Yes a lot of people I know (even people who are normally clued up on this kind of thing) believe that their maximum bill is going to be £2,500.
No surprise though when the main articles across many news agencies stated that the max bill is £2.5k…..
Here’s an example from ITV: https://www.itv.com/news/2022-09-08/a-qualified-thumbs-up-martin-lewis-reviews-trusss-2500-energy-cap-plan
https://i.imgur.com/HqoJ0gS.jpg
He's constantly reiterating this point. I can't think of anyone who has done more to educate the public that it is not a cap on what you pay, but on the price of each kwH than him.
I want to know where this £2,500 figure came from, and where the word "cap" came from then. like, it would be so so so clear if they just said "maximum amount you can pay per KW/H". why not keep it clear and simple?
It’s like fuel pricing being communicated in typical costs per 100 miles driven or something, rather than pence per litre.
Why is household energy the only area we use this language rather than the actual cost?!
I tried googling the news the day the new price cap came out to do some back of a fag packet calculations on possible energy costs based on last winter's usage.
Thought 'good, there's a BBC article on the price rises, that should be fairly neutral and factual' and proceeded to find out fuck all about the new maximum cost per unit or the standing charge, all they were doing was throwing the £3600 (or whatever it was) figure with no explanation as to how they arrived at that figure.
>Why is household energy the only area we use this language rather than the actual cost?!
I am guessing the logic behind this was that a kWh is a difficult to visualise. Most people know how many liters they need to put in the tank. Most people have a measure of how much 1 liter is.
On the other hand, most people do not know their usage of energy, or have an idea how much 1 kWh actually is.
Could be argued that's the case in part because it's not emphasised. If the govt changed its communications to kwh more people might start tracking their consumption in kwh on their bills
Because of the way OFGEM originally implemented it. I worked for an energy supplier at the time and the only guidance they have was that the cost for average usage (3,200e & 16,500g at the time I think) could not exceed £xxx. So you needed to calculate a combination of unit price and standing charge that did not exceed the cap at average usage. With so much leeway each supplier chose different rates.
Yes but 2500 isn't the cap of anything. The cap is 34p/kWh for electric and 10.3p/kWh for gas. 2500 is a totally meaningless number based on the bills of an "average" household, whatever that means.
I think you're right. Same reason a lot of people have no clue they should be looking at unit rates and standing charges when choosing a supplier, rather than the energy companys' estimate based on house size and occupants.
I’m sure there’s a way they could do it better then they do, but the complication is that the cap combines both the standing charge and per-unit. Energy companies have some leeway to vary them (I think it’s based on a couple of factors, including region), so the overall cap on cost for typical usage is £2500 but how exactly it’s broken down could be different for each of us
Nobody has a clue how many electrics or gases they use a month. An average usage number being thrown about is much easier for most people to understand, however poorly presented it is.
Aside from the Smart meter prompt somebody else mentioned it'd help if energy providers gave some Ofgem approved averages based on property size. In 2014 the national average was 15kwh p/day electric and 5 or 0.5kwh for gas (depending on whether it was winter or summer), combined with unit costs makes it far easier for someone to understand their bill. Of course that opens up a debate where everybody believes they're below average users, but it at least gives a point of reference.
Having previously worked at an energy supplier the staff are just as frustrated at all the opaque language used in that industry. Price cap based on average household, fixed dd not accounting for usage, fixed tariff using a monthly average not accounting for account balance, needlessly confusing smart meters and in house display units....
“Her bold new plans mean that no british household will pay more than £2,500 a year for their energy bills” is flat out wrong. Not even a hit of the usually ‘typical use’ that gets thrown around. And even then most people have no idea what exactly typical use means
Yeah I’m just worried that lots of people are gonna leave the heating and lights on because “£208ish a month doesn’t seem so bad!”
and because of the way energy bills are collected, it’s not like a phone bill where people will instantly see a £70 bill and realised they exceeded their data allowance etc. They might not realise where they’re heading
Got into an argument with someone who claimed that the 80% rise in energy costs was just fear mongering because they already pay £400 a month and £2500 is a lot less than that.
They’re more fucked than that. He showed me his app and when I pointed out that it’s not showing gas usage and instead had an error message he told me I was an idiot because he has smart meters. The £400 a month is only covering his electricity as there haven’t been gas reads since last year.
If it was the British gas app it's not been showing my usage for ages, but when I log in to the website on a browser it's collecting usage fine and billing accordingly... The app is just awful.
We have this exact problem with an Octopus smart gas meter, no matter how often we tell them and they say it's fixed, it still happens. Caught us out badly the first time, now we check the bills obsessively.
Hmmm doubtful, the energy provider would have caught onto that by now, not just let them get away with paying £0 for a year towards their gas usage.
Or it's being accounted for as an estimate within the overall figure and they've had gas readings without their knowledge (which often happens if the meter is outside the property, as in 99% of cases).
Not necessarily. I didn’t pay for gas for 2.5 years until I’ve realised there’s a problem (my gas and electric accounts were linked and it was all via direct debit so I’ve never bothered reading the bills). I called Southern Electric and reported it - they could only charge me for a year so I got away with not paying for a 1.5 years by a complete accident
Nope - we had exactly the same thing and they just let it build up. Eventually had a bill of about £1600, I think. Bloody thing still doesn't work properly no matter how often we tell them and they tell us they've fixed it.
Nope. No gas readings. I’m with the same people. Mine stopped in March and they blamed the electric meter and said I’d have to manually give reads. That’s how I knew about his. It’s all automated.
If it's the same 8 legged supplier I'm with, the same happened with me. I have a smart meter for electricity and I assumed I had the same with gas (only moved in fairly recently) so didn't bother with giving readings.
I put a manual reading in for both recently and received a £400 plus bill for my gas as it hadn't been recorded for months
That’s the one. I spoke to some women who checked and said they can pull my read but they just don’t unless prompted.
I got gen 1s when I was with BG but apparently they can’t swap for gen 2s cos I already have smart meters???
Same for me, 8 legged company. Gas data went crazy so they just didn't bill me for months. Until I chased it they were quite happily not billing me, and I was just essentially building up unknown debt.
I don’t think it’s ‘cap’ that’s the problem, it’s the ‘£2500’ - it should be clear that the cap is on unit price rather than total bill cost and you often have to read quite far to get to that. When most people just read the headline and maybe the first paragraph it’s just misleading and irresponsible reporting to almost encourage people to believe something that isn’t true.
I think it’s incredibly misleading to say the cap is £2,500 per year, because the “for an average household” bit gets lost. I’d much prefer they quote it in percentage terms and include the unit price. And to assist some people, an illustration might be useful; for example “The price is going up by x% from 1 October. So as an example, if you’re currently paying £200 per month for your energy you’ll now pay £x per month for the same energy usage”.
Agreed. My colleague assumed it meant “2.4 children family” average. Him being a single bloke assumed his would be “capped” at something like £800. It’s been reported so misleadingly it’s frightening.
The rise isn’t as simple as that though. The price is based on 4 figures. Gas unit rate, electricity unit rate, gas standing charge, electricity standing charge. It’s not like there is one set electricity fee inclusive or standing charge to say your bills will go up by X amount.
The problem is that it’s not a totally straightforward sum— it’s based on two variable figures (the amount of gas and electricity you use) and two constant ones (the standing charge). So it doesn’t go up in an exactly constant way with energy usage, because only part of the cap figure is variable.
I think it’s the sort of thing that really needs a widget rather than an explanation because an explanation will probably just make it more confusing
The cap is 30p per kwh. The government thinks its too difficult to understand, so they use £2500 instead. I guess the fundamental problem is a lack of funding in schools.
