To think Martin Lewis is misleading people with the new campaign to reduce the energy price guarantee

[cakeorwine]

Don't get me wrong - I think he has done tremendous work raising awareness. He has done so much

However, I have used his calculator

www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/

It's great - it asks you for the amount of gas and electricity you use and then works out the annual cost it predicts.

HOWEVER - I know that I will be using most of my gas in winter 2023. And the rates in winter 2023 will be lower than the rates his site is quoting.

So telling me my predicted annual cost is not much use when all the actual predictions are that gas will be lower in winter 2023 when we use more.

This is why the annualised price cap is confusing as it changes during the year and people don't use energy at a constant rate during the year.

Unfortunately this is hard to explain and the soundbite of an annual cost just sounds easier to people - and no doubt will lead to some kind of reversal of the proposed limit of £3000 to £2500.

This is the calculation

It's based on 12000 kWh gas, 2900 kWh electricity

BUT - in October, the cost of both is predicted to fall. And we use more gas in winter

It’s all a prediction anyway. Until it actually happens no-one knows what the hell it’s going to cost 🤷‍♀️

For all the ‘good’ he does there is also a lot of confusing waffle. He often deliberately complicates simple things and seems to repeat the same few points again and again. He’s done the same pension show about 3 times in the last year! Don’t get me started on his website. It’s awash with affiliate links so he encourages people to apply, switch or click so he can profit.

He has stepped up since Covid / cost of living and isn’t as bad as he used to be.

It is so hard to know what an annual cost is - when the cost of an item will change during the year and the amount of the item you use changes significantly during the year.

Not at all. I don’t know if you read Martin Lewis’ letter, but the message is very clear and not misleading at all.

The government should abandon the plan to rise the EPG by 20% from April ( or if you prefer the rise from £2500 to £3000 , though that IS misleading)
The reasons for this are:

1. When the EPG was introduced last year, the energy prices were rising sharply and the predictions/speculations were that they would be even higher in winter 2023. If you remember it was so bleak that Sunak’s predecessor pledged to keep EPG at the same level for two years.
2. Now we know that the prices are falling and are likely to be lower than EPG by July.
3. Therefore the government should keep the EPG at the current level, as they will only need to subsidise our bills for short time, so it will cost less than predicted in Autumn.
4. A lot of people are struggling already and putting the prices up will make it even worse for them.

With regards to the calculator, it is based on the EPG from April, as this is the only rate we know at this time. We have no idea what the actual price cap will be when the prices fall, so putting some random numbers in the calculator would be misleading.

With regards to the calculator, it is based on the EPG from April, as this is the only rate we know at this time. We have no idea what the actual price cap will be when the prices fall, so putting some random numbers in the calculator would be misleading

The calculator is misleading. When you put in your annual consumption, it tells the amount that it predicts you will spend in the coming year.

However, the cost per kWh will come down later on and the amount we use is disproportionately higher in winter.

So the calculator figure is totally misleading. And potentially worrying for some people

So surely an estimate based on annualised usage is the best way?

Not if the estimate is massively wrong.

Otherwise it's just a massively incorrect number

The calculator is misleading. When you put in your annual consumption, it tells the amount that it predicts you will spend in the coming year.
But we don’t know what the price cap will be. So what would be less misleading, a random number pulled out of the hat?

Also the prices are falling now and the price cap will fall in July, but the trend might be reversed by September when the following price cap will be announced. As everyone says, the prices of energy are volatile.

No number would be better.

Just saying that the cost of energy is predicted to come down and reminding people that they use more energy, especially for heating, in the winter months.

It's the same when the price cap was going up, as this too was affected by variations in usage.

Don’t get me started on his website. It’s awash with affiliate links so he encourages people to apply, switch or click so he can profit.

Every page has unafiliated links too and all reviews are completely independent of affiliates- if a company won't pay for links they are still listed.

No number would be better. Just saying that the cost of energy is predicted to come down and reminding people that they use more energy, especially for heating, in the winter months.

He can't possibly base estimated bills on guesses of what costs might be. No number would not be better because it wouldn't allow you to make comparisons between firms, which is the point.

