Energy Prices (Strictly NO referrals!)

[HungryHippos]

I'm afraid I might need it all explaining to me like I'm 5.

So "SVR tariff" so to speak is basically where prices can be changed as often as what? Monthly? Weekly? Daily? You have no guarantee of prices at all, hence why people used to do fixes?

SVR is what we're calling the cap tariff, it's the default rate all suppliers are giving if you move over and not applying for anything more specific. This rate changes it seems quarterly based on Ofgem guidance.

In the case of Octopus, it's what they put new people on by default, aka Octopus Flex.

It's like if your mortgage deal expires, you wind up on the SVR mortgage deal where the rate is higher than fixing, except here most energy fixes are not really great lately.

 

[jaybee]

SVR is what we're calling the cap tariff, it's the default rate all suppliers are giving if you move over and not applying for anything more specific. This rate changes it seems quarterly based on Ofgem guidance.

In the case of Octopus, it's what they put new people on by default, aka Octopus Flex.

It's like if your mortgage deal expires, you wind up on the SVR mortgage deal where the rate is higher than fixing, except here most energy fixes are not really great lately.

So the SVR is the same everywhere because all the different energy suppliers are maxing out what they can charge? i.e. They charge the most possible which is in fact the very cap ofgem have set? What is that currently then?

 

[200sols]

Only because the books are cooked and the wholesale provider (also them) makes a killing.

They dont set the price.

Why are people saying if tracker get's near to SVR they will switch? I read that as, if tracker gets close to SVR (but still below) they will switch. Why?

Risk. If it gets to a few % then there is less incentive to take that risk.

Still think we are a while away from the cap price coming down that far though.

 

[dlockers]

They dont set the price.

And we know how the price is set and who benefits from that.

Ain't no CEO of an energy company chosing to eat over heating their home, that is for sure. No matter how much they have educated the public on their razor thin margins and non-viable businesses.

 

[HungryHippos]

So the SVR is the same everywhere because all the different energy suppliers are maxing out what they can charge? i.e. They charge the most possible which is in fact the very cap ofgem have set? What is that currently then?

This pretty much, the prices are published somewhere, the standing charge and unit rates etc, if you google them you should be able to find them, or do a pretend new customer setup on any supplier and see what rates they offer or similar.

 

[200sols]

And we know how the price is set and who benefits from that.

Ain't no CEO of an energy company chosing to eat over heating their home, that is for sure. No matter how much they have educated the public on their razor thin margins and non-viable businesses.

Who sets the gas wholesale price then?

I don't know any CEO of any big companies that are choosing eating over heating. Our government chose this path so as said many times, blame them.

 

[jaybee]

They dont set the price.

Risk. If it gets to a few % then there is less incentive to take that risk.

Still think we are a while away from the cap price coming down that far though.

But what risk though? The risk of having to pay the higher price for a week before your switch goes across?

 

[pc-guy]

Disagree with this to a point, SVR is primarily made up of costs of energy bought on contracts well ahead of time. Tracker is using spot pricing daily based on wholesale costs.

The former probably has higher costs baked in due to risk, because future outlook can be uncertain that far ahead, especially in this climate with Russia/Ukraine war etc.

Don’t disagree the SVR has higher cost because of longer futures. But at nearly 2x the cost of tracker don’t you think that higher cost is a bit too high.

Put it this way, if you are a supplier you would be daft not leveraging your supply by taking a bit of a risk on spots right now.

 

[HungryHippos]

Who sets the gas wholesale price then?

There is a global market for wholesale prices I think, or at least a regional one, much like prices of things like metals, there is a supply/demand of this market, and people who have excess production can sell it, but it's extremely short term pricing/current.

Don’t disagree the SVR has higher cost because of longer futures. But at nearly 2x the cost of tracker don’t you think that higher cost is a bit too high.

Put it this way, if you are a supplier you would be daft not leveraging your supply by taking a bit of a risk on spots right now.

Anyone who has a tariff on SVR has a mandated thing where the energy company has to buy your energy ahead of time, to prevent the previous scenario where cheap energy companies did zero hedging at all and just folded when their variable costs got too high vs your fixed cost.

Ofgem review the prices quarterly based on factors I am not fully aware of, whether we agree or not, it's the formula they use to work out a fair price for energy being bought ahead of time.

That is one reason why prices are predicted to fall by 16% in March for SVR customers, the wholesale costs have been coming down, but it's all lagged behind.

 

[dlockers]

But what risk though? The risk of having to pay the higher price for a week before your switch goes across?

Well yeah... that's how risk management works. Some folk may be more comfortable waiting for the ding to happen; some folk will guess it. Consider the equation the other way around "pay £2 extra now to secure your future".

 

[Mercenary Keyboard Warrior]

OFGEM get given a load of future contract pricing from the energy cos when they set the cap

 

[200sols]

But what risk though? The risk of having to pay the higher price for a week before your switch goes across?

Yes, in this hypothetical scenario with the prices close even a week of high prices on tracker could erode months of previous gains.