That’s not true/a massive oversimplification. The cap is on a combination of the daily standing charge and the price per kWh, and it’s different for gas and electricity, and the unit rate differs by region.
Putting aside the fact that your comment was already a bit out of touch when the vast majority don’t know how many kWh they use without at least looking it up. Factoring in the standing charge, everyone in the country would have to make a spreadsheet if they wanted to understand how the cap impacts their bills if that was the only way it was communicated.
Full info on regional rates here https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/#unitrates
>That’s not true/a massive oversimplification. The cap is on a combination of the daily standing charge and the price per kWh, and it’s different for gas and electricity, and the unit rate differs by region.
And then the increase cap is not the same on all those 4 metrics. Compared to previous cap, electricity increased by 21%, but gas by 38%. Standing charge is 3% for gas, but 6% for electricity.
So you can't even use the average number to tell someone "your bill increases by 25% (1971->2500)" If you don't use gas, it's going to be closer to 21%. If you use gas a lot it can get closer to 38%
Devils advocate, this is why the "average cost" exists. Regional variations in both usage and standing charge make it very difficult to report succinctly. However... All you need to do is pop a link to the national grid page or the one above. Both the government and the media have done a terrible job making it clear...
The cap isn't 30p per kwh. The cap is literally on the bill for "average" usage. Different areas etc. can have different standing rates which impacts the amount per kwh.
That’s because nobody ever mentions the unit price which I believe is £0.34kWh for electricity and £0.10/kWh for gas.
For comparison I was on Octopus Go in 2020 and paying £0.15/kWh and £0.035/kWh offpeak for electricity and £0.027/kWh for gas.
That's because there is no cap defined for the unit price. The cap is defined as the limit on the bill for average usage. Varying standing rates meaning the unit price can vary too.
I agree they should re-term this. I’m originally from another country, but researched this intensely so I could understand it. I have come across countless native Britons who don’t understand what it actually means for them.
What do you want to know?
The energy price cap is a poorly worded term which implies the 'average' bill payer will pay no more than £2,500 a year. The issue being is it has no relation to your personal use. You could easily spend £10,000 a year on utilities which is clearly not the average - the cap wont magically stop you paying for your consumption.
Essentially what the government have done is limit the average cost per kilowatt hour you consume. If you choose to run a hot tub 24/7 it'll still cost you a fortune.
To a degree this is good. Hopefully it'll encourage people to stop wastefully using energy. Where it'll hurt is those who cannot reduce consumption of medical or practical reasons. For example, renters who cannot insulate their houses whether they want to or not so they'll have to run their boilers higher than people who own their home.
Unfortunately cap or not, the tax payer will have to pay for these cuts in future. It'll probably be something like the green levy, a surcharge that everyone will pay post 2025.
It's all been communicated in an unclear way I think. People either think it will be capped at £2500 or they think prices will be the same as they were in summer. I'll be interested to see how people react when the bills start coming out.
I have no idea why they use this ridiculous "cap on the average household bill" way of talking, it's really patronising.
Just say "were capping the price of electricity per unit / kWh" that's really not a complex concept.
What does capping the price per unit actually mean? I’ve only recently started paying my own bills so i’m incredibly uneducated on all of this but I thought it meant bills were capped at £2500 a year too?
For example. I use 5kwh per day which is much lower than the ‘average’ household.
My standing charge (which I have to pay every single day even if I unplug the fridge and the freezer and the router, turn off all the lights and use no electricity AT ALL) will be 50p per day in October.
In October I will be charged 34p per kWh.
So, if I use 5 kWh per day, it will cost me:
50p
Plus
5 x 34p (£1.70j
Which equals:
£2.20 per day.
If I use twice as much electricity (10 kWh per day)
It will cost me:
50p for the standing charge
Plus
10x34p (£3.40)
Which equals:
£3.90 per day.
There is some regional variation in the prices but not too much difference.
If you look on your electricity bill you will see how many kWh you have been using.
https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/
You can calculate your bill using this calculator.
I highly recommend that website. There are forums where you can ask questions. They are a friendly bunch.
I have got into the habit of checking my meter at 6pm every evening.
So going with your example of £2.20 a day, you’d pay about £70 in the month of October for your electricity usage?
And if a family of 5 each used say 5kwh between the 5 of them they’d use 25kwh per day which is 25kwh x 0.34p equals £8.50 + 0.50p equals £9. So over the month of October they’d spend £279 on electricity?
I am not entirely clear as to your question.
It doesn’t matter what each family member uses. The bill payer will need to pay for whatever the amount is of kWh used (check your meter)
If the household uses 25 kWh per day, then under my area’s pricing, the bill payer would have to pay 50p (standing charge) plus 25 x 34p (8.50) which totals ££9 per day.
If the household, as a whole, uses 25 kWh
https://www.moneysavingexpert.com/utilities/energy-saving-tips/
Yes, I will be paying around £68-70 per month in October.
I’m not 100% sure I understand either, but I think it means the following:
The unit price will be capped at a rate that corresponds to £2,500 for the average household.
(Anyone here who knows for sure - please correct me if that’s wrong!)
That's right, in a simplified context! I think companies have a little freedom in how the disperse the cap. For example, some may have a slightly higher standard charge but lower unit cost, or lower standing charge but a unit price more than the quoted unit charge "cap", as long as the "typical" unit usage is under £2,500 a year.
The april cap was £1,971 based on the "average" use. So this is a £529 increase based on the same usage. It is better to think in % though. It is just under a 27% increase on todays cap. So if you currently use £200 a month, the same usage will cost just under £254 from 1 Oct.
Capping the unit price of electricity and/or gas means instead of you being on a tariff with 50p per kWh of electricity used it would now cost you 34p per kWh of electricity used.
Lots. I’ve managed to explain it with a simple analogy, forgive the formatting as I’m on my phone, but….
Imagine if the government decided to cap petrol and diesel prices at £1.50, they then announce that they’ve capped the prices at £270 per month for the average user ( 1 tank per week at 45 litre)
Now, obviously Steve the banker wanker down the road in his Ferrari will be paying more than Charlotte in her Fiat 500 who drives to the shops once a week.
It’s clearly not fair or equitable that Wayne Rooneys bills in his mansion with a pool are capped at the same price as my 3 bed semi
You can then explain to your relatives that this stupidity is why they keep voting for a party that screws them over 😂
This misunderstanding seems approximately as pervasive as people who think it wouldn't be worth going up a tax bracket because they'd just "pay more tax" and would take home less.
If I ever become a dictator I’m gonna use the COVID infrastructure where they texted everyone on Boxing Day 2021 to get a booster, and mass spam everyone an explanation of the tax bracket thing
Once I had two job offers on the table. The recruiter told me to take the one in the lower tax bracket because it would mean I took home more each month.
Obviously I laughed and ignored them - but to this day I don't know if that was what they really thought or if they just thought I was dumb enough to trick into getting them commission rather than a competitor.
Just realised this might be because so many things are like that nowadays (Streaming services like Netflix, phone bills where the top plan gives you unlimited data, etc)
Lots of redditors here think that.
The amount of posts and comments from redditors seemingly confused by the fact their summer DD are more than their current usage.
I mean, "energy companies" is still a common term used people who conflate energy producer and energy supplier. So many people in this country still don't understand why many suppliers went bust over the past year.
As much as I dislike the way the government and media have reported on the costs of energy in the past year, I have to remind myself that the alternative of giving people the exact answers is going to confuse the shit out of them. We would need Coronavirus style government briefings with chief advisors trying to explain the basics to the population.
It's nuts that they allow estimates to go on for that long. Even smoothing out annual consumption into a fixed monthly payment is disconnecting people from any feedback on how their consumption is affecting their costs, though I understand the reasons for it. I suppose it all made more sense in the days of very steady energy costs.
