OFGEM Price Cap Oct to Dec 2023

[nowty]

Its announcement day from OFGEM today for the next control period.
https://www.bbc.co.uk/news/business-66607005

For a home using a typical amount of gas and electricity and paying by direct debit, the current annual bill is £2,074.

This will fall to £1,923 for the final three months of this year.

Specifically, the price of gas will fall from 7.5p per kilowatt hour (kWh) now to 6.89p from October. The price of electricity will fall from 30.1p per kWh to 27.35p.

The typical bill is calculated on an estimate that the average household uses 2,900 kWh of electricity and 12,000 kWh of gas.

[Moxi]

I read today that they are planning to scrap the price cap mechanism as they now fear suppliers are using it to avoid competition within the market.

Moxi

[nowty]

I read today that they are planning to scrap the price cap mechanism as they now fear suppliers are using it to avoid competition within the market.

Moxi

The problem is the difference between the typical near time prices (which are usually cheaper) and the year ahead price which is used to set the price cap. The prices used to be very close to each other, but now with all the uncertainty in the world, there is a larger price premium on the year ahead prices.

Example, today with almost no wind on the grid, my fathers Octopus tracker tariff price is,

Leccy 19.55p / kWh
Gas 4.36p / kWh

Which is still considerably cheaper than the price cap prices. Note, in the case of the tracker prices its the customer who takes the risk of price shocks.

Problem is if the price cap mechanism is scrapped, then we go back to companies not hedging properly (i.e, buying year ahead) and they go bust if there is a sudden price shock, like they did last year. So there would have to be some sort of Government guarantee, i.e, the government doing the hedging via taxation instead.

[AE-NMidlands]

What I noticed from the reporting is that the "small print" says that overall prices will be less because they expect people to use less, but this is to hide the fact that the standing charge is going up yet again. (from about 70 to 80 pence a day, if I remember that right.)

[ALAN/ALAN D]

https://www.theguardian.com/business/li ... iness-live




The people living here have only got to climb on the roof to connect a cable to the Grid and save money.

[Moxi]

Yes that seems to be the fly in the Conservative "free market solution" doesn't it, maybe they just need to tighten up on the supply companies licence to operate a little to get the right tweak to make the free market system function in the current global climate ? Would insisting that the suppliers maintained a contingency of X pounds per customer in reserve work ? The government of the day could then vary X for the year ahead based on geo political forecasts. It wouldn't be perfect but it might help smooth out peaks and troughs and give suppliers and consumers a little more stability ?

Moxi

[AE-NMidlands]

https://www.theguardian.com/business/li ... iness-live




The people living here have only got to climb on the roof to connect a cable to the Grid and save money.

From what I have heard, a fluorescent tube in the loft would be permanently lit... could you install a bank of them with pv to exploit the light?

[nowty]

What I noticed from the reporting is that the "small print" says that overall prices will be less because they expect people to use less, but this is to hide the fact that the standing charge is going up yet again. (from about 70 to 80 pence a day, if I remember that right.)

OFGEM is showing typical standing charges for leccy will be 53.37p and for gas 29.62p, so yes they are going up.
Cornwall Insight also thinks will increase further next year, maybe to 60p (leccy) and 30p (gas) by Qtr 2 to 2024.


EDIT - People are also using less as the Typical Domestic Consumption Values (TDCV) is being revised downwards from 1st Oct, however the published figures today are still being based on the original TDCV values to compare like with like. I.e, 12,000 kWh of gas, 2,900 kWh of leccy and 4,200 kWh of Economy 7.
https://www.ofgem.gov.uk/publications/e ... ain-winter

"We will be changing how we communicate typical bills from 1 Oct 2023, in line with our Decision on Typical Domestic Consumption Values. From 1 Oct price cap levels and typical bills will be expressed in 2023 TDCV of 2,700 kwh of electricity, 11,500 kWh of gas and 3,900 kWh of electricity for Economy 7. In the interests of transparency, we have compared what the July – Sept 2023 and the Oct – Dec 2023 cap levels announced today would be using 2023 TDCVs."