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 think this is it.

I was always fixed and paid my £60 a month and I went into debt in winter and into credit in summer.

Every 2 years or so I'd get £150 odd pounds from overpaying.

I knew I was fixed and couldn't work out why but never knocked an extra amount around Christmas time!

It's actually recently when costs have risen above what's comfortable bill wise I've learnt what it actually means.

I'm great fit for the very wise, informative and patient! MNers

I was paying £60 for both. That wasn’t enough - I usually ended up paying an extra £100 or so on the gas in February / March to cover the deficit but if that’s smoothed out over the year, my costs were roughly £70 per month. My gas has just been increased from £14.50 per month to £82 per month. Still lower than a lot of people’s but a lot more than the £25 or so gas was previously costing me.

I'm only using £60 dual fuel since April on the rise (obviously summer).

But working out annually it's an average on current costs of £85 per month over a year if the cap remained the same.

So an 80% increase takes me to £150 a month.

I'm paying £120 so I'm in credit and I'll get £66 discount from October.

Although the actual amount is scarily high when we know it'll go up again - compared to what I'm use to - I know and believe there genuinely are people out there who use very little and aren't miscalculating!

I don’t think it is clear, I am a first time buyer and I have signed up for a 2 years fixed deal.
So I think this means that the cost of unit of energy remains the same? But obviously if I used more I would need to pay more..
is this right ?

I have a small three bed terraced house, and pay quarterly, according to meter readings. My bills have been steady at approx £800 per year (gas and elec total) for the past decade, so that would have been about £65p/m if I’d paid a monthly DD. I’m constantly surprised at how high people’s bills are! Not looking forward to the rises, and feel very sorry for everyone who uses a lot more energy than we do.

Sorry; that was for Crikeyalmighty

It has always been this way. I used to work in customer service for an energy company and this confused many many people. The same as when they say "My bill is £200 a month" that's not your bill thats your DD amount which sometimr bares very little resemblance to your actual bill.

life is too short op

But you don’t know who doesn’t know.

Most people don’t really talk about finances, even with friends and family.

I'm in a two bed house and live alone. My bills are less now than they were last year.
In July my electric and gas cost me £51 without standing charges. August £48
I've massively reduced my usage since the hike in April.

Totally agree and also its not even about how people process information necessarily, the information given out in the media and by fuel companies is deliberately misleading, vague and missing information

Its no wonder people dont really understand

People dont even understand their unit costs on here, they post talking about their monthly payment

Oh this in spades!
so many people posting that they won’t accept the recommended rate increase as they won’t pay more, not realising it’s a unit rate increase. I think the government should do an announcement that the price cap is per unit and the amount quoted is a national average for example.

Can someone explain in simple terms as I’m sure I’m one of the people who think like this lol.

My DD is the same every month and I even got a £39 month old refund because I paid too much gas??? I never check my account because I don’t know what anything means tbh

The monthly DD is based on your average prior usage.

It is essentially calculated by

• Looking at your annual usage
• Multiplying your annual unit usage by the fixed rates
• Adding in the daily standing charges
• Dividing the total by 12 to reach a monthly payment amount

This is why accounts go into credit in the summer months, when your usage is lower than the monthly payment.

But in the winter your actual usage cost will be higher than monthly payment so the account credit balance gets eaten up.

Fixing your unit and standing charge costs only guarantees the cost you pay per unit and the daily standing charge - if you then leave the heating on 24/7 your usage will shoot up and your DD will not be high enough because you are using more units than the DD calculation was based on.

So you’ll go into debt until you either increase your DD or drastically cut your usage.

Hope that makes sense.

That means your DD was ever so slightly overestimating your use (which imho is absolutely correct). You used less than they thought you will.

It’s worrying. But understandable. So many things are subscription based theses days, and it IS worded and publicised in a way that sounds like the payment is capped.

You don’t have to be stupid to be misled. Especially if you are very used to capped services.

True, and of course it's not the sort of thing you just ask someone about.

Like I said I do understand being worried about those you know personally and care about, I kind of went off on a tangent, I appreciate it was not the main point of your post.

I am not that clued up on utility bills, I have a very hard time deciphering information that revolves around numbers. Like some others have said it's a confidence thing (for me anyway), I just don't believe I have the mental capacity to understand it so I avoid doing it if I can help it. I just pay each month what my supplier suggests my DD should be based on my projected usage.

They did put my DD up to £195 per month (for reference I live in a small 1 bedroom house alone and it's all electric, no gas supply), when I looked online at their calculation it actually came out at £155.00 per month so I changed it to that amount instead. I am actually in credit by a bit so hopefully that will help.

If it doesn't I'm building a firepit in the middle of my living room and my landlord will just have to accept it😂

YANBU. I had this exact discussion at work in our lunch break today and two of my colleagues didn't know. They thought that because they'd 'fixed' their DDs at a certain amount that this basically meant unlimited usage. Robust discussion followed but I'm really glad they now know!

I’ve also seen people who think that, because their fix is at a higher rate than the price cap rates, they will not have to pay more than the price cap rates and are very disgruntled to find out No, they pay whatever their fixed rate is.

I do think however, that fixes shouldn’t be able to charge more than 25% above the cap,
once the cap is known.

I really hope that if anything comes out of this shitstorm it will be people looking at MSE, citizens advice because and similar website and take more interest in what it is they are paying every month.

Ahh yes I get what you mean thank you OP.

If you’re in debt because your DD isn’t matching your usage (say your using way more energy then what you’re actually paying for) does your energy provider not contact you to let you know?

Sorry for the dumb questions but I’ve always rented and my rent has included bills. I’ve been in my flat for a year now and this is the first time I’ve actually had to pay for gas and electric and I’m just realising that I don’t know so much

That's the one I'm in and I agree it's baffling how many people don't know how to work out their energy usage. More than one recently still didn't seem to get that being on a fixed tariff wouldn't protect them from paying more than their current DD if they use more energy.

I have a very hard time deciphering information that revolves around numbers. Like some others have said it's a confidence thing (for me anyway), I just don't believe I have the mental capacity to understand it so I avoid doing it if I can help it. I just pay each month what my supplier suggests my DD should be based on my projected usage.

This is literally me in a nutshell!

i joined that group @Snazzysausage
i was so shocked yesterday that there were so many posts from people who were washing all bedding and curtains before the price rise
or is it me, am i the only one to think that is barmy and unecessary?

and all these posts from people who have had their dd's icnreased already and money taken
are they trolls?