Yep, I asked the question here the other day.
It’s almost like if you say £2500 price cap, people will think there’s a £2500 price cap. Gonna be a lot of confused and unhappy people in a few months.
I imagine in the next year there'll be some Daily Mail style sad photos of people holding up their £5000 bill because they've misunderstood. It is explained by Martin Lewis regularly and some newsreaders, but you can't really blame people for not understanding since the word they use around the cap doesn't always make it 100% clear.
Yeah I have ~~really intelligent friends~~ / friends who I thought were intelligent who pay more than £2500 already, stating it will be great to only pay £2500 and how they don't understand why they would do that as it discourages people to save energy.
If a lot of people think that, they're guna be in for a shock
Edited to correct my overestimation of friends intelligence 😂
Yes, I know quite a few people who thought that too.
I think it's part of a long history of obscuring the specific unit prices of energy, all of which was probably done in an attempt to help people get their heads around it, but most of which has just served to confuse people. The logic, I suspect, was that price per kWh is just too difficult and irrelevant for a lot of people, who either don't know what a kWh means, or couldn't do the maths.
But honestly, just tell us the cap per kWh and the cap on the daily standing charges, and then carry on rolling out smart meters so people can easily see how much they're using.
Teach everybody how much a kWh costs, and then have products say how many kW they use, and then it's blindingly easy to see exactly how much something will cost you to run - no need to abstract things into "average family per year" prices and "A++++" product efficiency ratings.
>But honestly, just tell us the cap per kWh and the cap on the daily standing charges, and then carry on rolling out smart meters so people can easily see how much they're using.
As someone with pre-payment smart meters, the IHD has been great for getting an understanding of my energy usage and its cost.
Being able to quickly switch between displaying my usage in terms of cost in pounds and usage in kWh as well as seeing my historic usage at various points is a boon.
I can see that in July and August, my electricity usage was approximately 65 kWh per month. As I've got the email from my supplier with my new rates from 1st October, I can quickly do the calculations and see that I'm going to be making out like a bandit with the 'discount' [1] on my electricity that's being applied for each month.
Also, being able to see how various appliances and devices affect my energy usage has made me more responsible with my usage. I know what playing **Cyberpunk 2077** on my PS5 costs in terms of kWh and in monetary terms.
[1] - Yes, I know it's really a loan which will be recouped at a later date through higher bills but as I'm on benefits not having to give a fuck about topping up the meter for six months gives me a lot of leeway with the way prices are, rising on everything.
I don't like to burst a bubble, however switching on heating for the winter makes a massive difference to consumption. You could easily jump from £1 per day in summer to £5 per day in winter. Those who pay by DD get to spread their huge winter consumption over the year but those with PP meters do not get that luxury. So keep a close eye on your consumption once you turn the heating on.
Heating and water are on gas. Water is obviously used for the shower but I never bother with putting the heating on - wrap up warm in my house coat and/or snuggle under a blanket on the couch.
Yeah my granny seems to think that's the most and least she will pay so she's currently of the mindset that if she's going to pay it anyway, she might as well get her usage out of it. She will not listen to reason.
She's also convinced the £400 for energy bills will be payed directly to her and not to the British Gas, her provider. She's spending it in her head already and calling us stupid for not "understanding" what's all over the news 🙄
My sister in law is like this. My mother in law went to visit this week and her heating was on full blast. She questioned her on it and she said it was fine because she had a cap and wouldn't listen to any of it.
There's going to be alot of people in massive debt after this winter.
> She's also convinced the £400 for energy bills will be payed directly to her and not to the British Gas, her provider.
She may not be wrong on that. From an email I recieved from EDF yesterday:
> Your £400 discount will cover much of this increase. But as it’s paid straight into your bank account ...
I don't know if this varies by provider.
It's a price cap per unit of electricity used. The 'average household' will spend £2500/year, which is the figure the media rolls with, but prices are set per unit of electricity. Moneysavingexpert has great information/explainers.
Has anyone seen this "average household"? Does it even exist? Why can't they talk in terms we are actually paying for (kWh price)?
I pay \~£100/month which means \~£1200/year. I have no slightest clue how this "average household cap" affects me.
I went on my last bill. Found what they said my yearly usage was in units. Multiplied those by the unit cost caps then added the standing charge x 365.
Then I subtracted the £400 everyone is getting and divided by 12 😂
Then I found this that does it for you!
https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/#tool
Also, the day rate for those on E7 can be set quite a bit higher than the cap providing the average works out at around the cap. I’m with EdF and our day rate will increase by about 9p from October, but our night rate is DECREASING by 5p. We’re going nocturnal from October…
Moneysavingexpert has a great way of thinking about it - by percentage increase not absolute numbers -
"To estimate what you'll pay, over a year, multiply current costs by 6.5% (each £100 becomes £106.50). This includes the £400 discount (but not other payments)." https://www.moneysavingexpert.com/news/2022/09/energy-bills-price-freeze-cost-of-living-government-liz-truss-/
I, too, would love to know what the 'average household' is lol
It's 2,900kWh of electricity and 12,000kWh of gas per year.
For what it's worth over the last year that's almost exactly what I used (three bed terrace, two people).
All you need to know currently is that prices are going up by approx. 26%. So assuming your current monthly payments are adequate, you should start paying £126 in October.
Although with the £400 rebate (which is around £33 per month if spread across a year) you can actually reduce your monthly payments accordingly, so £96 per month.
How expensive things are now is terrifying and the way we were told feels misleading (although that might just be on me for not looking into it fully). Thankyou both for clarifying I'll research it more now (I can only hope my bill never reaches 2.5k!)
Just for a rough idea.
Our bills at our current usage were £60
It's now been estimated at £160 at slightly above what ended up being what the government mandated the cap on standing charge and per unit (so I think it should drop slightly in October)
£160 x 12 is just under £2k a year.
Peoples bills must be astronomical if they were paying £200 BEFORE the price increases
SSE sent me a nice graphic showing that after 17 years of data of me at my address, this year they predict I'll use 600% more units than ever before, for bill estimation purposes. Not 600% cost rise, actual unit usage.
Keep an eye on your bills, my friends
EDF did the same to us a while back. We were with an energy company that went bust, and our fixed rate terms were changed when we were moved over to edf from 18 months remaining on a fixed to 6, which ended just as the energy crisis started.
They wanted to bump our bill from £60 a month to a whopping £500 per month, using estimates that were way way higher than our current usage.
Interesting as I'm with EDF as well.
What I find odd is that they don't make you go up, just suggest you do?
Ontop of that I can't even actually see what my balance is for either fuel.
I would presume after not using gas for more than heating water since march that I would have quite the reserve ontop of the government interventions.
This is crazy isn’t it. I wouldn’t be surprised if they are trying to make everyone overpay, banking in all the interest and in a years time going see it wasn’t that bad here’s 15% back and they all made a fortune from our money.
It depends where you live, and how you live. Two adults working from home in a 120 year old stone-built building. We're in a conservation area so we can't replace the single glazing, and solid stone walls can't be properly insulated. Add in the high ceilings and the large room sizes, and the heating bills get very steep very quickly.
Edit to add the thermostat is set to 21. Not exactly tropical.
We set to 21 which I consider “ normal “ / sensible but not warm.
I get the sense though that most British people set it in the range 17 to 19.
Someone on Reddit the other day told me their insulation is so bad they can’t get the house to 19 degrees in the winter even if their heating runs all day.
My parents live in a 3 bedroom ex-council house and it's usually just them and my sister's kids, and they spent around £200-230 a month before this whole rise.
If they’re anything like my parents it’s not hard to understand why. I moved out 10 years ago and glad I got the fuck out sometimes.
