Energy Prices (Strictly NO referrals!)

[Mercenary Keyboard Warrior]

Not sure what your point is though. Energy prices now are the highest they've ever been and double to what I was paying in 2019

My point was what I originally wrote that you said "hardly" to.

Most people are comparing pricing to when they think it was last "normal". Which was actually during COVID times and it was very much not normal then as it is not normal now.

2020 was basically very low pricing. At times they were paying to take gas, ie negative price.
So when many comment on OMG look how much my gas and elec went up they are not taking the normal trend point, but a low point.
You could secure some silly low prices pre 21.

In 21 when the global economy opened back up we went rapidly from a surplus position globally to a shortage. Economic activity tried to recover a lot of the lost activity.
So demand went above normal and hence why you saw 21 prices rocket.
Energy is highly sensitive to demand (and supply if extractors play silly buggers)

Then on top of that in 22 obviously Ukraine.

Then you have the failed suppliers, not only were we having to pay to cover those who had credit in failed suppliers, but we also now see lower competition.
Switching has basically only really just returned to the market, but its got vastly less competition now than it had up until 2021.

 

[200sols]

But yes exactly, there was a very low point for energy costs (in actual as well as real terms) around mid 2020. Demand for all energy went down considerably and hence prices tumbled.

I said 2019 though, pre covid. Energy was dirt cheap tbf.

 

[Mercenary Keyboard Warrior]

I said 2019 though, pre covid. Energy was dirt cheap tbf.

Yes I know.
Its been on an upward trend in real terms for some years. Far far shallower of course but its been there.

TBF energy has been incredibly cheap. We have taken in for granted and be very wasteful with it.

 

[jpaul]

beyond the wholesale energy cost (only 1/2 of the bill) have the other components that are keeping costs high, post covid
the green levy £150/pa post 2021 and supplier operating costs where OFGEM/govt could change them - Keir are you keeping green levy ?

The October to December 2023 price cap will consist of:

• 49% wholesale costs of energy
• 21% network costs
• 11% operating costs
• 9% policy costs (levies to support low carbon generation, energy efficiency and vulnerable customers)
• 5% VAT
• 3% assumed suppliers (profit) margin
• 3% other costs.

I never trust statista/clickbait .. if you are a member you could see whose data they were actually (mis)representing, although sometimes you can make an intelligent guess

 

[chrcoluk]

I doubt it will ever go down to the levels it was a couple of years ago tbh. Get used to these prices.

2021 days are gone. I think even if we ever get to the point we are no longer reliant on the international market, there will be too many self interests to keep prices above 2021 levels.

Tracker will occasionally flirt with those level of prices (unit) though.

 

[pc-guy]

Wholesale retail electricity price (ie £ per unit we pay) has been average 17-18p last month and half, before that 16p.

Gas had been 4p and recently average 5p, just don’t understand how ofgem can justify these rises in cap.

Been on the tracker rate for nearly a year now and not a single day has the tracker rate ever breached the cap rate.

How can ofgem justify these cap rates let alone raising them. Just pure profit for suppliers.

 

[Richie]

Regarding the Green Levy - what is this actually used for. Am I correct in thinking part of it is used to pay grants for Solar and Heat Pump installs?

 

[413x]

Wholesale retail electricity price (ie £ per unit we pay) has been average 17-18p last month and half, before that 16p.

Gas had been 4p and recently average 5p, just don’t understand how ofgem can justify these rises in cap.

Been on the tracker rate for nearly a year now and not a single day has the tracker rate ever breached the cap rate.

How can ofgem justify these cap rates let alone raising them. Just pure profit for suppliers.

Will be going tracker when my fix ends for sure. The cap is mental.

Probably relies on people's aversion to trackers.

 

[pc-guy]

I have explained how the tracker works to a number of people and how it has been proven to save significant money.

50% is like this is no brainier I am doing it right now
50% is like no, don’t want to know.

I think it is human nature to just block things out that doesn’t suit your narrative/comfort zone.

