Energy Prices (Strictly NO referrals!)

Shoza said:
Standing charge is what, £20 a month? It’s half my mobile phone bill. I don’t see all reason for all the hate and drama about it.

However, it should be uniform across the entire national grid and not regional.
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Standing charges was £25 this month which is half my whole energy bill and 25 times my phone bill.

There is reason to hate it when it's a stupidly high proportion of people's bill. Most people don't get what the cost is for sure, but it's still silly high, specially the whole failed suppliers thing, that's not the publics problem.
 
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MatsyLR said:
Standing charges was £25 this month which is half my whole energy bill and 25 times my phone bill.

There is reason to hate it when it's a stupidly high proportion of people's bill. Most people don't get what the cost is for sure, but it's still silly high, specially the whole failed suppliers thing, that's not the publics problem.
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Your very atypical user though. You really can't be used as a good example. It seems your atypical not just on energy but also your phone bill.

The failed suppliers was a public problem. Unless you don't want to protect people spreading the cost via DD.
Stop doing that and you see two things, prices go up as the businesses need to fund all energy in advance and less competition probably.
You may also see more people refused a credit account and be forced onto prepayment as all companies will have a limit set on how much they can reasonably borrow to fund the cost of the utils in advance.

It should be remembered that the regulator caused most of the companies to fail as they prevented them from charging what they needed to. So the price cap basically forced the companies to fail.
Some of the properly sketchy ones would have failed anyway. But some of the companies would have been fine if they were allowed to charge what the actual cost of buying in the utils was.
 
Mercenary Keyboard Warrior said:
It should be remembered that the regulator caused most of the companies to fail as they prevented them from charging what they needed to. So the price cap basically forced the companies to fail.
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or rather the failing companies took financial risks on the forward purchase of energy and insuring those, especially w/o vertical integration with supply companies,
at least now if people move new supplier is liable on 'pre-purchased' energy cost of old supplier; churn rate for public with suppliers (fanboy Lewis) doesn't help either
 
Mercenary Keyboard Warrior said:
The failed suppliers was a public problem. Unless you don't want to protect people spreading the cost via DD.
Stop doing that and you see two things, prices go up as the businesses need to fund all energy in advance and less competition probably.
You may also see more people refused a credit account and be forced onto prepayment as all companies will have a limit set on how much they can reasonably borrow to fund the cost of the utils in advance.

It should be remembered that the regulator caused most of the companies to fail as they prevented them from charging what they needed to. So the price cap basically forced the companies to fail.
Some of the properly sketchy ones would have failed anyway. But some of the companies would have been fine if they were allowed to charge what the actual cost of buying in the utils was.
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The failed suppliers thing was handled poorly from start to finish and in an unfair way. My supplier (Avro) failed, and so that made my agreed contract void and I went onto standard variable rate with a new SOLR. However when Bulb failed, all their customers got to stay on their contracted unit rates because the failed company was taken over by the Government.

Not fair to treat customers of failed suppliers differently. The Bulb group was massively advantaged (compared to customers of other failed suppliers) by that.
 
jpaul said:
or rather the failing companies took financial risks on the forward purchase of energy and insuring those, especially w/o vertical integration with supply companies,
at least now if people move new supplier is liable on 'pre-purchased' energy cost of old supplier; churn rate for public with suppliers (fanboy Lewis) doesn't help either
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You failed to fundamentally understand that the majority of the companies who failed were those who DIDN'T forward purchase.
They should have been allowed to put up prices, and with that they would have survived.
They were forced to sell at a loss, buying at spot at a high price and sell at the cap.

The pre-purchase charge is because those who survived are all forward purchasing. Without that in place then literally every customer would move constantly when the wholesale prices are falling.
For once the regulator was awake to preventing the problems they are causing from escalating into chaos.
 
danlightbulb said:
The failed suppliers thing was handled poorly from start to finish and in an unfair way. My supplier (Avro) failed, and so that made my agreed contract void and I went onto standard variable rate with a new SOLR. However when Bulb failed, all their customers got to stay on their contracted unit rates because the failed company was taken over by the Government.