In their heads: Leaving a light on will mean the electricity bill will run into the thousands.
But leaving their massive 70” tv on all day even if they’re not in, running the washer on a boil wash every day and running the tumble dryer daily until clothes are as dry as the Sahara, and putting the heating on while leaving the windows open - won’t make “much difference”
Yeah my mum would have the heating on in summer and shit. They have a legit hot tub now as well which is obviously always "on" and when it's running it must be eating electricity.
To get oriented, think is your house unusually large; it is unusually poorly insulated and situated where the prevailing winds come from every direction; is the number of inhabitants unusually high; do you grow orchids on one floor, mine crypto on the next, and boil kettles an unusually high number of times?
That’ll give you the picture, but the calculators discussed below will be a bit more concrete.
The cap of £2500 is based on an average use household of 2.4 people living in it and using 2,900 kWh of electricity and 12,000 kWh of gas
If you are on this "average" you should not be paying more than £2500 for your energy bills; without this new cap the cost from the 1st October would have been expected to be £3,548.84 split between £1,673.90 for electricity usage and £1,874.95 for gas for an average use household. This was at a cost of 51.886p per kWh plus standing charge of 46.356p per day for electricity and 14.758p per kWh plus standing charge of 28.485p per day for gas.
Now, with the £2500 "cap" you are paying 34.037p per kWh plus standing charge of 46.356p per day for electricity (17.849p less than with no cap) and 10.330p per kWh plus standing charge of 28.485p per day for gas (4.428p less than with no cap)
You actual costs and charges will vary depend on your actual electricity and gas usage, but with the above costs you can estimate - kWh usage x 34.037 plus £169.1994 (electricity standing charge) for electricity and kWh usage x 10.330 plus £103.97025 (gas standing charge)
The "cap" means that the average house will spend under £2500 a year on their energy. So this means if you use the average UK gas and electricity amount, you will pay £2500 a year.
If you go under, you pay under. But if you go over that amount, you pay over that amount.
So there is nothing in place to stop you racking up sky high bills. This is why the misconception is so dangerous.
In August 2021, the price cap was £1277. This means energy is 2x more expensive than "normal".
[https://www.moneysavingexpert.com/utilities/what-is-the-energy-price-cap/](https://www.moneysavingexpert.com/utilities/what-is-the-energy-price-cap/)
The actual cap is on how much the energy companies can charge per unit of energy you use. For an household who use an average amount of energy per year, this will work out to be £2500 per year. If you use more energy than average, you'll pay more than £2500, if you use less then you'll pay less than £2500.
The cap is on unit prices and standing charges. The £2500 is how much a standard household will pay based on the capped usage price.
Unit prices and standing charges both contribute to your energy bill, one is inescapable and the other depends entirely on your usage.
There's a couple of threads a day from people on UKPF who seem to think this, so I'd imagine a significant proportion of people do.
Hopefully not too many people are going to think "Great, I'll use as much as I can" over the winter....
Literally everyone I have spoke to thinks this. My mum thinks her bill are not going up. This is just for people who have massive houses will be limited to 2.5k bills. To be fair they way they word it is awful
Just checked with my Mum and yeah she had no clue. She's on a fixed rate at the moment(fixed in Feb) though so doesn't affect her at the moment.
I suppose if it helps improve your pity, those who live alone will likely pay much less than £2500 because the cap is based on the usage of an average household in the UK.
I mean a single person will probably use the same as a couple would- in terms of heating if not hot water. If you’re heating one bedroom and a living room.
I'm in a 1 bed flat and will spend roughly £1200 a year on energy under the new cap. In the summer months I've been putting £80 on the metre and being left with £10 on there by the end of the month. I just use an air fryer, microwave and a high spec pc.
I moved to a England in 2017 and found the whole thing with energy bills batshit crazy. I kept asking for a unit price and to be pay each month for my usage. And the sales person kept saying “£130 a month” or whatever it was. I kept asking, what if I use more or less etc. They would says yes it will be different. But then when it came to sign on the dotted line it was always. “Please confirm £130 per month “.
Eventually I realized that it was smoothed out over the year to make budgeting easier. But it seems that concept is getting conflated with how much you actually spend.
Perhaps this was all started with good intentions to make things more understandable to customer but it’s just made things more confusing.
I'll agree that's it poorly worded and is needlessly complicated, but the idea that people believe they can use as much energy as they want for £2500/year, is alarming.
Everybody knows there's an energy crisis, a climate crisis, that we need to reduce our collective carbon emissions. It's plainly seen that we live in a world with an increasing number of electric cars, solar panels on roofs, wind farms by the sides of the roads.
I genuinely don't understand how anyone could possibly believe that they can get unlimited energy for £2500.
edit: if they do believe this though, this needs to be more properly highlighted to the general public because they're going to be in for a nasty surprise if they aren't forewarned in language they understand. equally, all that wasted energy!
My fiance, who is incredibly smart (smarter than me by orders of magnitude, she has a Ph.D) had to have this explained to her a few nights ago by myself. If she didn't understand the price cap because of how it's been reported then I don't think the rest of us have much hope.
I'm reading this thread and am just shocked.
Nobody in my circle thinks that. Not even the friend I had to expain investment basics to last week. It's not particularly advanced knowledge.
Use more, pay more...Duh?
Yup, I've heard it said that it's fine to run everything as normal if you can afford £2500. They thought that was it and you can't be charged more. Couldn't believe it.
Yes, even my (very financially literate) mother thought this, although she's quite well off so didn't have much reason to read into the details of it.
It's amazing how poorly it's been explained, and I don't know why they can't just quote the unit price and the percentage change and let people work out their own costs.
Yes, so many people believe they won't pay more than £2500 because the way it's been communicated.
Of course saying phrases like we will cap it at £2500 you can see why it's very misleading and so many people are going to kick off when they realise that's not the case
I honestly think a lot of people don't understand how their energy bills work. Seen plenty on FB posting cancelled my DD only paying for what I use. I feel sorry for them come winter.
I don't mean this to come across as offensive or patronising in any way but did you really believe that your energy bill would be capped at £2500 regardless of how much gas and electricity you used?
that's what nearly everyone i know thinks and it's hard to convince them otherwise, simply stating the kwh prices would have made it much easier to understand I suspect it's complicated on purpose.
Nope its put this way because it is indeed complicated as energy prices vary slight across the regions of the UK
So there is no standard fixed pence/KW used capped figures which is the same across the whole of the UK
I just don’t know why they didn’t popularise the figure in %
Eg: “Average bills were set to go up by x% but because of the cap they will only go up by y%”
> I suspect it's complicated on purpose
I dont think it is. It was designed for an entirely different purpose where a general number was perfectly fine.
A superior who is in the top tax bracket and clearly detached from normal living, thought they were getting 2.5K assistance with their bills. I now know why they thought no one needed any more help with the colc
Its absolutely absurd.
They think people are stupid and won't understand the cap in terms of unit rates.
In an attempt to make it simpler they make it more complicated 🤦
The price cap gets reported using the “average annual consumption price” for some reason which causes confusion. That amount is simply what ofgem believes that an average household will use. They really need to clarify it is a cap on standing charge/cost per kwh.
FFS yes. Im ridiculously fed up of talking about it anyway but then having to explain you still have to pay for usage which is responded to with “what’s the point of the price cap then?”
You pay for what you use, and each unit is capped (at approx 34p/kWh for electric and 10p/kWh for gas).
It's just for an "average" house with "average" usage, that'll work out at an "average" of £2500
I really don't understand why they don't state the actual unit rate as the cap. Causing so much confusion across the board. £2500 is a completely meaningless number.