On average when costs come down they will do so equally for all firms. When a firm has a particularly good deal which means the personal calculation for your usage changes, MSE notify you.

The way he does it is the only sensible way and the same way all energy market comparisons work.

He can't possibly base estimated bills on guesses of what costs might be. No number would not be better because it wouldn't allow you to make comparisons between firms, which is the point

No one can make comparison between firms because you can't get deals at the moment - unless you are aware of any fixes out there?

He doesn't have a crystal ball. All the calculators tell you their limitations. They are tools not exact science.

The way he does it is the only sensible way and the same way all energy market comparisons work

But energy comparisons are based on the energy price being fixed for 1 or 2 years.

We aren't doing comparisons at the moment. Just trying to figure out what a bill will be, based on an unknown and varying energy price during the year and much higher energy usage during winter.

Just saying that the cost of energy is predicted to come down and reminding people that they use more energy, especially for heating, in the winter months.

It's the same when the price cap was going up, as this too was affected by variations in usage.
He’s been saying this on and on, and on, like broken record. On TV, on the podcasts, on Instagram, on his website…

The purpose of the calculator is to give an estimate based on the current prices. It is stated clearly above the calculator.

Of course nobody is forced to use it. They can just assume that their cost of energy will go up and down and maybe down again.

This calculator is exactly the same as all the other financial calculators.
If you take a mortgage your predicted monthly payments will be based on current interest rates. If the rates change so will your payments ( unless you have a fixed rate)
When you open a saving account, your predicted interest will be based on the current interest rates, but again that may change in future.

I personally find these calculators useful as they give me rough ideas how much I will be paying, but I understand that they are just estimates not guarantees.
Since September I used the MSE calculator multiple times and each time I had a totally different estimate. This was because the prices are volatile, not because the calculator is faulty.

Since September I used the MSE calculator multiple times and each time I had a totally different estimate. This was because the prices are volatile, not because the calculator is faulty

So not a very helpful tool when prices are volatile and consumption varies.

The only thing I know is that if you look at my bills from April 23 to April 24, they will be lower (probably by quite a bit) compared to what the calculator told me.

But energy comparisons are based on the energy price being fixed for 1 or 2 years.

We aren't doing comparisons at the moment.

No we are not. But the energy companies keep whacking the direct debits up, often to unreasonable amounts, using their own bizarre predictions.
Having used MSE calculator and using it as an estimate gave me confidence to demand that my provider brings my direct debit down to reasonable amount, which saved me a lot of money.

Well - that's true.

Energy direct debits are a law unto themselves - and it will be interesting to see how they respond to this, especially given the predicted fall in winter.

Which is also why I have a spreadsheet and pay by variable direct debit.

It is interesting to see what I pay on a 12 month basis and how that figure varies depending on when I start the 12 month period from.

So not a very helpful tool when prices are volatile and consumption varies.
On the contrary, very helpful. It showed me that my provider raised my direct debit far too high.

It is an annual estimate, it is what it is. You don't a finally KNOW prices will drop, it is a future possible change.

I think you're splitting hairs.

Also you are incorrect to moan about ML repeating things. That is what all successful campaigners do. Repeat messages are needed to achieve any kind of cut through.

His website makes money from big company affiliate links.

That's why his advice is all about switching and hunting out 20p coupons etc

If his advice is helpful to you, fine. Just remember which part of his business model, you are.

Sorry @cakeorwine i completely disagree. These calculators are a free tool based on currently known circumstances, they shouldn't be speculative or individuals will latch on to the policy they "hope" will be brought in. All the caveats are clear on the websites and they are seeking to help individuals make better informed decisions.
They cannot be a panacea for all and as in every circumstance people should take their own advice from professionals if they aren't sure they can adjust/fully understand the caveats themselves.

And @MagicCat83 i agree with this too. Free tools are free because they are driving something. Doesn't mean their advice is incorrect but you should always consult multiple sources to help inform your decisions.

All predictions are that the cost of energy will be lower than the current energy price guarantee.

If it helps people see that the direct debit is too high, then fine.

Just don't rely on it telling you what it will cost - as the final year cost (from April to April) will be lower than what the calculator tells you.

And if/when those predictions come to pass, the annual price will be adjusted accordingly.