There is a global market for wholesale prices I think, or at least a regional one, much like prices of things like metals, there is a supply/demand of this market, and people who have excess production can sell it, but it's extremely short term pricing/current.

There is a market yes, its all supply and demand driven. The energy producers dont set the price, so I was asking dlockers who he thinks does set the price. Pretty sure he has this idea the CEOs are all in a room together deciding this years profit margins.

 

[McPhee]

It’s worth noting in the summer/autumn months last year, it was as cheap as 10p average for a month.

Tracker moves. Normally Jan-Mar the priciest time for leccy due to long night and not as much wind.

My average for the five months from September to now is lower than from April to August last year. With Autumn and Winter pricing averaging ~20-25% over pre-pandemic pricing, it's entirely plausible that the 12m average to September 2024 could be in the same ballpark as pre-pandemic prices (even with the price rise).

Even if prices stay level, I'm quite content personally. Energy prices have come down far enough that they are no longer a concern for me compared to other inflated prices (e.g. food, housing and other household bills are either still rising or haven't come down anything like as much as energy).

Why are people saying if tracker get's near to SVR they will switch? I read that as, if tracker gets close to SVR (but still below) they will switch. Why?

The upside of being on SVR is that a spike in wholesale prices doesn't hit immediately and is instead paid months down the line, averaged out over a three-month price cap period. There's also a chance of government support if prices rise dramatically again.

The downside is it's more expensive than Tracker over time regardless of what happens to wholesale prices (except in extreme scenarios where the government steps in to help).

 

[pc-guy]

Anyone who has a tariff on SVR has a mandated thing where the energy company has to buy your energy ahead of time, to prevent the previous scenario where cheap energy companies did zero hedging at all and just folded when their variable costs got too high vs your fixed cost.

Ofgem review the prices quarterly based on factors I am not fully aware of, whether we agree or not, it's the formula they use to work out a fair price for energy being bought ahead of time.

2x the tracker as a buffer to ensure profitability is nuts. Yes mandate you have to do XYZ and guess who’s selling the gas on the wholesale market - the same people supplying. The Uk market is dysfunctional at best.

Question about FAIR price just opens up another can of worm.

Octopus has been able provide 1/2 priced leccy and gas since Nov 2021 and still able to make money out of the tariff. That says a lot about fairness of those cap.

 

[Hyburnate]

I'm currently with BG and on the Standard Variable, Medium Usage household (1890s build, 3 bed semi). I've been trying for years to get them to install a newer Smart Meter and I'm past my point of fun now, if I were to move to Octopus, how quickly would they install one?

 

[Pyr0m@nI@]{]

When I moved to Octopus, they fitted smart meters within a few weeks. Gas first, then electric.
Apparently, it depends when they have engineers available in the area.

 

[MatsyLR]

I'm currently with BG and on the Standard Variable, Medium Usage household (1890s build, 3 bed semi). I've been trying for years to get them to install a newer Smart Meter and I'm past my point of fun now, if I were to move to Octopus, how quickly would they install one?

Mine was a matter of 1-2 weeks to have a meter fitted by them. Depends on engineer availability in your area.

Easily one of the best for customer service and turnaround (make sure you use a refferal for £50 credit)

 

[Hyburnate]

When I moved to Octopus, they fitted smart meters within a few weeks. Gas first, then electric.
Apparently, it depends when they have engineers available in the area.

Mine was a matter of 1-2 weeks to have a meter fitted by them. Depends on engineer availability in your area.

Okay getting that done tonight.

I never had an in home display when I bought the place, BG said they'd need a new meter, sent someone out who said they weren't trained on my fuse cut out and therefore couldn't do the install.

BG then said we'll get someone else out, and then never did.

Since then they've removed my ability online to track energy usage so have absolutely no interest in continuing to support them despite online complaints they can't be bothered.

What are the rules on referrals here? If I request can someone say yes?

 

[Mercenary Keyboard Warrior]

Okay getting that done tonight.

I never had an in home display when I bought the place, BG said they'd need a new meter, sent someone out who said they weren't trained on my fuse cut out and therefore couldn't do the install.

BG then said we'll get someone else out, and then never did.

Since then they've removed my ability online to track energy usage so have absolutely no interest in continuing to support them despite online complaints they can't be bothered.

What are the rules on referrals here? If I request can someone say yes?

Yes you can request, prepare for 100 Dms

 

[HungryHippos]

2x the tracker as a buffer to ensure profitability is nuts. Yes mandate you have to do XYZ and guess who’s selling the gas on the wholesale market - the same people supplying. The Uk market is dysfunctional at best.

Question about FAIR price just opens up another can of worm.

Octopus has been able provide 1/2 priced leccy and gas since Nov 2021 and still able to make money out of the tariff. That says a lot about fairness of those cap.

I can't comment on how they come up with the figures they do here tbh, I haven't dug into it, my interest in doing so is minimal because my util bill for 2023 was £600 for the year, for everything, so I'm already saving a lot by doing other things (solar etc).

I saw the higher prices coming in, and took my own action to prevent it hitting me too badly, not everyone can afford this but hey I'm also generating green energy!