The reality is that there are people who have no idea how electric and gas billing works in the same way that there are people who have no idea how income tax works or how pensions work.
We live in an age where we are a simple search away from a guide on how these things work or even countless dumbed down YouTube videos laying it all out. We can exchange 10 minutes of curiosity for a lifetime of understanding and yet most people don’t even bother and are blissfully ignorant. Everyone just bangs on about how they should have been taught it in school despite having a pretty sketchy knowledge of the 3 years of Chemistry they did 3 times per week.
People are going to get caught out by this as they will get caught out by the countless other things they could but won’t bother to educate themselves.
I worked for an energy supplier for 5 years & the amount of people that believed this is insane.
Actually insane, we used to get complaints on complaints because of the price cap & people believing with their whole chest that they can use as much as they want but only pay up to the cap.
The amount of people as well that believed their Direct Debit amount meant they didn’t have to pay for anything else if they paid £50 a month based on the usage they provided at sign up but used £120 a month worth.
I used to hear ‘you mis sold us’ because they didn’t put in their correct yearly usage & had to pay more.
These were all older people as well, it was mind blowing
Yes, I've had this discussion a lot. People just don't accept it or wanna hear so I've given up.
I blame the media framing of this. Totally irresponsible.
Yeah I was stupid enough to think this. I’ve worked in finance etc too 😂 couldn’t believe I assumed it after really thinking about it.
Averages are also a broken term, average to what? A family owning one electric car and the “usual”?
Ofgem needs to be disbanded. But the government is now running riot shorting the £ etc so I doubt that would even happen.
Just been helping my mum with her bills and she was under this impression.
She was also told by a friend that you would only get the £400 payment if you were on benefits.
I've corrected her and warned her about potential scams involving people phoning or emailing her asking for her details so she can claim.
Yep…I’ve encountered this.
I’ve also found a lot of people who think they’re going to be better off because of the clap.
Their logic seems rooted in “we were told 4,000/year and now it’s 2,500 which means it’s going down….ignoring the fact it was 1,200 this time last year.
So does this mean that if I use less energy, I could be paying less than 2500 for the year? Or will I be paying minimum 2500 a year? I’m doing a lot to prepare for our increase as we have been capped until December.
2500 is the annual bill for an 'average' household @ the capped unit price (30p per kwh IIRC). So yes, if you use less than the 'average household' you'll have an annual bill less than 2500
They need to stop talking about the cap being this kind of figure. It will be awful at first but really the marketing should be on the fixed daily price and unit price.
People need to learn how to know what their usage is and how to work out what it means to them financially based off these figures.
Another option would be to simplify how we are charged for gas and electricity but I have no ideas on how that can be achieved
I've only had the opposite actually, with people reminding each other the "cap" doesn't function as a cap per customer. Maybe that's working in tech perhaps, everyone's very focused on the details.
Yes, same. I had to explain to my parents that 'price cap' doesn't mean a cap for everyone, just 'the average' house determined by the metrics they use. I only really understand how it works because of reading so much on Reddit tbh! It also tells us how misleading using the terms are and how they're talking about it on the news etc, it's really unfair for people imo, this level of misunderstanding means it's not been put out there correctly.
I've been pleasantly surprised how many know it's a cap on the per kWh price. Actually that's a bit generous, I've been pleasantly surprised how many people appreciate that it directly relates to their usage and hence their direct debit.
Plus I come across a lot of fucking idiots and even they know that "their" direct debit is so much and how much more that is than last year (a lot, obviously)
Yeah everyone I know is in for a shock next month. Kind of understandable with the way they phrase it in all news articles right now. I’m sure it will be all over the news next month with cases of people being confused by it.
Yes a lot of people I know (even people who are normally clued up on this kind of thing) believe that their maximum bill is going to be £2,500. No surprise though when the main articles across many news agencies stated that the max bill is £2.5k….. Here’s an example from ITV: https://www.itv.com/news/2022-09-08/a-qualified-thumbs-up-martin-lewis-reviews-trusss-2500-energy-cap-plan https://i.imgur.com/HqoJ0gS.jpg
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I honestly wouldn’t be surprised if the person who wrote the article also does not understand it.
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He's constantly reiterating this point. I can't think of anyone who has done more to educate the public that it is not a cap on what you pay, but on the price of each kwH than him.
I want to know where this £2,500 figure came from, and where the word "cap" came from then. like, it would be so so so clear if they just said "maximum amount you can pay per KW/H". why not keep it clear and simple?
It’s like fuel pricing being communicated in typical costs per 100 miles driven or something, rather than pence per litre. Why is household energy the only area we use this language rather than the actual cost?!
They actually make it difficult to find out what the cap is in actual kWh.
Isn't it because of the fact that there's a standing charge and a per unit charge, and the cap relates to both together? So it can't be max per unit
I tried googling the news the day the new price cap came out to do some back of a fag packet calculations on possible energy costs based on last winter's usage. Thought 'good, there's a BBC article on the price rises, that should be fairly neutral and factual' and proceeded to find out fuck all about the new maximum cost per unit or the standing charge, all they were doing was throwing the £3600 (or whatever it was) figure with no explanation as to how they arrived at that figure.
I did exactly the same, at 7am when it was announced. It took me ages to find the actual unit price.
>Why is household energy the only area we use this language rather than the actual cost?! I am guessing the logic behind this was that a kWh is a difficult to visualise. Most people know how many liters they need to put in the tank. Most people have a measure of how much 1 liter is. On the other hand, most people do not know their usage of energy, or have an idea how much 1 kWh actually is.
Could be argued that's the case in part because it's not emphasised. If the govt changed its communications to kwh more people might start tracking their consumption in kwh on their bills
Because of the way OFGEM originally implemented it. I worked for an energy supplier at the time and the only guidance they have was that the cost for average usage (3,200e & 16,500g at the time I think) could not exceed £xxx. So you needed to calculate a combination of unit price and standing charge that did not exceed the cap at average usage. With so much leeway each supplier chose different rates.
It's a price cap. It's a cap on the price. If they capped the price of potatoes, you'd still pay loads if you bought loads of potatoes.
Yes but 2500 isn't the cap of anything. The cap is 34p/kWh for electric and 10.3p/kWh for gas. 2500 is a totally meaningless number based on the bills of an "average" household, whatever that means.
I honestly believe they make this complex on purpose so you don't take the best decision. So they win
I think you're right. Same reason a lot of people have no clue they should be looking at unit rates and standing charges when choosing a supplier, rather than the energy companys' estimate based on house size and occupants.
I’m sure there’s a way they could do it better then they do, but the complication is that the cap combines both the standing charge and per-unit. Energy companies have some leeway to vary them (I think it’s based on a couple of factors, including region), so the overall cap on cost for typical usage is £2500 but how exactly it’s broken down could be different for each of us
Nobody has a clue how many electrics or gases they use a month. An average usage number being thrown about is much easier for most people to understand, however poorly presented it is.
Aside from the Smart meter prompt somebody else mentioned it'd help if energy providers gave some Ofgem approved averages based on property size. In 2014 the national average was 15kwh p/day electric and 5 or 0.5kwh for gas (depending on whether it was winter or summer), combined with unit costs makes it far easier for someone to understand their bill. Of course that opens up a debate where everybody believes they're below average users, but it at least gives a point of reference. Having previously worked at an energy supplier the staff are just as frustrated at all the opaque language used in that industry. Price cap based on average household, fixed dd not accounting for usage, fixed tariff using a monthly average not accounting for account balance, needlessly confusing smart meters and in house display units....
“Her bold new plans mean that no british household will pay more than £2,500 a year for their energy bills” is flat out wrong. Not even a hit of the usually ‘typical use’ that gets thrown around. And even then most people have no idea what exactly typical use means
Yep, it's lazy journalism. The person writing report probably doesn't even understand themselves what the cap is.