If the whole nation is wise to the touch and go on tracker then ofgem can go and stuff itself. Tho that would create a rather dysfunctional market as octopus will be the sole energy supplier.

Never the less - consumer champion Martin Lewis has been surprising quiet on tracker…

Interesting fact also is that standing charge on tracker is half the current capped rate as well.

 

[Mercenary Keyboard Warrior]

I have explained how the tracker works to a number of people and how it has been proven to save significant money.

50% is like this is no brainier I am doing it right now
50% is like no, don’t want to know.

I think it is human nature to just block things out that doesn’t suit your narrative/comfort zone.

If the whole nation is wise to the touch and go on tracker then ofgem can go and stuff itself. Tho that would create a rather dysfunctional market as octopus will be the sole energy supplier.

Never the less - consumer champion Martin Lewis has been surprising quiet on tracker…

Interesting fact also is that standing charge on tracker is half the current capped rate as well.

I think the tracker standing charge is semi fixed. My gas standing charge is what it was when I joined.

I am on go for elec as opposed to tracker.

I really like the tracker products but they can sure soar if the timing catches you. IMO you need to mentally bank the savings so if it does jump above cap you just accept it.
I have seen people talking of leaving tracker the moment it goes above. Madness.

IIRC Octopus quote 30 days max to move you off as well. Plus of course 9 month cooling down time to rejoin.

I fully expect that at some point during winter my tracker gas could jump to over cap. But I don't expect it to be much of the time if it happens.
If it does then the chances are cap could pressure upwards again in later quarters.

 

[SDK^]

Wholesale retail electricity price (ie £ per unit we pay) has been average 17-18p last month and half, before that 16p.

Gas had been 4p and recently average 5p, just don’t understand how ofgem can justify these rises in cap.

Been on the tracker rate for nearly a year now and not a single day has the tracker rate ever breached the cap rate.

How can ofgem justify these cap rates let alone raising them. Just pure profit for suppliers.

You're quoting day ahead prices there [Tracker rates]
The 6 month future price is higher than day ahead !

A 6 month future average wholesale price is used for the Price Cap calculation, to smooth out the peaks and troughs. Also so suppliers aren't exposed to volatile market fluctuations, which sent many suppliers into Bankruptcy in 2021/22

Just pure profit for suppliers.

Even with £970m profit over 6 months, British Gas is only making £80 per customer over that time. [Assuming all profits can be linked back to home customers, if not, then it's lower than that]

 

[chrcoluk]

I have explained how the tracker works to a number of people and how it has been proven to save significant money.

50% is like this is no brainier I am doing it right now
50% is like no, don’t want to know.

I think it is human nature to just block things out that doesn’t suit your narrative/comfort zone.

If the whole nation is wise to the touch and go on tracker then ofgem can go and stuff itself. Tho that would create a rather dysfunctional market as octopus will be the sole energy supplier.

Never the less - consumer champion Martin Lewis has been surprising quiet on tracker…

Interesting fact also is that standing charge on tracker is half the current capped rate as well.

He likes my posts on tiktok when I mention it, I think he knows if he goes big on it, it will upset the apple cart, sometimes its better to keep a good thing small. He also has briefly mentioned it on his tv show, but never as the main point of discussion.

 

[eddyr]

He likes my posts on tiktok when I mention it, I think he knows if he goes big on it, it will upset the apple cart, sometimes its better to keep a good thing small. He also has briefly mentioned it on his tv show, but never as the main point of discussion.

It makes sense, I wouldn't push it as a public figure, imagine the backlash from people who don't care to understand it and then panic.

Particularly now as the tracker price is naturally drifting up as we head into winter as it is and will likely hover around the price cap SVT in the depth of winter and occasionally go over. A lot of people are going to get burned, or feel they get burned when the tracker price jumps in the short term by 20/40/60% due to something or other and can't get off it quick enough, and then find they can't get back on it due to cooldown period when prices drop with demand abating or the market calming.

