We have all been shocked by the energy price cap changes headlines! The headline numbers give very little insight into how one will be affected as it is unlikely your energy usage matches the average energy use in an average place in the UK
The price caps, we have discovered depend on where you live, ie they are not the same in London as in Cornwall for example.
We downloaded the detailed documents from Ofgem and extracted the data for London.
Prices vary also depending on which payment method you use, ie pre-payment meter, credit meter (payment on receipt of bill) or other methods that include fixed direct debit.
Your energy bill is also made up of fixed service charges per day (do not change with your usage) and a rate per KwH used.
It is disturbing to discover that the fixed charges for Electricity have increased significantly. On the most widely used payment method (other methods) the increase is a staggering 38%. They are smaller for gas, ie 4% but `16% for pre-payment meters. Asuming that you have an electricity and a gas meter the combined charges that no switching off the lights or switching off the heating or hot water will reduce, are as follows:
- Other payment methods/ single rate electricy- £206.35 per year (was 171.93 before- increase of 20%)
- standard credit/single rate electricity- £240.82 per year (was 203.78 before-increase of 18.2%)
- Prepayment meters/single rate electricity- £258.69 per year (was 208.43 before- increase of 24.1%)
Not sure what operating costs would justify such huge increases in fixed charges not related to usage! This will undoubtedly hurt the less well off more as they tend to be on pre-payment meters and those charges are fixed, whatever endeavour you take to reduce your usage.
So what about the variable charges based on the electricity or gas you use, ie rates per Kwh?
The increase in gas prices is around 80% per KwH. So you would have to use around half of your current usage of gas to maintain your current variable expenditure!
The increase in electricity prices is around 43% per KwH. So you would have to use around 1/3 less electricity to maintain your current variable expenditure!
What is also worth noting is that it might be worth considering a multiple rate electricity tariff. These tariffs have prices that differ depending on when you use electricity. What was known as Economy 7 before, has evolved with some companies offering 3 different unit rates. This is beneficial if you have delayed start appliances that you can run between midnight and 4 am or storage water heaters for example.
If you are on a standard credit tarriff, it is also worth moving to a fixed direct debit tarriff that is much cheaper if you can. A standard credit Tarriff for electricity is also more expensive than a prepayment meter for Electricity .
The above changes only affect customers that were on standard tariffs. A lot of people were on fixed tariffs and thus did not see the price increases in October 2021. For these people the price increases will be much higher.
Please see below the detailed tarriff cap levels for London.
All above prices are before the 5% VAT is applied.
Please look at your bills that should give you a yearly estimated usage in Kwh for gas and electricity to calculate your future bills if your usage doesn’t change.
The source for the data is here for prices from April 2022 and here for prices from October 2021.