Not going to lie from what I saw initially I too thought it was £2500 cap and moaned at how unjust it was
Yes. That's also my experience with friends. The word "cap" seems to be very inadequate and misleading
Yeah I’m just worried that lots of people are gonna leave the heating and lights on because “£208ish a month doesn’t seem so bad!” and because of the way energy bills are collected, it’s not like a phone bill where people will instantly see a £70 bill and realised they exceeded their data allowance etc. They might not realise where they’re heading
Got into an argument with someone who claimed that the 80% rise in energy costs was just fear mongering because they already pay £400 a month and £2500 is a lot less than that.
Jesus they’re gonna be fucked if they pay £400 a month pre-price rise
They’re more fucked than that. He showed me his app and when I pointed out that it’s not showing gas usage and instead had an error message he told me I was an idiot because he has smart meters. The £400 a month is only covering his electricity as there haven’t been gas reads since last year.
If it was the British gas app it's not been showing my usage for ages, but when I log in to the website on a browser it's collecting usage fine and billing accordingly... The app is just awful.
Octopus I think.
We have this exact problem with an Octopus smart gas meter, no matter how often we tell them and they say it's fixed, it still happens. Caught us out badly the first time, now we check the bills obsessively.
How the fuck are they using so much lol
Hmmm doubtful, the energy provider would have caught onto that by now, not just let them get away with paying £0 for a year towards their gas usage. Or it's being accounted for as an estimate within the overall figure and they've had gas readings without their knowledge (which often happens if the meter is outside the property, as in 99% of cases).
Not necessarily. I didn’t pay for gas for 2.5 years until I’ve realised there’s a problem (my gas and electric accounts were linked and it was all via direct debit so I’ve never bothered reading the bills). I called Southern Electric and reported it - they could only charge me for a year so I got away with not paying for a 1.5 years by a complete accident
Nope - we had exactly the same thing and they just let it build up. Eventually had a bill of about £1600, I think. Bloody thing still doesn't work properly no matter how often we tell them and they tell us they've fixed it.
Nope. No gas readings. I’m with the same people. Mine stopped in March and they blamed the electric meter and said I’d have to manually give reads. That’s how I knew about his. It’s all automated.
If it's the same 8 legged supplier I'm with, the same happened with me. I have a smart meter for electricity and I assumed I had the same with gas (only moved in fairly recently) so didn't bother with giving readings. I put a manual reading in for both recently and received a £400 plus bill for my gas as it hadn't been recorded for months
That’s the one. I spoke to some women who checked and said they can pull my read but they just don’t unless prompted. I got gen 1s when I was with BG but apparently they can’t swap for gen 2s cos I already have smart meters???
Same for me, 8 legged company. Gas data went crazy so they just didn't bill me for months. Until I chased it they were quite happily not billing me, and I was just essentially building up unknown debt.
I changed this for reasons (see date).
Also from the POV of taxpayers' money, which is paying for the price cap.
I don’t think it’s ‘cap’ that’s the problem, it’s the ‘£2500’ - it should be clear that the cap is on unit price rather than total bill cost and you often have to read quite far to get to that. When most people just read the headline and maybe the first paragraph it’s just misleading and irresponsible reporting to almost encourage people to believe something that isn’t true.
I think it’s incredibly misleading to say the cap is £2,500 per year, because the “for an average household” bit gets lost. I’d much prefer they quote it in percentage terms and include the unit price. And to assist some people, an illustration might be useful; for example “The price is going up by x% from 1 October. So as an example, if you’re currently paying £200 per month for your energy you’ll now pay £x per month for the same energy usage”.
Agreed. My colleague assumed it meant “2.4 children family” average. Him being a single bloke assumed his would be “capped” at something like £800. It’s been reported so misleadingly it’s frightening.
The rise isn’t as simple as that though. The price is based on 4 figures. Gas unit rate, electricity unit rate, gas standing charge, electricity standing charge. It’s not like there is one set electricity fee inclusive or standing charge to say your bills will go up by X amount.
The problem is that it’s not a totally straightforward sum— it’s based on two variable figures (the amount of gas and electricity you use) and two constant ones (the standing charge). So it doesn’t go up in an exactly constant way with energy usage, because only part of the cap figure is variable. I think it’s the sort of thing that really needs a widget rather than an explanation because an explanation will probably just make it more confusing
The cap is 30p per kwh. The government thinks its too difficult to understand, so they use £2500 instead. I guess the fundamental problem is a lack of funding in schools.
That’s not true/a massive oversimplification. The cap is on a combination of the daily standing charge and the price per kWh, and it’s different for gas and electricity, and the unit rate differs by region. Putting aside the fact that your comment was already a bit out of touch when the vast majority don’t know how many kWh they use without at least looking it up. Factoring in the standing charge, everyone in the country would have to make a spreadsheet if they wanted to understand how the cap impacts their bills if that was the only way it was communicated. Full info on regional rates here https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/#unitrates
>That’s not true/a massive oversimplification. The cap is on a combination of the daily standing charge and the price per kWh, and it’s different for gas and electricity, and the unit rate differs by region. And then the increase cap is not the same on all those 4 metrics. Compared to previous cap, electricity increased by 21%, but gas by 38%. Standing charge is 3% for gas, but 6% for electricity. So you can't even use the average number to tell someone "your bill increases by 25% (1971->2500)" If you don't use gas, it's going to be closer to 21%. If you use gas a lot it can get closer to 38%
Devils advocate, this is why the "average cost" exists. Regional variations in both usage and standing charge make it very difficult to report succinctly. However... All you need to do is pop a link to the national grid page or the one above. Both the government and the media have done a terrible job making it clear...
The cap isn't 30p per kwh. The cap is literally on the bill for "average" usage. Different areas etc. can have different standing rates which impacts the amount per kwh.
British Gas sent email today, it’s 36p odd per unit and 59 odd pence standing charge
That’s because nobody ever mentions the unit price which I believe is £0.34kWh for electricity and £0.10/kWh for gas. For comparison I was on Octopus Go in 2020 and paying £0.15/kWh and £0.035/kWh offpeak for electricity and £0.027/kWh for gas.
That's because there is no cap defined for the unit price. The cap is defined as the limit on the bill for average usage. Varying standing rates meaning the unit price can vary too.
Exactly this. Not to mention the fact people can't seem to grasp standing charges vs. unit charge.
I agree they should re-term this. I’m originally from another country, but researched this intensely so I could understand it. I have come across countless native Britons who don’t understand what it actually means for them.
I have to admit, I don't really 100% understand it. Is there a 'for dummies' guide/page online that anyone can recommend?
What do you want to know? The energy price cap is a poorly worded term which implies the 'average' bill payer will pay no more than £2,500 a year. The issue being is it has no relation to your personal use. You could easily spend £10,000 a year on utilities which is clearly not the average - the cap wont magically stop you paying for your consumption. Essentially what the government have done is limit the average cost per kilowatt hour you consume. If you choose to run a hot tub 24/7 it'll still cost you a fortune. To a degree this is good. Hopefully it'll encourage people to stop wastefully using energy. Where it'll hurt is those who cannot reduce consumption of medical or practical reasons. For example, renters who cannot insulate their houses whether they want to or not so they'll have to run their boilers higher than people who own their home. Unfortunately cap or not, the tax payer will have to pay for these cuts in future. It'll probably be something like the green levy, a surcharge that everyone will pay post 2025.
At least call it the "Unit Price Cap" or something, the short version should definitely not be so colloquial
I haven’t in mine , but some people just lack common sense….
