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.

To be honest I'm not particularly good with financial things. Even though I'm firmly middle aged and keep on top of bills I do struggle to understand some of them. I came from a family that didn't discuss 'adult matters' in front of the children. The meter man read meters and you got a bill.
When my own were young we didn't hide anything financial but were on poverty wages so there was little to understand eg, pay rent, pay CT, pay electric ( key meter) etc..what's left buys food if you are lucky.

I think that the jargon used is unnecessary. Although I didn't think it meant fixed DDs, I struggled to understand the bills. It needs to be plain and simple.

I'm in a one bed flat paying a dual fuel DD of £53 a month, which is expected to cover my actual usage pretty much spot on. I'm on a 2 year fixed rate which ends August 2023, so luckily fixed just before prices really started rising. My previous DD on a fixed rate was something like £35 a month.

I'm not sure why you were shocked? A well insulated one bed flat, especially on a upper floor, isn't going to cost huge amounts to heat, if only one person lives there there's likely to be less use of the washing machine/electric shower/lighting/phone and laptop chargers etc, and if the person is also on a cheapish fix their bills can absolutely be pretty low.

OK, I've seen a lot of people call a lot of people derogatory names over this matter, which is a little unfair. These are unprecedented times for a lot of people regarding the price hikes etc. I've always handled my own bills and whenever I've been on a fixed tariff in the past, that's what I've paid on a monthly basis, regardless of usage and have never accumulated debt as a result. I fixed mine again when all the rumours bout price hikes started a while ago and think I got a good deal up until December 2023 - see attached email I recently got from Scottishpower confirming the details.
If I'm reading these messages correctly, are you now saying I'm wrong to assume I'm going to pay the same amount up until that date and/or I won't have accumulated debt once this deal ends?

This

I think it’s a very good idea. I’m certainly going to wash all my curtains (they need it and haven’t been done in, cough, some time) before the end of September.

As long as your actual usage isn't more than what they estimate you will use (which is how they decide your direct debit) you shouldn't accumulate debt. Your account online should show you some sort of prediction for your actual bill for the next few months and an indication of whether your DD will cover it. You should currently be in credit i.e. have paid more over the summer months than you actually used, as it's this credit which adds to your DD to pay for the higher usage in the winter.

No, that’s not how fixed rates work. Your price per kWh is fixed so if you carry on using electricity & gas as you have previously then the cost will stay about the same. However, if you increase usage you will
pay more and if you reduce usage your cost will drop accordingly

I do totally agree.

I initially was surprised that quite a lot of people don’t understand how this works but, when you do stand back and think about it, it is easy to see where misunderstanding comes from, given the terminology used like ‘fix’ and ‘cap’ and how other subscription services work.

That’s really my point on this thread - you don’t know what you don’t know.

There’s a lot of stuff I know nothing about but I do know how utility bills work - but we have no idea who doesn’t and it could have quite significant repercussions.

And please don’t think I’m being patronising - that really isn’t my intention.

At the end of the day you can just think if it like going shopping, because the basic of it can be that simple. If you manage shop for food without spending accidental 5k, you have enough mental capacity for this. Nothing scary.

You know how much what in shop costs when you are buying it all the time, can work out if it's good value and if the shop charged you kind of right at the end.
This is basically the same. You look at the goods just instead of veg and fruit it's kwh of gas and kwh of electric. Does your provider charge good price or do others charge less? You can see (well not now annoyingly) it on comparison sites easily.

You look at you meter to see how much you used, like you would check a fridge when finding out what you need to add to shopping list. That's how you know your usage and if the DD is grossly overestimated or just little bit to cover usage movements. Or if it's underestimated. It can also tell you if your consumption is high or low. So again, if it's high you make decisions to see if you can use less, like you would make decision about what food can you eat less because you are eating a lot and it's costing lots of money. Eg, ease up on steak/tumble dryer 5x a week.

I know this may not be the main analogy, but tldr is the first paragraph. Imagine if so many people refused to go shopping because they don't understand food price etc. That wouldn't happen, yet it is not much more different in needs of mental power.

i normally go with what the energy company suggest.
they can work it out for me
i go with it.
i dont get into debt and if i do they certainly notice and email me to increase

@Catell based on your posts you appear to be one of the people who think your bill is going to stay the same, regardless of what you actually use.

Please correct me if I’m wrong but the screenshot you posted doesn’t mean your DD will cover your energy costs until Dec 2023, regardless of usage.

It just means the rate you pay per unit and the standing charges are fixed.

If your usage increases your total bill will go up.

If your usage stays the same, the fixed DD will cover it.

For those people who think ‘ah well, I’m paying a fortune on my fixed rate so I’ll just crank up the heating’ - they are going to get hit with a big bill as it’s not unlimited usage for the fixed DD.

