Energy Bills capped at £2500 a year - for the average household (subject to usage)

[BecauseICan22]

Truss has just announced this.

Ah well that’s good if that’s the case.

Imagine a world where they abandon the standing charge and say subsidise the first 2500kwh. Yeah, imagine because it ain't going to happen sadly.

Should there be assistance there, though? Oil is not at historic highs, and has always been volatile. Gas has seen 500% increases due to the war in the Ukraine and Putin having Europe over a barrel, it’s been nothing like that with oil.

How do you intend to tax those producers who are not even based in the UK and just sell us their product? It's not possible.

For those producers who are based in the UK, how many weeks do you think it would take them to move their HQ overseas if they were facing a huge windfall tax?

If you want to stick a massive windfall tax on energy producers when prices are sky high in the face of global demand, are you in favour of giving them handouts when the price of oil is in negative numbers like it was a few years ago - or are you in favour of the taxpayer funding research and development?

She should have paid the subsidy as a fixed cash payment per head to encourage lower usage. Capping prices means someone rich in a mansion gets a far bigger subsidy than poorer people living in more modest properties. But then she is a Tory

Truss's plan involves huge borrowing & removing Green levies but these are also used to help poorer families aren't they?

No WF tax and no ceiling on costs as no one knows how much gas will go up...

"Fix energy market" how? its a global commodity, only nationalising UK energy production will do that and that wont happen, even though its a far far cheaper solution, just as Labour did with the banks in 2008.

Privatise back again, when Putin gone and Ukraine sorted.

Nonsense!

Did banks move when they had to pay a WF tax? nope or oil companies move when Osbourne had a WF ... again no.

Many european countries are levying windfall taxes and NS gas is extracted under licence, moving HQ doesn't effect that.

Oil prices were negative for a few weeks due to global shut downs, they soon bounced back.

Up to a point it will be funded by taxpayers, but there are other considerations.

Liz Truss (and her Cabinet) are all for reducing taxes. So what is likely to happen is that a larger proportion of the tax take will be spent on servicing the Government's debt, and other spending will be reduced.

Where will that leave, for instance, the NHS and social care?

It’s even more than that, really. I do wonder if this was the plan all along. I mean, you scare the hell out of people for months about prices doubling, and then hope they’ll shut up and expect them to fall on their knees with gratitude when prices only go up 25% (and they pay the other 25% in “hidden” taxes instead). Really disgusting and insidious, but I’m not surprised. They left this until the last possible moment so people would be “grateful” for any plan. But the fact is that so many people don’t have an extra 100 or 200 or 300 pounds for the electric bill. It just isn’t there. So it doesn’t matter how Liz Truss tries to spin it. Someone pointed out last week in a thread, and I thought it made sense, that £500 was the same as £2000 was the same as £4000 for them - it was all money they’d never be able to pay. Unless the government passes something so that you can’t lose the house you own or your credit over these energy debts (because if you lose your credit, that will stop you from getting another rental if you private rent), I don’t know what’s going to happen when some families rack up large amounts with one energy company - £10K or £20K.

All lovely and makes smarmy Liz very popular but we’ll be paying off the 170 million given to the energy companies in increased taxesinstead. What about the effect of fracking on the environment? Huge step backwards.

Martin Lewis's briefing calls the oil payment discretionary which normally means you have to apply and fulfil certain criteria. Whilst the cap on gas and electric is for everyone. Should be consistent.
@IndigoC oil is currently more than double what I paid last year so has a similar effect on families budgets I would think, also you tend to have to buy all at once which is a lot of money to find at once

I'm just going to shout for a moment:

THE TYPICAL HOUSEHOLD THAT OFGEM USES ARE 2.4 PEOPLE USING 12,000 KWH OF GAS AND 2,900 KWH OF ELECTRICITY PER YEAR. THIS WILL COST THEM £2500 A YEAR.

IF YOU USE MORE THAN THIS (LOOK ON SUPPLIER'S WEBSITE OR BILL TO FIND OUT) THEN YOU WILL BE CHARGED MORE, IF YOU USE LESS THEN YOU WILL BE CHARGED LESS.

EVERYONE IS STILL GETTING THE £400.

I think the key bit in Martin Lewis's buff is it works out at 6.5% more than the rate you are currently paying.