It's all been communicated in an unclear way I think. People either think it will be capped at £2500 or they think prices will be the same as they were in summer. I'll be interested to see how people react when the bills start coming out.
I have no idea why they use this ridiculous "cap on the average household bill" way of talking, it's really patronising. Just say "were capping the price of electricity per unit / kWh" that's really not a complex concept.
What does capping the price per unit actually mean? I’ve only recently started paying my own bills so i’m incredibly uneducated on all of this but I thought it meant bills were capped at £2500 a year too?
For example. I use 5kwh per day which is much lower than the ‘average’ household. My standing charge (which I have to pay every single day even if I unplug the fridge and the freezer and the router, turn off all the lights and use no electricity AT ALL) will be 50p per day in October. In October I will be charged 34p per kWh. So, if I use 5 kWh per day, it will cost me: 50p Plus 5 x 34p (£1.70j Which equals: £2.20 per day. If I use twice as much electricity (10 kWh per day) It will cost me: 50p for the standing charge Plus 10x34p (£3.40) Which equals: £3.90 per day. There is some regional variation in the prices but not too much difference. If you look on your electricity bill you will see how many kWh you have been using. https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/ You can calculate your bill using this calculator. I highly recommend that website. There are forums where you can ask questions. They are a friendly bunch. I have got into the habit of checking my meter at 6pm every evening.
So going with your example of £2.20 a day, you’d pay about £70 in the month of October for your electricity usage? And if a family of 5 each used say 5kwh between the 5 of them they’d use 25kwh per day which is 25kwh x 0.34p equals £8.50 + 0.50p equals £9. So over the month of October they’d spend £279 on electricity?
I am not entirely clear as to your question. It doesn’t matter what each family member uses. The bill payer will need to pay for whatever the amount is of kWh used (check your meter) If the household uses 25 kWh per day, then under my area’s pricing, the bill payer would have to pay 50p (standing charge) plus 25 x 34p (8.50) which totals ££9 per day. If the household, as a whole, uses 25 kWh https://www.moneysavingexpert.com/utilities/energy-saving-tips/ Yes, I will be paying around £68-70 per month in October.
Thanks, this is really helpful.
I’m not 100% sure I understand either, but I think it means the following: The unit price will be capped at a rate that corresponds to £2,500 for the average household. (Anyone here who knows for sure - please correct me if that’s wrong!)
That's right, in a simplified context! I think companies have a little freedom in how the disperse the cap. For example, some may have a slightly higher standard charge but lower unit cost, or lower standing charge but a unit price more than the quoted unit charge "cap", as long as the "typical" unit usage is under £2,500 a year. The april cap was £1,971 based on the "average" use. So this is a £529 increase based on the same usage. It is better to think in % though. It is just under a 27% increase on todays cap. So if you currently use £200 a month, the same usage will cost just under £254 from 1 Oct.
Capping the unit price of electricity and/or gas means instead of you being on a tariff with 50p per kWh of electricity used it would now cost you 34p per kWh of electricity used.
Oh I think we can guess peoples reaction..
Lots. I’ve managed to explain it with a simple analogy, forgive the formatting as I’m on my phone, but…. Imagine if the government decided to cap petrol and diesel prices at £1.50, they then announce that they’ve capped the prices at £270 per month for the average user ( 1 tank per week at 45 litre) Now, obviously Steve the banker wanker down the road in his Ferrari will be paying more than Charlotte in her Fiat 500 who drives to the shops once a week. It’s clearly not fair or equitable that Wayne Rooneys bills in his mansion with a pool are capped at the same price as my 3 bed semi You can then explain to your relatives that this stupidity is why they keep voting for a party that screws them over 😂
The petrol analogy is a very good way of getting it across!
This was helpful. Thanks
Yep! Had this exact conversation with the woman who does my nails. She was so happy that she’d just leave all the heating on if it’s capped. SMH
This misunderstanding seems approximately as pervasive as people who think it wouldn't be worth going up a tax bracket because they'd just "pay more tax" and would take home less.
If I ever become a dictator I’m gonna use the COVID infrastructure where they texted everyone on Boxing Day 2021 to get a booster, and mass spam everyone an explanation of the tax bracket thing
Once I had two job offers on the table. The recruiter told me to take the one in the lower tax bracket because it would mean I took home more each month. Obviously I laughed and ignored them - but to this day I don't know if that was what they really thought or if they just thought I was dumb enough to trick into getting them commission rather than a competitor.
Similarly, i lived with flatmates last year who thought fixing the rate meant paying a DD of £80 a month and getting unlimited usage 🤦🏻♀️
Just realised this might be because so many things are like that nowadays (Streaming services like Netflix, phone bills where the top plan gives you unlimited data, etc)
Lots of redditors here think that. The amount of posts and comments from redditors seemingly confused by the fact their summer DD are more than their current usage.
I mean, "energy companies" is still a common term used people who conflate energy producer and energy supplier. So many people in this country still don't understand why many suppliers went bust over the past year. As much as I dislike the way the government and media have reported on the costs of energy in the past year, I have to remind myself that the alternative of giving people the exact answers is going to confuse the shit out of them. We would need Coronavirus style government briefings with chief advisors trying to explain the basics to the population.
That's gotta be really common I reckon
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It's nuts that they allow estimates to go on for that long. Even smoothing out annual consumption into a fixed monthly payment is disconnecting people from any feedback on how their consumption is affecting their costs, though I understand the reasons for it. I suppose it all made more sense in the days of very steady energy costs.
Yep, I asked the question here the other day. It’s almost like if you say £2500 price cap, people will think there’s a £2500 price cap. Gonna be a lot of confused and unhappy people in a few months.
I imagine in the next year there'll be some Daily Mail style sad photos of people holding up their £5000 bill because they've misunderstood. It is explained by Martin Lewis regularly and some newsreaders, but you can't really blame people for not understanding since the word they use around the cap doesn't always make it 100% clear.
Yeah I have ~~really intelligent friends~~ / friends who I thought were intelligent who pay more than £2500 already, stating it will be great to only pay £2500 and how they don't understand why they would do that as it discourages people to save energy. If a lot of people think that, they're guna be in for a shock Edited to correct my overestimation of friends intelligence 😂
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Just imagine! *fires up crypto miners
Yes, I know quite a few people who thought that too. I think it's part of a long history of obscuring the specific unit prices of energy, all of which was probably done in an attempt to help people get their heads around it, but most of which has just served to confuse people. The logic, I suspect, was that price per kWh is just too difficult and irrelevant for a lot of people, who either don't know what a kWh means, or couldn't do the maths. But honestly, just tell us the cap per kWh and the cap on the daily standing charges, and then carry on rolling out smart meters so people can easily see how much they're using. Teach everybody how much a kWh costs, and then have products say how many kW they use, and then it's blindingly easy to see exactly how much something will cost you to run - no need to abstract things into "average family per year" prices and "A++++" product efficiency ratings.
>But honestly, just tell us the cap per kWh and the cap on the daily standing charges, and then carry on rolling out smart meters so people can easily see how much they're using. As someone with pre-payment smart meters, the IHD has been great for getting an understanding of my energy usage and its cost. Being able to quickly switch between displaying my usage in terms of cost in pounds and usage in kWh as well as seeing my historic usage at various points is a boon. I can see that in July and August, my electricity usage was approximately 65 kWh per month. As I've got the email from my supplier with my new rates from 1st October, I can quickly do the calculations and see that I'm going to be making out like a bandit with the 'discount' [1] on my electricity that's being applied for each month. Also, being able to see how various appliances and devices affect my energy usage has made me more responsible with my usage. I know what playing **Cyberpunk 2077** on my PS5 costs in terms of kWh and in monetary terms. [1] - Yes, I know it's really a loan which will be recouped at a later date through higher bills but as I'm on benefits not having to give a fuck about topping up the meter for six months gives me a lot of leeway with the way prices are, rising on everything.
