy it is only the unit price you are fixing - your monthly bill will vary dependent on usage.

The terms ‘fix’ and ‘cap’ are causing a lot of confusion.

I agree. I also think that, because many people pay a certain amount by direct debit every month, they don't always realise that they may be accumulating debts on their accounts.

it does seem very concerning, I struggle to understand how they have never noticed this before though, I assume the vast majority of them have been paying for utilities long before the cost of living crises put it in the news so much.

I don't wholly agree as for the majority on a fixed deal the annual cost is spread evenly across 12 months.

I think what is apparent is that the majority of people don't understand how to calculate the cost of the energy they use. I also see a lot of people saying they're cancelling their direct debit and just paying for what they use and I fear this is based upon the summer months usage, without consideration for how consumption changes in the colder months.

Surely people aren't that daft?? Or maybe some people just breeze through life like this??

I've just come across two middle aged blokes like this on twitter - clearly thought it was indeed like Netflix - me and several others had to chime in

This has revealed how financially illiterate and oblivious a lot of people are. I do worry for a lot of people this winter as they genuinely don't get it. I'm no maths wizard myself but I'm in an energy group on Facebook and some people are unable to even read a meter.

Im now getting this. Friends who have never done a rate change for their mortgage. One still pays 7% interest on theirs. I was staggered. I literally said, you are throwing money away!

Fairly easily. If your DD always covers your usage and you don't log in to your account, you don't see the months of credit and debit on a cycle.

A better way of explaining it to people is that it's like mobile phone contracts with data you can carry data over month to month. Standard charge, x amount included, if you go over, you pay more.

YANBU. It seems that there are a lot of people who don't understand what the price cap means.

Yanbu.

I am on this group - it has 80k members and the amount of daily posts from people who do not understand this is staggering.

www.facebook.com/groups/966754150512356/?ref=sharewww.facebook.com/groups/966754150512356/?ref=share&exp=9594

I think a good thing to do is the very first week the heating is on for any length of time is to do a meter reading and submit - on octopus I can submit and have it deducted off my balance within half an hour- if it's clear I'm going to have a shortfall I will up my DD at that point- at moment though am hugely in credit because gas has been about £10 a month last 4 months (only heating and hot water is gas) so my charge is mainly standing charge- paying £237 a month dual fuel at moment on 4 bed well insulated house but only 2 of us - and I do use dishwasher and tumble dryer (but only 2 times a week)

If you have lived in the same house for more then a few years, you will have quite accurate energy use predictions, so chances are the DD you are been offered will cover it, when averaged out over the year. That's probably what they have expressed, so their actually saying "the same amount of energy I used last year will now cost X".

Obviously if you move to a bigger house, have someone move in, or install a pool etc, you will use more. Or if you have cold showers, cut heating, and change cooking styles, usage will go down. But I don't think people who aren't planing any of the above are wrong to think of it in monetary terms when budgeting, and so describ it that way.

I wouldn't necessarily call it daft.

Sadly, I think a lot of people really lack confidence when it comes to dealing with financial stuff, and so they don't necessarily look into the detail of their bills - they're afraid that they won't understand it.

This kind of stuff isn't ever really explained to people, they are just expected to work it out. And not everyone does.

But your monthly bill can still vary even if you have a fixed rate and fixed direct debit
If you turn the heating off your bill will be lower. If you start heating the place to 26c, it will be higher...

@Crikeyalmighty - have you had or are you going to get a refund? I was surprised to get a refund of a bit under half our gas and electricity credits this morning - I would have thought they would have kept the credit to pay the increased bills, but apparently not.

People with english as second, third or even forth can understand, there is no reason for brits not to do so. I think it's because, like with many things, people hear "aww yeah it's too difficult" and just assume so, that's it.
I am also dismayed at the number of women I am encountering who do "Oh no I couldn't possibly understand".
Unless person has some specific disabilities, the only reason not to get it by reading few simple "how to" articles is not wanting to, rather than not being able to.

That's the scary thing for me. How many people simply don't care. But I bet you they can name last Love island contestand or similar😳

I don't disagree that most are probably capable of understanding, unless they have specific learning difficulties etc. However, if they don't have confidence in their ability to understand, they may never try.

We are not very good at teaching general life skills imo.

Energy companies are all very competitive so how they word their products can be deceiving which is very unfair. Not everyone has access to the internet many find all the information overwhelming they just want simple straightforward information and it isn’t so straightforward

I’m aware that I shall accumulate debts at he moment I am in credit but £350 my dd has tripled but i shall still be owing more with my fixed dd

I’m still waiting for a smart meter 🙄

I agree it shocks me that so many people genuinely believe they can use as much energy as they want and won't have to pay more .

i think the issue is all the talk of the price cap as an annual figure, is pretty irrelevant, as is the bloody direct debit figures energy companies quote. All pricing info should focus on the unit prices and standing charges to help people understand you are fixing a unit price not an all you can eat DD figure or annual figure.

My mum is finding it all so overwhelming as are people I work with nothing to do with their reading or language abilities it’s how people process information

when you are worried trying to take on more information can be difficult and many are extremely worried

at the moment we are absolutely bombarded with information

I think the sneery comments on here are unkind

I've just read a post on another thread where the poster is saying that they have "fixed" their direct debit at £xxx until the Spring.

That's all very well, but they might get a nasty shock in Spring when they have to pay for their actual energy usage.

In the interest of balance, they may have a nice surprise and find out that they are in credit, but this is unlikely and they have totally misunderstood what fixing their payment means.

Sadly, I think a lot of people really lack confidence when it comes to dealing with financial stuff

Sadly, I think you are right. I work in finance so working out bills and costs is easy and second nature for me, but having had to explain to a friend (who I had always thought was fairly savvy) what SVR is I'm not surprised about misconceptions over what a fixed tariff is.

But if they have fixed their unit price, there us no reason why they should use more than last year. So why would the cost broadly not be fixed?

@RustyBear not yet no- are you talking about the£66 a month gvt thing? Or a refund because you are so much in credit.

Agree with @Anothernamechangeplease . Also it sometimes feels like energy suppliers are almost deliberately obfuscating and offering “deals” that aren’t very transparent or easy to compare. As they’re commercial companies it’s maybe unsurprising that they use this tactic.
However I’d expect better from government regulators. Why are they using this roundabout and confusingly named “price cap” metric? In plain English, a “price cap” suggests that you won’t pay more than that. So it’s not too surprising that some people might understand it that way.
Instead, regulators should set an actual price cap on
a) maximum standing charge/day
b) maximum price for kWh

Energy companies should be forced to spell out these metrics too for any deals they offer. Consumers could then easily compare and work out their projected costs depending on usage.