British Gas to refund energy rebate each month.

[Whatthetrolley]

Just had an email saying that British Gas will be refunding the £67/66 per month after the full direct debit has been taken. So not just a credit on the account. I now need to up my DD to £66.

See this is where I'm so confused.. all the figures I've heard about are saying things like bills might rise by 54%.. then later 70%something and now I've read 82%. Which I appreciate is still a heck of a lot.

BUT the figures you have here seem to imply that your bills are rising by 400%.. how can that be possible? Assuming no extra usage than usual? Am I missing something or am I misunderstanding the information? Is it a case of 54% rise from the price cap in Oct perhaps and THEN a 82% rise from that figure, so a 136% rise perhaps?

I'm lucky in that my bills (small flat) were approx £90 a month around the end of last year. I fixed when I was offered a deal with EON to existing customers sometime in April which was one of the offers which Martin Lewis suggested we should take and now my bills are £110 a month fixed DD. I've checked usage regularly and one month I had to pay an extra £40ish I think as I could see I was in debit despite my payment but now I'm in credit approx £90 across the accounts. I'm sure this will go when it comes to Winter ofc.

I have essentially assumed as all the figures mentioned are less than 100% , if I use 100% as a worst case scenario, I can budget to save this in readiness, i.e. saving an additional £110 a month to pay the increased bills when this comes in. I appreciate I am in a fortunate position to be able to afford this, but have I just totally misunderstood things? Should I be saving more? What's the total percentage (say, from October 2021) that I should be expecting by bills to increase by in Oct 2022?

I've just found this article which includes a calculator to estimate how much your bills will go up:

www.themoneyedit.com/household-bills/energy/energy-price-cap

When I put in that my bills are £110 a month it tells me my bills might go up to £200 - so that seems to be implying the 82% price rise I've read about and that my "worst case scenario" of an approx 100% price increase seems correct?

Remember that each percentage increase in on top of the previous one. So the 82% is on top of the April rise and the Jan rise will be on top of the 82%, not on top of current rates. You don't just add together 54% and 82% and 20% to get 156%.

For example, in 2020, I was paying 3p for gas and 14p for electricity.

The new rates for October, using the 82% figure, look like they will be closer to 50p for electricity and 14p for gas.

Then in January, that will rise to 60p for electricity and nearly 17p for gas.

So that's a 300% increase from 2020 for electricity and 466% for gas if my maths is correct.

BUT the figures you have here seem to imply that your bills are rising by 400%.. how can that be possible?

Because we're comparing winter 2020 to winter 2022...

They rose by 12% late last year

Then they rose by 54% earlier this year, which is on top of that previous rise, so the increase is compunded.

Then they are estimated to rise by 82% on top of that rise - the % is further compounded.

Then they are estimated to rise again by another 19% but this is already on top of the previous rises, so even further compounded.

For simplicity, assume your bill is £1.

£1 + 12% = £1.12
£1.12 + 54% = £1.72
£1.72 + 82% = £3.19
£3.19 + 19% = 3.73

Summary: A 3.75x increase

In my exmaple, I was on a fix in Winter 2020 so I've seen an even bigger jump than that - because I didn't start on the price cap.

I just want £400 credited to my electricity account, to be absorbed as winter kicks in. If BG send it back to me I will just have to send it back to them, which seems convoluted.

@Rosiestraws Fixed tariffs fix your unit price, not your direct debit. Your DD can change depending on usage but your unit rates will stay fixed until the end of your tariff, when you'll either go onto the variable rate (which is subject to the price cap) or fix again on a fixed rate tariff. So you won't see a big rise in October if you're on a fixed tariff but will whenever your fixed rate ends, unless the world is less crazy by then.

Sorry, to make it clearer (hopefully)...

For simplicity, assume your bill was £1 in winter 2020

£1 + 12% = £1.12
£1.12 + 54% = £1.72
£1.72 + 82% = £3.19
£3.19 + 19% = 3.73

Summary: A 3.75x increase when compared to bills at the end of 2020

@Rosiestraws How much more you need to budget for Oct 2022 depends on what your current fixed price per kwh is and what your current standing charge is.

If it helps, if I apply the Cornwall Insight's precictions to the current costs, I see Oct 2022 looking something like:

Elect
Standing charge: 81.3p per day
Price per kwh: 50.2p

Gas
Standing charge: 49.4p per day
Price per kwh: 13.2p

There will be variation on that across regions etc, and the price cap may allocate differently between stamding charge and kwh charge. But that might give you an idea how much more you might be paying once your fix ends.

BUT

The price cap is due to be reviewed again in Jan 2023 and Cornwall Insight think they will go up again by another 19% making them...

Elect
Standing charge: 96.8p per day
Price per kwh: 59.7p

Gas
Standing charge: 58.9p per day
Price per kwh: 15.7p

This may not come to pass, but this is thr worse case I am currently planning for.

The other thing to remember is that in late 2020 it was possible to fix below the price cap, which was around £1000/£1100 per year.

At that time, you could get a fix for around £900 for the amount of energy that the price cap figure is based on.

So if this is your starting point, you've got another factor of around 1.1 to 1.2 to multiply your factor of 3.75 by, which is where we end up with people's bills rising from under £100 to over £400 per month for the same amount of energy. And why we're seeing higher users with annual bills approaching £10k pa.

The price cap figures of 2900 kWh electricity and 12 000 kWh gas aren't that high. We're just above that in an extended 2 bed semi with good insulation but crap windows and admittedly we're not as careful as we could be.

If you're in a spacious 4/5 bed drafty detached with teens on their gaming PCs and Mumsnet usage levels of laundry, showering and tumble drying, you could easily use 2 or 3 times the price cap. And that's before we get to having hot tubs, fish tanks etc.

