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.

There’s no polite way to say this:

Yes it’s concerning at exactly how little common sense some seem to have.

I believe the media is to blame. They keep talking about energy bills going up to £x amount per year rather than % increase or cost per unit.

If people are now asking questions in these facebook groups it suggests to me that they are now trying to understand.

Typical estimate of adult literacy in the UK is that of a 12-year old; numeracy is estimated to be that of a 9-year old or as below for more nuance.

49% of UK adults have the numeracy skills we'd expect of someone leaving primary school or lower.

www.nationalnumeracy.org.uk/what-numeracy/what-issue

It's distressing to see how much difficulty this is creating for people who are attempting to understand what is happening with their money, bills, and budgeting.

And that's great. I am on a thread here about how much what costs to run and it's great when people ask. It's hard to find many models manuals to find consumption. Plus asking is good!

The thing about bills though is that everyone is paying them. Every month they go out of people's budget yet so many never cared enough to ask "how does that work and where do I check it's accurate?". That's what is fascinating AND also a massive issue because no one ever questioned anything until it became totally ridiculous situation. And the answer in a first world country to asking "why" basically is "we are half illeterate and have communal self esteem issues"😳

I worry about the ignorant all the time

Alas there isn't much that can be done

That's the problem with common sense though, it's frighteningly not all that common!

It's like the people that get caught by average speed cameras - "but I slowed down to X mph for each camera - why have I been caught?!"

YABU, I have never met anyone who believed that a fixed price energy deal referred to anything other than the fact that the unit price and daily charge wouldn't change for the duration of the fix. As far as I was aware I thought everyone knew that their bill would vary based on usage.

I do think however that many people seem to misunderstand the "price cap" because of the way it's reported. Media sources refer to it as a "cap of £6000 a year" or whatever. This implies that people won't be billed more than this, which is not the case. I'd think it would be much simpler if they just said a cap of £x.xx per unit and £x.xx per day for the standing charge.

Why are you 'worried'? How does other peoples lack of understanding about a subject negatively affect you?

Or...is your 'concern' merely a way to start a post showing off your own 'higher knowledge' on these things?

Yes, some people don't understand how certain things work...but you could instead (if you were genuinely 'worried' 🤦‍♀️) simply explain it, as a concept...you know, supportively!

I bloody hate faux 'worry' posts! Smacks of Mean Girls and Tinkly Laughs 😔

I have seen so many people on Facebook saying I only used £65 last month and my direct debit is currently at £150 so I have cancelled it as they are ripping me off, having no realisation that you want to be in a lot of credit at this time of the year so it balances out your winter bills (hopefully!). When this is pointed out to them they don't believe it and claim they are just going to pay what they used every month. For some of these they are going to get massive shocks come Jan and Feb when they get a massive bill. But they all think its a great conspiracy for the energy companies to rip us off even more.

Well you clearly haven’t read the energy related threads on here and other SM platforms 🤔

I thought I did explain it as a simple concept in my OP

Not sure why people have to be so narky on here.

Nailed it

@Dotjones I've spied this with my own eyes today on twitter on a thread- several Middle aged to late middle aged people (and I'm in that bracket myself) clearly not getting that their DD is just that- an amount that should cover off the years use in theory based on expected and previous rates. It is not an 'all inclusive' any use tariff like Netflix.

So if ‘worried’ isn’t the right word then what is?

People who don’t understand this are going to end up in the shit if they just use as much gas and electric as they like, thinking they charge will stay the same.

And you don’t know who doesn’t know this - it could be your friends or family

People on 'green' renewable electricity tariffs must be pretty happy, there's no reason for the price of wind or solar energy to increase.

I only learnt from mn last week that this is what it means. I feel gutted now as I was offered a fairly decent fixed rate in March but rejected it because I thought it would be adding 500 to my monthly bill 😳.

Yeah I find these faux "worried for other people" threads a bit sneery too.

Just come out and say how thick you think people are if that's what you want to discuss. Or do something about if it's family and friends life worried about - make sure they understand, or check with anyone you know that might need help.

I'm perfectly mathematically literate, but until a couple of years ago, never really though about energy bills. I paid the DD each month; renewed to the tariff they recommended; realised that over the year my payments seemed to cover the usage that went up and down; and didn't think much more about it.