Not fair to treat customers of failed suppliers differently. The Bulb group was massively advantaged (compared to customers of other failed suppliers) by that.
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Bulb offered no fixed rates, everyone was on their standard variable rate already.
 
I dont really understand why the price cap has increased.

BBC:
"The rise in the price cap is the result of higher prices on the international energy market, Ofgem said, owing to increasing geopolitical tensions and extreme weather driving competition and demand for gas, which determines the price of wholesale electricity."


But for those of us on Octopus tracker we've paid rates way less than price cap rates on both electricity and gas for ages now. So why, if wholesale rates are way less, does the price cap need to go up?
 
danlightbulb said:
The failed suppliers thing was handled poorly from start to finish and in an unfair way. My supplier (Avro) failed, and so that made my agreed contract void and I went onto standard variable rate with a new SOLR. However when Bulb failed, all their customers got to stay on their contracted unit rates because the failed company was taken over by the Government.

Not fair to treat customers of failed suppliers differently. The Bulb group was massively advantaged (compared to customers of other failed suppliers) by that.
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Same thing happened to me. I was with Peoples energy and on a good (not mega but good) deal. They went under and I was moved to BG, on the "special" scheme that was like 0.0000001% better than the standard tariff with them.
I then needed to wait for my credit to be recovered and given back to me.

Bulb was a slightly different position in that at the time no one wanted it. The offers from the remaining companies were really bad and would have cost us (the treasury) even more money.
The other companies had been small enough that they were taken fairly easily.
 
danlightbulb said:
I dont really understand why the price cap has increased.

BBC:
"The rise in the price cap is the result of higher prices on the international energy market, Ofgem said, owing to increasing geopolitical tensions and extreme weather driving competition and demand for gas, which determines the price of wholesale electricity."


But for those of us on Octopus tracker we've paid rates way less than price cap rates on both electricity and gas for ages now. So why, if wholesale rates are way less, does the price cap need to go up?
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Tracker is based on spot, which means no guarantee on pricing. The majority pay prices based on forward contracts which always cost a chunk more.

The regulator takes into account the forward pricing of the contracts when they set the cap.

Even tracker, for gas, has shown a fairly significant uptick recently.
 
Mercenary Keyboard Warrior said:
Tracker is based on spot, which means no guarantee on pricing. The majority pay prices based on forward contracts which always cost a chunk more.

The regulator takes into account the forward pricing of the contracts when they set the cap.

Even tracker, for gas, has shown a fairly significant uptick recently.
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Right but if spot prices have been consistently below forward contracts, doesn't that show that forward contracts pricing is out?

The price cap I believe is based on 'historic' forward prices, not a projection of 'future' forward prices I think.

So shouldn't someone be saying hang on a sec, these forward prices were not reflective of what the actual prices were, so its a poor value benchmark for the consumer?
 
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danlightbulb said:
Right but if spot prices have been consistently below forward contracts, doesn't that show that forward contracts pricing is out?

The price cap I believe is based on 'historic' forward prices, not a projection of 'future' forward prices I think.

So shouldn't someone be saying hang on a sec, these forward prices were not reflective of what the actual prices were, so its a poor value benchmark for the consumer?
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The forward prices are the ones that relate to the supply of energy for the forthcoming period.
So eg in jan you purchase x amount at £y for delivery in Q3, then those are the ones that the regulator takes into account for the Q3 price cap.

Spot prices are generally below forward contract prices. They may suddenly flip over, like when Russia invaded Ukraine, but generally the spot is cheaper.

The reason the majority of the suppliers who failed did so was because they bought at spot. That allowed them to sell it cheaper to customers.
Fine when 999/1000 spot was cheaper than forward contracts. When Ukraine happened spot went bonkers, those companies were not allowed to go above cap so had to sell at a loss.
Normally they benefitted from having a cap set higher than their purchasing price would dictate, but as the purchasing price was based on the costs to the large companies who mainly forward purchase that was what created their business opportunity, but also what was (due to regulator activity) the thing that ultimately caused their demise.
 
