an energy cap of 2500 - still double energy bills this winter?

[yih8979kh]

The figure of 2500 a one possible energy cap has been doing the rounds on the media -www.bbc.co.uk/news/business-62801913. It's definitely better than 3500 but doesnt that still mean that our energy bills will be double this winter seeing as last winter's cap was 1200? We paid 180 per month last winter, will it be 360 this Dec? Yes, we get 67 pounds off or something but thats still quite a lot more per month than last year.

I think what FreddyHC is saying is that the unit price is capped, so those who use more UNITS see more benefit.

"Another man looking for detail is Paul Johnson, director of the Institute for Fiscal Studies, who says a straightforward bill freeze would be "very poorly targeted" as the "majority of the money will go to better off people who use more energy"."

https://www.bbc.co.uk/news/live/uk-politics-62812442

The rumoured level is still a very large increase from now or last winter. No doubt dressed up as a great improvement, but not. Probably being judged by the government as what they think they can get away with.

Energy prices are set on the world market, so prices will be high until Russia stops holding their gas supplies to ransom or unless Opec agrees to pump more oil, which isn't in their economic interests and isn't good for the environment either.

So the govt can only do so much to ease the impact. The real answer is

1. Use less. Insulate houses, adopt more frugal habits..
2. Increase our renewables rapidly - solar and wind turbines
3. Decide whether we accept nuclear long term or not.

I'd be a lot happier if there was scaled pricing, so the first amount, enough for heat and basics (light, cooking) are at a cheaper rate. Then a higher rate over a certain usage per month.

That way, there is a still a motivation for people to cut their usage, the debt the UK incurs is less, and people who insist on running tumble driers, hot tubs and swimming pools pay the world rate for their luxuries rather than expecting the rest of us to subsidise them.

Yes you put it well - I think there is appetite for nuclear but not sure whether it’s there on local nimby level

I’d be happy with that too re people who use over and above lower usage for those types of things to pay full price

But it is also true that this approach penalises the less well off the most

They will send fuel costs rise significantly as a proportion of their spend whilst the rich will heat their swimming pools without a second glance

The people who use most will have least reason to reduce use ( which is desperately needed for both energy security and emissions)

Looks like details will be announced tomorrow so the most sensible thing to do is calculate your annual usage, and winter months usage, so you can do the maths when the actual unit and standing costs are announced (I expect the energy company websites will all go down with too many people looking to use the cost tools).

Personally I would prefer the standing charge to be reduced as this is effectively a tax - everyone pays it regardless of how poor they are and there is no opportunity for anyone to reduce it. As I understand it one reason it's gone up is because of the cost of failing companies which makes me furious - the regulator should have prevented that.

The new Business and Energy Secretary, Rees Mogg, wants to get back with starting fracking, nuclear power stations etc.

He's a climate change sceptic, and thinks cheap, independent fuel, including fossil fuels, is more worthwhile than "green" energy.

He intends to ignore NIMBYS.

www.independent.co.uk/news/uk/politics/jacob-reesmogg-energy-climate-change-b2161136.html

No you seem obviously confused like many on here. The cap isn't a cap it is a average household price should not exceed given an average use of units. Each unit is being subsidised so if wholesale costs are 60p and the unit rate I pay is 40p then each unit the government pays 20p to subsidise. Someone who uses 4000 units a year gets a £800 subsidy someone who uses 16000 units a year gets £3200 subsidy. If they just subsidised the standing charge and kept the unit rate the same as the market rate I would be happier but it seems from the maths the subsidy is more tilted towards higher usage houses.

This strategy protects the shareholder. Liz should be piling into the record profits of the energy companies, and getting the help for the householder from there, and not just borrowing from our money to keep them raking in profits

FGS

Where fuck did i say that energy costs are capped at 2.5k? i'm well aware its unit cap

The point is, people at the bottom will be paying proportionately far more than the wealthy, who can afford more but are being given an inflation rising handout instead.

As for the argument on inflation, thats rubbish, the £ is and will fall on the back of unaffordable borrowing, that means imported inflation and what happens when in 18 months time, gas is still super hi? what then?

The markets have no faith in this policy and its not one any european country is doing, plus we need extra spending on health and defence due to the UK having the highest inflation in the G7.

Indeed about the regulator people cheered these non big size challenger companies when they came out but their business model was nuts. People like Martin Lewis need to take the blame here for how they pressured in my opinion the regulator to allow these companies to enter the market in the first place.

If they just subsidised the standing charge and kept the unit rate the same as the market rate I would be happier but it seems from the maths the subsidy is more tilted towards higher usage houses

But unless you use pretty much no energy at all, the standing charge is a small percentage of the annual bill. At the current price cap, it's a little over 10%.

If they did what you're suggesting, then it would knock a couple of hundred pounds at most off a £5k pa+ bill that would still destroy the finances of average income households in 2-3 bed properties using a typical amount of energy.

On the matter of profit, this is due to increased global demand for a finite and reducing supply of energy. The companies who we as householders buy our energy from are not making much, if any profit at all, it's under £50 a year. They could sell us energy at cost, and it would barely change the size of our bills.

They do need a windfall tax on the global mega corps who extract and produce the energy, but that's a separate issue.

The new price cap comes in on 1 October - that’s just over three weeks away. The new government policy has to be really straightforward in order to implement it so quickly - hence a one size fits all ‘freeze’ (at least for customers on a capped tariff, business is more complicated I suspect as there isn’t a capped tariff already).

I agree that some kind of tiered tariff would be fairer, but given that the £400 scheme is horrendously complicated for suppliers to implement and has taken months, a much larger scheme needs, at this point in time, to be ‘simple’ in order to benefit people quickly.

I guess the structure and the standing charges will be reviewed in due course.

I think that it has to be high to ensure people cut their usage. Too many people think it is ok to wear t-shirts at home and have the heating on full.

Hopefully, the people who really need it will get targeted help as well.

I did chuckle about Lincs calling you thick.

Price cap on all units regardless of how many you use is, as another poster put, 'Gordon Brown policy on speed.'

@Silverpossum

"I'm at peace with it as it could be a lot lot worse. I appreciate it will be really really rough for a lot of families though."

^^^
I agree
And we will get the £400
This way I can still help others where possible

@FreddyHG

No you seem obviously confused like many on here.

No. I'm not confused about the cap - far from it - in fact if you scroll back to last night's posts you'll see my detailed one about our new energy bill which takes into account the October cap raise.

My point was, you're talking about people being "penalised for doing the right thing".

The only context in which that would be valid is if some people didn't benefit from the cap, which is not the case.

@FreddyHG Just to add the "No incentive to use energy efficiently" also makes no sense unless you think that the wealthy won't be paying more, too.

They pay more but they don't notice the cost so have no incentive uk reduce usage

I don't benefit I am on a long term fix I freely chose in September last year which is well below the proposed price cap I paid an early exit fee because it was so obvious what was happening to energy prices (I also brought shell shares too using money I could have used as a holiday days out fund). So far as I see it I am being made to pay in the future for something I don't benefit from all because the masses were unable to see the obvious problems coming cheered on by Martin Lewis telling people not to take out fixes.

🤦‍♀️

See my worked example the more energy one uses the greater the subsidy as it is biased to per kWh unit price. Those who have the heating on the highest will get the biggest subsidy. It's really not difficult to understand.

It still doesn't mean there's "no incentive to use less energy", does it.

This plans subsidises hot tubs, swimming pools, people who use tumble dryers when it is 30°C outside, it subsides houses that are festooned with Christmas lights, it subsidises houses that have the heating on at 25 and leave the windows open.
Does that sound like a good idea?