Can anyone explain how the energy cap works?

[LuluBlakey1]

We have gas and electricity accounts with British Gas.

How do they apply the £400 payment from the government - do they take £200 off each account? Or ask us or what?

How do they apply the £2500 cap? Against one account, divided equally across both?

Our estimates from them do not add up to £2500 (although they might given the costs from 1 Oct but our new bills that arrived today don't state that amount as estimates)

We currently pay £60 a month electricity Direct Debit and £175.00 a month Gas Direct Debit which way more that covers the amounts we use. I don't object to the Gas as we will use much more over winter. However they have just increased our electricity Direct Debit from £60 a month to £145.00 a month and at the same time are telling us our annual useage estimate cost is £617.00 a year (they have not included the £400 government payment in either bill) That direct debit is £145x12 = £1740 a year. We are not in debt to them. Can I insist the electricity Direct Debit is reduced to £80.00 per month (given the £400 payment from the government is also to be taken into account?)

Just ignore the £2,500. It's just an illustration of how much energy will cost a typical family in a year but there are too many variables to make it really useful for anyone.

The government have made it so unit rates can't exceed a certain amount for 18 months for both gas and electricity.

For example, electricity unit rates were due to almost double in October before the government price freeze. Now they are 'only' going up by 25% or so,

OP- you can use past bills to work out how much your gas and electric might be this year. (that assumes that you use the same amount of energy this year as last)
If you don't have a bill then you can use the app to see how much the standing charge and price per kWh you're paying.

I've had lots of emails from BG about this - it might be worth checking your inbox

They haven’t reduced anything bills have still increased by about 27% it is just less than the October rise was due to be and prevents further six monthly roses for 2 years.

If you use the same amount of gas and electricity as you used previously you need to add an extra 27% to cover your bill as you will be paying more for every unit of gas and electricity. The £400 is taken from electricity only and either reduced each month from your bill or refunded each month once you pay your direct debit.

The £2,500 is just based on how many units the average 3 bedroom 2/3 person household uses. You will still be billed for the number of units you use so if you use more than the average you pay more, if you use less you’ll pay less.

You need to get the 2500 figure out of your head and never give it a pondering again. Forget it was ever said.

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

Yes, here is our bill from today.It shows what we have used, what they estimate we will use and does not include the £400 government help.
I understand electricity will go up from 1/10/22 - I am unclear if they have taken that i to account. I am also unclear why they have also sent us an email saying following this bill they are raising our direct debit for electricity to £145.00 a month when we are in credit paying £60 a months, and the £400 has not been taken into account yet.

Yeah the £2500 is not relevant - the unit prices are fixed so the average home will pay £2500 but it depends on your own usage - the actual kWh you use. It could be less, it could be significantly more.

How are people still not understanding the £2500 price cap is a fictional average figure? It's been explained multiple times over the last few weeks.

The standing charges and unit rates have been fixed at a certain level.

Nothing is being reduced, prices are going up, just not at a high rate as predicted for Jan/April.

Your bills will go up as unit rates are nearly triple what they were last winter.

It is not just a case of public illiteracy and numeracy, it is a case of badly worded announcements from the government and utility suppliers that are then repeated constantly in the media and are not corrected loudly and clearly. a lot of people are going to be caught out unless steps are taken to explain that the cap is an imaginary amount pulled from unicorn land and has no bearing on any households actual energy use.

The whole provision of energy is a nasty cesspit of corporate greed, just look at the way that the poorest members of the community are charged the highest rates via meters. And yes, I do realise that one of the reasons for meter use is to repay previous debts, but this should not mean that the repayment pushes the cost of energy beyond reach.

The price cap is a system by where the regulator Ofgem attempts to create balance within the energy market. By balance I mean to prevent utility providers from losing out and gaining too much financially and also a way of protecting the consumer.

The orice cap is a goal post on wheels and wings and we are all living in Monty Pythons flying circus so the best thing for us consumers is to always look on the bright side of life.......with the lights off.

Yu must not have been on any of the energy threads on here and the rest of the internet if you think LT is responsible for people not understanding the cap. It's been misunderstod for as long as it has existed

She is merely one of the recent examples of getting it wrong

This is the problem though- the price cap wasn’t designed to be a price stabilisation mechanism which is why it doesn’t work particularly well as one. It was actually introduced to try and reduce the loyalty penalty for people who weren’t shopping around for fixes.

No, but it's public illiteracy and innumeracy that allows politicians to repeatedly get away with making over-simplified to the point of inaccuracy statements such as the £2.5k "cap"*.

Energy bills aren't complicated, so why do so many people not understand them at the best of times? Admittedly, it's not helped by the supposedly easy to understand format that energy companies are required to use that ends up making it look more complicated than it is.

*I'm not convinced that the PM herself genuinely understands it's not a cap on the total spend given the number of times she repeated the error. She earns more than enough not to need to think about the details of how energy is sold to consumers and has shown no signs of ever having attempted to understand the lives of the electorate.

Without doing all the calculations no one can say for sure but in principle your DD needs to increase to cover the increased variable rate and the fact that winter is coming. The 400 is irrelevant as they will be giving it back to you, it doesn't affect your DD

I have the same problem with my provider. Currently trying to get £300+ back from them. Im on a fixed rate and I told them the DD was too high ages ago - took back money from a similar credit after winter -but they won’t allow a change. Last time I got my money back easily but I have a feeling this time will be less easy.

even on variable, your DD shouldn’t be going up by more than double.

The estimated electricity usage on that bill is 2588 kWh per year. The £614 is calculated using your existing tariff and then adding VAT at 5%.

At the new capped electricity rate that would be 2588 x £0.34 + 365 x £0.46,
so £880 for usage and £168 standing charge. Comes to £1100 per annum inc VAT at 5%, or £92 per month.

Which of course assumes that the estimate is reasonable.

That's very helpful. Thank you.

I understand they will be giving us it back but they don't need to take it in the first place- I object to them taking £55 a month more than they need to every month of the year and then paying us £400 back over 6 months. If their estimate is right, we will still be in credit paying £90 a month every month. If they take £145 a month, we will pay them £1740 a year and they will pay us £400 back but their estimate using the new rates is that we will use £1100- so they are still taking about £250 too much and we are unplugging the second fridge-freezer from tomorrow. I am happy to move from £60 a month to £90 a month but not to £145. That will be my position tomorrow in the phone call 😁

I'm with BG and the best thing to do is register for an online account (if you don't already have one). Find out exactly how much per month you're using by looking at your meter reads....assuming you have a smart meter? If you don't have a smart meter, then make sure you're submitting regular meter readings otherwise your bill will be an estimate.

I had an email from BG to say they will be refunding the government's energy rebate direct to my account. So I currently pay £88 per month (still on one of the good, early tariffs) so each month for six months, they'll refund £67 into my bank account. I'd personally rather they add it to the energy account but oh well, I'll just add it to savings account and store it up for when I need it.

Er, they have reduced October’s price cap, and by some margin. Credit where it’s due.

We have an online account and submit readings every month/6 weeks, that's why I'm pretty sure their estimate of what we will use across a year will be accurate.

We don't have a debt- paid it yesterday with a card payment. It existed because of their error on an earlier bill.

Lulu completely agree. I must admit, I haven't tried calling yet but last time I was on hold for 45 mins and got cut off. So I try to do what I can via email.

there is definitely a consumer issue with many of us being asked for money based on nonsensical usage figures but I suspect the energy companies are doing it to offset the number of people who won't pay. Infuriating.