Capped bills

[twordle]

Can anybody who understands energy billing/ govmt announcements please clarify how this 'capping' just announced works? Our monthly energy bills are around £500 currently.. does that mean once we've reached 5 months of such bills we don't pay anymore?! I mean great if that's so but surely not! Thanks

It's not capped bills.
It's a capped kwh charge.

Every time, I think, how can people not understand this, a journalist talks about bills being capped. They need to start talking about a cap on what you can be charged on each kwh or each unit. It's confusing for people who have never had to worry about this before.

I'll switch to cheapest option available but I'm thinking they'll all be charging the same

I think this is the case. The energy companies are still selling the energy for a very high price. But the gov will be picking up the tab above a set unit price therefore all the companies will be charging us customers the same unit price for two years.

This is how I am reading the rumours.

I know. It's astonishing. There's apparently millions of grown adults with jobs, mortgages, children, who have run their own homes for years, but have apparently thought about how much their energy costs or how the price is worked out before.

How?? Are you all so wealthy that the cost doesn't matter?

The email I've got from Hugo, which is an energy use monitor app, had new rates as roughly:

NEW PRICE FREEZE ELECTRICITY starts 1st Oct 33p per kWh
CURRENT PRICE CAP ELECTRICITY Ends 31st Sept 27p per kWh

NEW PRICE FREEZE GAS starts 1st Oct starts 9p per kWh
CURRENT PRICE CAP FOR GAS end 31st Sept 7p per kWh

Formatting a bit wonky but hopefully legible

Also re: fixed rates, Martin Lewis said earlier:

IMPORTANT FIXED TARIFF INFO: I'm hearing fixed tariffs will have the same unit rate reduction as variable tariffs (ie roughly 30% off). So it looks like, unless you fixed at over the new Oct price cap level, your fix will be cheaper than moving to variable. More to check on this

If you didn't then end the fixed rate.

Don't do this until you know.

Martin Lewis is reporting that he suspects fixes will be discounted by roughly the same as the SVR. So if you are on a fix, I'd stay on it for now - until more detail is announced.

I think it's more that people are used to paying things in fixed amounts each month e.g. phone contracts, council tax and they take their energy direct debit to be the amount that definitely covers their energy for the year, rather than the energy companies best guess at where to set it to cover your average usage. And maybe, for most people if the direct debit was set at the correct level, they didn't put any more thought into how it was calculated?

No

Your energy comes in units.

It's the price of the individual units that is capped.

Pretend you're in Tesco. Tins of beans are 50p each.

There is a sign saying special offer. You will never pay more than 50p for your beans!

You buy a can of beans. That costs you 50p.

The person behind you buys 50 tins. Do they pay 50p? No. They pay £25.

There's no cap on your bill. You pay for what you use.

Who knows whether this will actually be implemented given the current situation - at least not for the next few weeks (the Commons go into mourning for a period of weeks according to the news)

It's a sad situation re the Queen however this is also extremely important and I'm worried it might get swept under the carpet..

The person behind you buys 50 tins

I bet they would end up producing enough gas not to bother getting the stuff from EDF or NPower.

🤣🤣

So the reasoning behind the 30% off fixed tariffs is that the Energy companies could potentially make a claim and bigger profit for reimbursement even though their customers have a fixed rate hence why fixed tariffs are getting a discount too? Does that make sense?