Mercenary Keyboard Warrior said:
Spot prices are generally below forward contract prices. They may suddenly flip over, like when Russia invaded Ukraine, but generally the spot is cheaper.
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Yeah absolutely, because there is a premium to buying ahead.

However what Im questioning is the value. Look at all of us on Octopus tracker or similar tariffs, and how much we have benefited from taking the risk on spot prices.

The vast majority of the country have, against this benchmark, been overpaying for months.

And yet Ofgem simply lifts price caps instead of challenging suppliers to beat the forward prices, as we have all been doing.

Ofgem could have kept the price caps the same and challenged suppliers to deliver more effective purchasing arrangements by taking a proportion of risk on spot prices.
 
They cant beat the forward pricing, that's the price on the day to guarantee supply at a fixed cost in the future. Spot is always going to be cheaper until the day it isnt and you are caught pants down and the energy market collapses, it literally just happened.

As the Ofgem boss said on BBC earlier though, the sooner we move away from being pegged to gas prices the better.
 
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danlightbulb said:
Yeah absolutely, because there is a premium to buying ahead.

However what Im questioning is the value. Look at all of us on Octopus tracker or similar tariffs, and how much we have benefited from taking the risk on spot prices.

The vast majority of the country have, against this benchmark, been overpaying for months.

And yet Ofgem simply lifts price caps instead of challenging suppliers to beat the forward prices, as we have all been doing.

Ofgem could have kept the price caps the same and challenged suppliers to deliver more effective purchasing arrangements by taking a proportion of risk on spot prices.
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Beat the forward prices would require them not forward contracting and going to spot.
The whole regulation is assuming thats not happening, again see what happened to the companies that didn't forward contract.

Most people prefer a fixed deal, that needs forward contracting.

Look at how much the risk price is on tracker. IIRC its 30p for gas and £1 for elec.
If a Ukraine type scenario happened again and tonight you were advised spot had gone to 30p for gas and £1 for elec, how quickly would you be trying to switch to a price that had been forward contracted? ;)

I am currently debating fixing my gas, even though its at a higher rate than tracker.
 
If prices as expected will rise again in January I'm very pleased I just fixed with Octopus.

Octopus 12M Fixed
This tariff features 100% renewable electricity and fixes your unit rates and standing charge for 12 months.
Tariff info(all prices include VAT)
Starts from 12:00 AM, 28th Sep 2024
Electricity
Unit price 22.76p per kWh
Standing charge 61.25p per day (:eek:)
Gas
Unit price 5.79p per kWh
Standing charge 29.60p per day
 
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MissChief said:
If prices as expected will rise again in January I'm very pleased I just fixed with Octopus.

Octopus 12M Fixed
This tariff features 100% renewable electricity and fixes your unit rates and standing charge for 12 months.
Tariff info(all prices include VAT)
Starts from 12:00 AM, 28th Sep 2024
Electricity
Unit price 22.76p per kWh
Standing charge 61.25p per day (:eek:)
Gas
Unit price 5.79p per kWh
Standing charge 29.60p per day
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Last I saw they were saying likely a small increase for Jan, but then a decrease again after that.
Its pretty much now on what you would expect.
More demand = higher prices, so it should rise in the autumn then in winter and fall in spring and summer.

ofc for most people the gas price is most important in the autumn and winter periods.
I was paying close to 5.79p last November on tracker. Sure I would like less but it feels "ok" at that level for the certainty.
 
200sols said:
They cant beat the forward pricing, that's the price on the day to guarantee supply at a fixed cost in the future. Spot is always going to be cheaper until the day it isnt and you are caught pants down and the energy market collapses, it literally just happened.
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You don't think energy companies are doing this anyway, but using the gap to boost profits instead of returning it to customers?

These big suppliers have whole trading teams who will be buying various combinations of forward prices and spot at any time.
 
Standing charge still represents a disproportionately high percentage of bill even on tracker, if you use little.

Economy would only support a few percent of users on spot prices - otherwise your loaf of bread would become dynamically priced too, or cinema ticket - mayhem,
even Octopus shareholders want a stable return.
 
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