I had this exact conversation with my lovely MIL earlier - she thought if she fixed she wouldn't have to worry about putting the heating on. She finds this all really confusing and she's a high user so it could make an enormous difference.

Also discovered she has a 40 year old chest freezer...dread to think what that's consuming energy wise

@Butterflyfluff

Agree totally. It has massively confused me too. The price 'cap' is a fucking bullshit name, because it suggests that the £3,549 or 'price cap' is the MOST you will pay. It's not. It's a cap for the individual units (or something like that!)

I was thinking the price cap is the most anyone will pay, (altogether - that whole year - ) and that is a load of bollocks. The 'price cap' is ONLY for each unit. You could still have a £5000 a year bill, (or you could have LESS than £3,459 of course!)

I was thinking 'well the 'price cap' is a lot, but at least we know where we stand, and it won't be any more than that. What a fucking fool I was.

As I said, (and you said OP,) the 'PRICE CAP' (price fix,) it is a VERY MISLEADING NAME!!!

This!!! ^ @Catell and @SpringIntoChaos WAKE UP!!! The price cap/price fix is NOT what you think it is. Don't be embarrassed or ashamed to admit you got it wrong. I am happy to hold up my hands and admit I did!!!

Thank you @WhileMyGuitarGentlyWeeps

And good luck for the shit show we’re all facing 🙏

I haven't washed my curtains because frankly who could be fagged with that, but I have washed all the winter duvets and bedding/ cushions, got the sleeping bags washed dried and packed away etc. All the stuff I'd normally do a bit later in the year.

Not necessarily to beat the price rises, but more to take advantage of the incredible drying weather we've had.

Washing curtains! 😂

I have never even thought of doing that in nearly 50 years on this planet!

Like I say - you don’t know what you don’t know!

Energy companies vary. I am with Shell for my gas and their DD has always been a really accurate representation of my usage.

I'm with Scottish Power for electricity and they set their DD higher than you would use so you build up a credit with them. I ended up £300 in credit to them and it was a massive fight trying to get that money back. When I was in credit (before the price increases) they also tried to put my DD up a significant amount, in the end, I cancelled my DD and go onto my online account and make a payment every fortnight so I don't get a big bill.

The best thing you can do is take regular readings(monthly is good) and input the numbers on their site which will give you an accurate picture of what you are using instead of estimating it.

The £3,549 being spouted is based on a 2-3 bedroom home using 12,000 kilowatt hours (kWh) of gas and 2,900 kWh of electricity per annum on a dual fuel tariff.

Each kWh of electricity will be PRICE CAPPED at £0.52p and the standing charge for providing the home with this electricity will be PRICE CAPPED £0.46p per day.

2900 x .52 = £1508 for the electricity
365 x .46 = £167.90 for the standing charge
1508 + 167.90 = £1675.90 per year for Electricity

Each kWh of Gas will be PRICE CAPPED £0.15p and the standing charge for providing the home with gas will be PRICE CAPPED at £0.28p per day.

12000 x .15 = £1800 for the gas
365 x .28 = £102.20 for the standing charge
1800 + 102.20 = £1902.20 per year for gas.

Total 1902.20 + 1675.90 = £3578.10 the duel fuel tariff is assumed to offer the discount to bring that total down to the £3,549.

If you use more energy than the average OFGEM are using of 12000kwh of gas and 2900kwh of electricity per year your bill will be more than the £3,549. The cap is applied to each individual kWh of energy. Not your total bill.

I just can't get my head around any of that. I cannot make sense of it.

The ‘price cap’ isn’t the most anyone will pay.

It’s the most anyone with ‘average’ usage will pay.

If you use more units - you pay more.

If you use less units - you pay less.

What’s important is understanding how many units you use and multiplying that by the rate you pay per unit.

You see it on here all the time

People quote their DD payments but don't know their usage

It would be so much easier if the media quoted the new price per KWH and the new standing charge instead of the 'price cap'.

People have their heads in the sand about this.

I have a spreadsheet and have modelled various scenarios of usage. I understand how energy is used in the house and where I can make savings on usage.

Yeah I have no idea what my usage is.

I just want to know how much money is coming out of my bank account each month.

I'm not on a fixed rate, my supplier calculates how much my DD will be based on my predicted usage.

You can just take meter reading and see if it corresponds with what shows as the estimated usage.
Then you take it again in a month and you see what you use monthly approximately (as it changes a bit as does life)

It’s entirely your call if you’ve no idea what your usage is.

My point is, if you ramp up your usage, thinking you’re paying top whack anyway, it will bite you on the arse.

You pay for the units you use - at the suppliers variable rate or whatever rate you fix at.