We asked our readers what they wanted to know about the rising price of energy. Hilary Osborne, our Money and Consumer Editor, has the answers.
I’m on a fixed deal, will any part of my bill/expense increase?
– Susan, Oxford
No, not while the deal is in progress. The cap relates to energy provider standard variable tariffs – these are the tariffs customers use as payment relief and have traditionally been more expensive than the fixed rate deals on offer. The reason for introducing a power cap was to prevent these customers from paying high prices due to their loyalty.
If you’re on a fixed deal, you’ll keep paying the same price until the end of the term – unless your provider fails and you switch to a new company.
Families are in a strange place at the moment because moving to a new fixed deal will mean paying higher prices. It is possible that if your deal ends soon, it is better to switch to the standard tariff of your provider than to a new fixed rate.
Does the price ceiling refer to the combined cost of gas and electricity as to the cost of dual fuel? How is it applied if a different resource of gas and electricity is used? Also, if the fixed-dual deal has just expired, is it better to renew or go back to the fixed-rate variable contract?
– R Price, retired, Hampshire
The widely priced annual rates are for what a dual fuel customer with average energy use is expected to pay – they aren’t the extremes per se. So currently no home can guarantee that their bills will not exceed £1,277. What is limited by the regulator, Ofgem, is the unit price that can be charged for gas and electricity (see above), and these apply to any resource you use. If you use an average amount of gas and an average amount of electricity, you can expect to pay for this figure.
According to Ofgem, the average use is 12,000 kWh of gas per year and 3,100 kWh of electricity. British Gas publishes the averages on its website which are based on different sized homes and properties – these indicate that one or two people living in an apartment will use 8000 kWh of gas and 1800 kWh of electricity while four or five people in a five-bedroom house will typically use 17,000 kW / hour of gas and 4,300 kWh of electricity.
For now, you are very likely to be better off going back to the deal with the price cap. Lots of power providers offer very high prices on their fixed-price deals – even above the new maximum price.
What is the planned maximum per kWh for electricity and gas? And the current price capped? Using arbitrary increments of £600-700 per year makes it difficult to compare fixed plans.
– Padrick, 31, works for the NHS, West Yorkshire
The price cap varies across the country and depending on how you pay for your energy. Customers who pay by direct debit pay the lowest, followed by those who pay prepaid counters, and then customers who pay their bills with cash or check. Covers depend on the cost of the power supply, among other factors.
Electricity paid by direct debit is capped at 28 pence per kilowatt-hour across Britain, including value-added tax. On top of that, there is a flat fee (a flat daily fee for just being a customer), with a maximum of 45p per day. For cash and check customers, the limit is 30 pence, the standing fee is 51 pence, and for prepaid customers, the maximum unit charge is 28 pence, and the standing fee is 50 pence. Direct debit customers in London pay the lowest flat fee, at 31 pence while customers in northern England and Yorkshire have the lowest usage cost at 26 pence per kWh.
Gas caps follow the same pattern. The average across Britain for direct debit customers is 7 pence, plus a flat fee of 27 pence, cash and check customers pay 8 pence per kilowatt-hour and 32 pence per day, and upfront customers pay 7 pence and 37 pence Straight.
I want to know how prepaid clients will get their £200 loan in October. Always forget us. We don’t get an invoice. Will it be chic? coupon?
The Treasury says that prepaid customers with smart meters that can be accessed remotely will receive the funds automatically. Those with old prepaid counters will get a voucher issued by email or mail, a mailed check or a private business letter to a retailer where they top up.
Customers who pay with cash or checks will have their accounts credited with their energy provider in the same way as direct debit customers.
Would there be any way to opt out of the government council’s proposed tax cuts and cut £200 in energy bills to be paid in the future, and only pay now?
– Anna, London
The Treasury says that wouldn’t be an option — and it says that having an opt-out would complicate the process and delay money getting into people’s accounts. If you pay by direct debit, this may not be an issue – you can be sure no credit in your account will be restored or run out, so when the bills rise to cover the £40, you’ll have the money.
It’s not yet clear exactly how the energy discount and reimbursement system will work but – perhaps because there are all kinds of potential problems around linking refunds to individuals or property – the government has said it is expected to do so through an increase in standing charges.
That option, which will add about 11 pence a day to the standing fee, means for five years all new energy customers will pay for the discount this year.
If you’re in a position where you can take £200 off your bill now but worry that you might struggle to pay an extra £40 over the next five years, you can put some cash now into a savings account to cash in at a later date. You will not get much interest but no interest on the loan should not be a big concern.
Why isn’t oil included, when a lot of rural people already have bigger outlays than towns.
– Jolly Sweetor, 80, retired, Kirkwall
Heating oil costs are not regulated by Ofgem, so they are not included in the price ceiling – this may be the reason, as you have indicated, this part of the energy bill will not be subject to payment.
Another reason could be that the Household Assistance Mechanism that the Treasury Department came up with uses domestic electricity and gas providers to pay for and recover the assistance. Arranging a £200 loan for clients would be more difficult than doing this for people who have accounts with an energy company, because the debt cannot be recovered through standing fees.
However, if you have an electricity account, you should make use of the £200 cash through it.
Homeowners using heating oil will be eligible for the £150 council tax rebate – assuming they meet the criteria for living in an AD home in England.
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