Only when I moved to a new place with complicated heating (district heating) and rates were much higher than I expected did I start looking into the tariff more carefully, and realising what a huge difference the balance between standing charge and unit rate made, particularly for people who lived alone. The hugely high standing charge the housing association had agreed with the energy supplier was killing me. Not that I could do anything about it, as the tariff wasn't up to me. But it made me petition a bit for the next tariff to have a lower standing charge and higher unit charge (not that pushing them had any effect, I'm sure, but the later rate was a bit more in my favour). And it made me look into that balance more in my electricity bill, where I did have some choice of tariff. So instead of just accepting the recommended tariff automatically, I tried to find one with a lower standing charge if possible. At least that way I felt I might have a little more control over that bill, even if the district heating bill will be massive tariff this winter (not subject to price cap, and no warning in advance of the new tariff - we are just waiting to find out what it could be from October, and then will have no choice but to pay it)

The point is that if you are generally paying a reasonable amount for normal usage that your DD has always covered, you really might not think much about how it works. Not because you're stupid , or Watch Love Island or whatever someone said, but because it's just not been that relevant. Mortgage rates, too. People have blackcaps about some financial things as well, and may always have been told how complicated they are, so they assume that's true.

So I hope we are all teaching our children how it all works so future generations aren't as ignorant as we are.

Unless you've sat down and taught yourself this stuff then you won't know how it works. All these companies are notorious for making it difficult for the average person to make sense of their bills.
I know I've looked at bills which maybe say Credit or Debit and I can't work out whether I owe them money or not, because you see Debit and think, oh I'm in debt, but then you read further and see, no, you don't owe then because your DD is about to come out, or they say "don't worry if it say Debit, it averages out over the year"

Or a bill is calculated out of sync to your DD payment. You might have paid an upfront charge or pay after usage so you're not quite sure what's what (mobile phone contracts are terrible for this).

Then all the gubbins about standing charge, rates per unit etc etc.

I think a lot of people think "OK, that seems reasonable, I'll keep an eye on it and maybe look around for a better deal next year" and then get on with everything else.

I am not an unintelligent person, it took me AGES to work out that what I needed to do was NOTHING when my fixed tariff ended. They were suggesting I move to something more than 3 times what I was paying. The info was hidden deep in their website.

I can understand being worried if it's a friend or family member you are talking about, in that case you could teach them about it if they want to learn.

But I am not sure why you would worry about other people that you don't know.

I am assuming you are not just talking about your own friends and family here?

I teach Physics.

One of my standard lessons is taking an energy bill and analysing it with my students, as part of a cost of electricity lessons. I'd say about 50% of my students pay attention to what we are doing during that lesson (and I'm considered one of the good 'uns, before anyone chimes in with it being my methods that are at fault).

I also did a stand-alone lesson on general finances and budgeting with a class which had finished all teaching for the year. I think only one of them actually completed the (adapted to their knowledge and needs) MSE sheet, which, together with an overview of entry level salaries, gave them a good idea of what they could afford when they moved out, a few did some very basic calculations, but stopped after a while.

This is in an inner city school.

Until many parents (not all, there are a few who are reasonably clued up) stop indulging their children who want the newest iPhone (which number are we on now?) and who will deliberately smash their old phone to get the newest version (done right in front of me, repeatedly, by different students), until children get taught basic money management at home as soon as they are deemed old enough for allowances, until money actually matters to them, it makes no difference what is being taught in school.

Sadly, while we are doing our best in the classroom, until money has actual relevance to children, they won't be interested.

So the buck does stop with homes I'm afraid. My children learn budgeting, learn what they can afford and what they can't and the oldest is included in some financial decisions. The youngest is 5 and knows how to look out for prices in shops as well as how to add up their pocket money to see whether they can afford their weekly object of choice, the oldest can compare prices per unit and make a basic budget plan for a trip out.

Perhaps now is a good time to start these habits and conversations.

A refund because I'm in credit.

From our electricity account page on the SSE website:
"Your monthly payments are staying the same and we're giving you a refund
We've worked out what you need to pay to cover the cost of your energy by looking at your forecasted energy use until your next review and your account balance (excluding any reserved credit). We're giving you a refund of £223.90 from your current balance of £479.08. The reserved credit amount of £255.18 helps to smooth out any changes in usage and costs over time. We'll check your payments at your next review and let you know if anything should change."

I would have expected that with the increased price we would have used all that credit and probably a bit more by the end of next winter, so there doesn't seem much point in giving it back to us - it's not as if we'd be able to get any significant amount of interest on it over the next six months.

@ThrallsWife those sounds like brilliant physics lessons!
I would have found that far more useful than learning how long it would take to throw a ball over the roof of my house!

I give monthly readings, my past two annual statements have been correct so I'm pretty sure I am paying a correct monthly DD. It is just my (prior) annual amount ÷ 12 months. It is not on an estimate.

My situation has not changed at all. So whilst the unit price is going up, I'm pretty confident my usage isn't going to massively change.

I am not going to start heating empty rooms just because my DD is going up. I realise I am paying more for the same amount I am using.

@Moonmelodies the price per unit of electricity is pegged to the price of generating it by gas, so producers of renewable electricity will be making incredible profits while gas prices are high. The regulator prioritizes keeping energy companies producing over keeping costs low for consumers.