You should also be making your calculation based on your ACTUAL PAST USAGE rather than focusing on the £2500 figure as thats completely bloody misleading.

For use we pay for our actual use rather than regular DD so it makes it a pain to work out, but I am a lot calmer about things than I was, especially with the news that wholesale price do appear to be dropping.

I am concerned about brownouts at this point which I still think are a realistic possibly.

I find these threads so frustrating about the lack of knowledge on the energy markets. I get that it’s complicated and people don’t understand, but it’s not OK to make up rubbish, or misunderstand things you’ve read in the DM and requote it on here as being fact.

People need to distinguish between energy suppliers and oil and gas producers - calling them all ‘energy companies’ is really misleading.

Oil and gas producers (BP, Shell etc) already pay tax at 65% - (corporation tax is 19% for reference). So with higher prices they are already pumping massive tax receipts into the governments coffers. Oil and gas producers are essential to helping the transition to energy supply security. Paying tax at 65% is quite some contribution, particularly as when we were all paying 12p a unit for elec and 3p for gas they were struggling - nobody was suggesting we top them up then !

Energy companies make less than £10 per customer on energy supply. They aren’t allowed to make more than that under price cap regulations. That £10 involves a lot of complex management (hedging, balancing, regulatory compliance, collateral costs, customer contact….)

The government is funding the difference between the previously announced cap and the new price guarantee - energy suppliers will still need to hedge wholesale prices.

The government is right that they have screwed up energy policy for a long time.

Some energy generators are making millions, but some are making nothing where they’ve hedged (ie ‘fixed’) their sales volumes. Its definitely not one size fits all. I heard the government propose a new contracts for difference mechanism for generators which is interesting (at the moment it’s voluntary and new generators are not signing up as prices are high).

Finally, when demand is high and supply is low prices rise. People are expecting something for nothing, it is entirely correct that vulnerable customers should be protected, but it’s not right that everybody should have guaranteed ultra low prices - those days have gone (and were artificially suppressed due to small suppliers running unsustainable business models).

Unfortunately lowering consumption is key - capping unit prices at 34p (ish) and 10p for gas is still really high compared to the recent past !

Thanks for this post

There is a lot of misunderstanding and tbh most of us haven’t thought about the market much prior to this. I include myself although I’m trying to get up to speed a bit

I find these threads so frustrating about the lack of knowledge on the energy markets. I get that it’s complicated and people don’t understand, but it’s not OK to make up rubbish, or misunderstand things you’ve read in the DM and requote it on here as being fact

Quite.

Oil and gas producers (BP, Shell etc) already pay tax at 65% - (corporation tax is 19% for reference)

They don't its 30% plus a supplementary rate of 10% and on UK profits.

65% is marginal rate and its not the overal rate.

they also get very significant relief on de commisioning of old rigs, BP paid no tax at all between 2018 and 2021.

At long last, there is a clear dividing line between the two political parties: the rich take all vs the poor pay all. The perfect free cost put.

😂

Apparently, the government is going to produce a service announcement making people aware and encouraging lowering energy usage.
Good people need to wake up and wise up. Stop being wasteful.

Do we know what the new kWh cost is yet or have events taken over?

Why should someone in a bigger or better house per more per unit than everybody else?

pay*

My rate E7 was 35.5 pence per kWh daytime
and 14.5 at night
my electric bill is roughly £2400 a year

I use around 20kwh units a day ( I do have a hated hot tub 😂 that uses around 12kwh a day )

I have just moved over to the SVR with E7 so I
am paying slightly less I think
29per kwh but I’ve only just changed last week so not yet noticed a difference

if the bill went up to 50p per kWh I would be paying around £4200 according to Martin Lewis calculator

@IndigoC Yes there should of course be the same help for all on oil etc. Was 43p per litre now around £1. It is pretty hard to absorb that and it needs paying up front. Energy, particularly for heat is absolutely vital, no one should be left out.

The highest I've paid for oil was 76p a litre back in 2012, cheapest price now (for me appreciate there's regional variations) is 96p a litre but it was less than 50p a litre pre Ukraine.

I think it's fair that we get some help or at least the moaning about the wood stoves has to stop as I will be burning loads. When was the last time it was this high anyway?

Another idea is to subsidise only some usage, not all of it. Then everyone benefits, but for lower users, might be all of their use. Could be set at average use? Or large proportion of that, to encourage reduction.
Fairer?