I'm going to do as a PP above and pay the £67 straight back as a credit to my account each time instead.

Ah thanks @Hugasauras and @CravenRaven , that makes more sense. So it's like what I had mentioned at the end of my second paragraph.. it's one increase on top of the previous increase... the figures make sense, thanks..

I've just checked again and I actually fixed in March 2023 and yep I checked the fixed rates being offered for the standing unit and price per kwh were what they were supposed to be at that time in comparison to the price cap (I think it was something like 54% higher than the price cap? I can't recall but I know I read articles at the time and was confident it was the right thing then!)

So it sounds like I'm doing ok for now - if I'm spending £110 a month and keeping an eye on usage to check I'm not going over this in reality based on usage, and saving £110 a month. That seems like it won't be needed until my fixed rate ends in March 2023 so hopefully I'll have the money there to help with the increase.. but I guess it does all depend on how much it increases again by then!

it does all depend on how much it increases again by then!

It does. Definately keep an eye on prices and predictions so that you're not caught unaware.

Well done for fixing. I am haunted by a particularly nice fix I saw back when this all started, that was offered to me and I decided to think about it. Half an hour later I decided I should go for it... but it was gone! After that I couldn't find any fixes at all.

@BarbaraofSeville I don't have a DD I pay for what I use on a monthly basis.

I'm not expecting a huge shock come the winter because I'm aware that the bills will jump & I have taken steps to decrease my already not very much usage.

I have a 2 bed flat which is well insulated & it's just me & DD, we're both naturally warm people so the heating isn't on that much even in the depths of winter. We also have oodies, an abundance of blankets & hot water bottles.

My main concern is drying towels & bedding in the winter which is all the dryer tends to be used for.

I'm not sure there's a good way to apply the funds to accounts - returning money to people just gives them the money to use for other things & isn't really subsidising energy, but applying as a credit just means some people will cancel their DD & keep the money they would usually spend on energy costs.

In all honesty, the entire situation is shit & something needs to be done.

But how you pay doesn't change the fact that the amount of energy that cost you £75 in January 22 will cost about £250 in January 23 (I forgot the 3rd price rise!) and if you don't use very much, you don't have a lot of scope to cut down, especially as the daily standing charge is likely to be around £30 a month. That was my point.

Going into this winter, you won't get 'heating on full pelt to run a tumble dryer 24/7' for £75, £100 or even £200 a month. That's where the £5/600 pm bills come in.

They're all doing that, or they're all meant to

It's done by your electric meter ID see in this report
'Those with a domestic electricity meter point paying for their energy via standard credit, payment card and direct debit will receive an automatic deduction to their bills.'

www.itv.com/news/2022-07-29/how-does-the-400-energy-bill-discount-work-and-how-do-you-claim-the-money

I also read recently, though can't remember where, that because it is done by your electric meter it doesn't matter if you change supplier halfway through as it is the meter ID that is used.

it's a bit confusing because they keep calling it energy grant/rebate rather than electric

We fixed in April at just below the current price cap. Our DD is £67 and we are £200 in credit. Last month we used about £55 for both gas and electric. I was hoping the rebate would pay for our heating in winter and build up credit for next April. I suppose l will just increase my DD if l can't leave the £400 on the account.

To be clear, suppliers aren’t able to do as they please when applying the £400 credit - it’s been subject to extensive consultation within the industry and Ofgem/BEIS/Treasury have been involved throughout. There are regulatory rules around application.

Broadly speaking, prepayment and cash customers get it as a credit to their bills and DD customers will get it paid to their bank accounts. Some energy providers are able to amend DDs, but many can’t as it’s a mammoth task for millions of customers - and as a pp poster said, keeping the DD the same avoids confusion with customers when the scheme ends.

I'd much rather the electric company didn't keep messing around with a direct debit, that's how mistakes get made, if they are simply putting money IN to my bank there is less chance of mess ups causing me hassle.

I'm on a fixed tariff, so one of the "lucky" few (who ignore Mr Lewis). Just hoping it'll all be sorted by 2024.

Interesting - though as I said before, Shell have written to say they will be applying it as a credit to the energy account (I'm a DD customer). So, there seems to be some flexibility.

@CravenRaven there’s been a lot of debate as to whether it should be cash, or a bill credit for DD customers. I’m going to check that point, I work in the sector and was involved in the consultation. It may be that they have permitted some flexibility in application.

Here's what Shell say...

"How will the payments work?

You’ll receive two instalments of £66, and four of £67, starting in October 2022. If you pay by Direct Debit, or when you get your bill, the credit will appear on your account as if you’d made a payment."

@CravenRaven it will be paid as cash, either through a lower DD, or as cash to your bank account.

It will appear on your bill as a payment refund (hence the word ‘credit’), but it’s definitely cash in your pocket if you are a DD customer.

So for example, it can work in two ways, either as a DD reduction, or as a cash refund.

DD reduction: You owe £100, you normally pay £100. For these six months you would pay £34 and the £100 on your bill will be paid off.

OR

Cash: You owe £100, you normally pay £100. For these six months you continue paying £100 and your bill is paid off, separately you will get £66 in your bank account to do what you like with.

If you are going to tell me it would’ve been easier to apply as a bill credit - you’re right (imo……)

If you are a cash/prepayment customer you will have the amount either applied to your account as a credit, or given to you as a voucher. It’s not cash.

Hope that helps, for info, what I’ve said above is definitely correct. The energy market is my mastermind subject lol.

Good-oh! Glad I stumbled across you then and thanks

Mine's under £40 for electric as heating, water, and stovetop is gas