 

[pc-guy]

You're quoting day ahead prices there [Tracker rates]
The 6 month future price is higher than day ahead !

A 6 month future average wholesale price is used for the Price Cap calculation, to smooth out the peaks and troughs. Also so suppliers aren't exposed to volatile market fluctuations, which sent many suppliers into Bankruptcy in 2021/22




Even with £970m profit over 6 months, British Gas is only making £80 per customer over that time. [Assuming all profits can be linked back to home customers, if not, then it's lower than that]

I am quoting last 11 months. Futures clearly has a degree ambiguity. But for the last 11months cap has been substantially higher than actual cost to suppliers. So it’s crazy that ofgem thinks raising cap is sustainable for consumers.

You get the likes OVO who offers 7p EV charging anytime during the day while also keeping customer on capped rate. That is telling how profitable it is to supply.

If a company consistently say it makes x% profit despite market fluctuations and growth or loss of business then I wouldn’t trust that company’s accounts whatsoever. It’s just mean the books has been cooked by some well paid accountants.

No doubt BG/EoN/EDF/Octopus/OVO and others are making decent money off supply side of things.

 

[pc-guy]

He likes my posts on tiktok when I mention it, I think he knows if he goes big on it, it will upset the apple cart, sometimes it’s better to keep a good thing small. He also has briefly mentioned it on his tv show, but never as the main point of discussion.

Didn’t stop him encouraging a load of people to take out fixed 2yr mortgages at 0.99% back in late 2020-2021…those poor souls would be literally poleaxed since October last year as they come off those short term fixed.

That deal was literally on his weekly emails as bold text for a long while with words such as “best buy get it now before rate rises”.

 

[SDK^]

I am quoting last 11 months. Futures clearly has a degree ambiguity. But for the last 11months cap has been substantially higher than actual cost to suppliers.

A couple of points:

1. The cost cap is a formula based on 6 month average future price - so it will always be consistently higher than the day ahead price.
2. Suppliers are 'minded to' purchase energy 6+ months ahead, hence why the cost cap formula is used. Some suppliers offer day tracker tariffs but it's limited to a low number of customers.
   Looks like you're saying - the day tracker prices are low so all energy consumers should be paying this rate. This 'day ahead' pricing methodology works when day prices are low, but that isn't always the case - hence why Ofgem created the 6 month Policy, to save supplier going bankrupt again, when the day ahead price jumps.

 

[200sols]

They changed to a 3 month methodology last year.

Most of the profit comes from the generation side really, supply side profit is capped.

 

[chrcoluk]

It makes sense, I wouldn't push it as a public figure, imagine the backlash from people who don't care to understand it and then panic.

Particularly now as the tracker price is naturally drifting up as we head into winter as it is and will likely hover around the price cap SVT in the depth of winter and occasionally go over. A lot of people are going to get burned, or feel they get burned when the tracker price jumps in the short term by 20/40/60% due to something or other and can't get off it quick enough, and then find they can't get back on it due to cooldown period when prices drop with demand abating or the market calming.

That as well yeah, I remember people blaming him for their woes when his advice to fix had people on tariffs higher than the EPG.

But he isnt mystic meg he can advise, but ultimately people make their own decisions. So yeah I think the tracker just might be too risky for him to sell big.

 

[Sinbad2000]

That as well yeah, I remember people blaming him for their woes when his advice to fix had people on tariffs higher than the EPG.

But he isnt mystic meg he can advise, but ultimately people make their own decisions. So yeah I think the tracker just might be too risky for him to sell big.

The majority of people have really bad luck when it comes to making their own decisions.... *coughBrexitcough*

 

[200sols]

But for the last 11months cap has been substantially higher than actual cost to suppliers.

Its fine, if you want to be exposed to market moves then you have that choice via smart tariffs. The price cap is really in place to stop people being ripped off. Basing everything on day ahead prices works until it doesnt and we have very recent evidence of that with all the supplier collapses.