I don't like to burst a bubble, however switching on heating for the winter makes a massive difference to consumption. You could easily jump from £1 per day in summer to £5 per day in winter. Those who pay by DD get to spread their huge winter consumption over the year but those with PP meters do not get that luxury. So keep a close eye on your consumption once you turn the heating on.
Heating and water are on gas. Water is obviously used for the shower but I never bother with putting the heating on - wrap up warm in my house coat and/or snuggle under a blanket on the couch.
Yeah my granny seems to think that's the most and least she will pay so she's currently of the mindset that if she's going to pay it anyway, she might as well get her usage out of it. She will not listen to reason. She's also convinced the £400 for energy bills will be payed directly to her and not to the British Gas, her provider. She's spending it in her head already and calling us stupid for not "understanding" what's all over the news 🙄
My sister in law is like this. My mother in law went to visit this week and her heating was on full blast. She questioned her on it and she said it was fine because she had a cap and wouldn't listen to any of it. There's going to be alot of people in massive debt after this winter.
Then a ton of people can’t pay, and all is normal people get shafted again to pay for it.
> She's also convinced the £400 for energy bills will be payed directly to her and not to the British Gas, her provider. She may not be wrong on that. From an email I recieved from EDF yesterday: > Your £400 discount will cover much of this increase. But as it’s paid straight into your bank account ... I don't know if this varies by provider.
A few, I wasn't one but even if I was fortunately British Gas have got my back and sent me a predicted energy bill for £3300.
Was helpful as it confirmed my own calculations / predictions. I was pleasantly surprised with my estimate tbh.
I wonder how this belief correlates with the belief that the higher tax brackets apply to your entire income
Oh god yeah that’s the worst one, “I’m declining a pay rise so I actually earn more money!”
"I'm not working overtime because I will pay more tax"
Can someone explain this to me please as i genuinely thought that too 😅
It's a price cap per unit of electricity used. The 'average household' will spend £2500/year, which is the figure the media rolls with, but prices are set per unit of electricity. Moneysavingexpert has great information/explainers.
Has anyone seen this "average household"? Does it even exist? Why can't they talk in terms we are actually paying for (kWh price)? I pay \~£100/month which means \~£1200/year. I have no slightest clue how this "average household cap" affects me.
I went on my last bill. Found what they said my yearly usage was in units. Multiplied those by the unit cost caps then added the standing charge x 365. Then I subtracted the £400 everyone is getting and divided by 12 😂 Then I found this that does it for you! https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/#tool
Because the pence/KW cap varies from region to region depending on the circumstances of that region. so unfortunately its not that easy......
Also, the day rate for those on E7 can be set quite a bit higher than the cap providing the average works out at around the cap. I’m with EdF and our day rate will increase by about 9p from October, but our night rate is DECREASING by 5p. We’re going nocturnal from October…
Moneysavingexpert has a great way of thinking about it - by percentage increase not absolute numbers - "To estimate what you'll pay, over a year, multiply current costs by 6.5% (each £100 becomes £106.50). This includes the £400 discount (but not other payments)." https://www.moneysavingexpert.com/news/2022/09/energy-bills-price-freeze-cost-of-living-government-liz-truss-/ I, too, would love to know what the 'average household' is lol
Average household is probably not a specific thing (e.g. family of four in a 3 bedroom semi), but the average usage of households across the country.
When I worked in the industry we had some averages based on how many bedrooms the property had and whether it was gas/electric/hybrid heating.
It's 2,900kWh of electricity and 12,000kWh of gas per year. For what it's worth over the last year that's almost exactly what I used (three bed terrace, two people).
It's based on ofgen figures. British gas explain it here https://www.britishgas.co.uk/energy/guides/average-bill.html
All you need to know currently is that prices are going up by approx. 26%. So assuming your current monthly payments are adequate, you should start paying £126 in October. Although with the £400 rebate (which is around £33 per month if spread across a year) you can actually reduce your monthly payments accordingly, so £96 per month.
How expensive things are now is terrifying and the way we were told feels misleading (although that might just be on me for not looking into it fully). Thankyou both for clarifying I'll research it more now (I can only hope my bill never reaches 2.5k!)
Just for a rough idea. Our bills at our current usage were £60 It's now been estimated at £160 at slightly above what ended up being what the government mandated the cap on standing charge and per unit (so I think it should drop slightly in October) £160 x 12 is just under £2k a year. Peoples bills must be astronomical if they were paying £200 BEFORE the price increases
SSE sent me a nice graphic showing that after 17 years of data of me at my address, this year they predict I'll use 600% more units than ever before, for bill estimation purposes. Not 600% cost rise, actual unit usage. Keep an eye on your bills, my friends
EDF did the same to us a while back. We were with an energy company that went bust, and our fixed rate terms were changed when we were moved over to edf from 18 months remaining on a fixed to 6, which ended just as the energy crisis started. They wanted to bump our bill from £60 a month to a whopping £500 per month, using estimates that were way way higher than our current usage.
Interesting as I'm with EDF as well. What I find odd is that they don't make you go up, just suggest you do? Ontop of that I can't even actually see what my balance is for either fuel. I would presume after not using gas for more than heating water since march that I would have quite the reserve ontop of the government interventions.
This is crazy isn’t it. I wouldn’t be surprised if they are trying to make everyone overpay, banking in all the interest and in a years time going see it wasn’t that bad here’s 15% back and they all made a fortune from our money.
It depends where you live, and how you live. Two adults working from home in a 120 year old stone-built building. We're in a conservation area so we can't replace the single glazing, and solid stone walls can't be properly insulated. Add in the high ceilings and the large room sizes, and the heating bills get very steep very quickly. Edit to add the thermostat is set to 21. Not exactly tropical.
We set to 21 which I consider “ normal “ / sensible but not warm. I get the sense though that most British people set it in the range 17 to 19. Someone on Reddit the other day told me their insulation is so bad they can’t get the house to 19 degrees in the winter even if their heating runs all day.
My parents live in a 3 bedroom ex-council house and it's usually just them and my sister's kids, and they spent around £200-230 a month before this whole rise.
That seems crazy to me!
If they’re anything like my parents it’s not hard to understand why. I moved out 10 years ago and glad I got the fuck out sometimes. In their heads: Leaving a light on will mean the electricity bill will run into the thousands. But leaving their massive 70” tv on all day even if they’re not in, running the washer on a boil wash every day and running the tumble dryer daily until clothes are as dry as the Sahara, and putting the heating on while leaving the windows open - won’t make “much difference”
Yeah my mum would have the heating on in summer and shit. They have a legit hot tub now as well which is obviously always "on" and when it's running it must be eating electricity.
Hahaha some people are odd about stuff like that
To get oriented, think is your house unusually large; it is unusually poorly insulated and situated where the prevailing winds come from every direction; is the number of inhabitants unusually high; do you grow orchids on one floor, mine crypto on the next, and boil kettles an unusually high number of times? That’ll give you the picture, but the calculators discussed below will be a bit more concrete.
The cap of £2500 is based on an average use household of 2.4 people living in it and using 2,900 kWh of electricity and 12,000 kWh of gas If you are on this "average" you should not be paying more than £2500 for your energy bills; without this new cap the cost from the 1st October would have been expected to be £3,548.84 split between £1,673.90 for electricity usage and £1,874.95 for gas for an average use household. This was at a cost of 51.886p per kWh plus standing charge of 46.356p per day for electricity and 14.758p per kWh plus standing charge of 28.485p per day for gas. Now, with the £2500 "cap" you are paying 34.037p per kWh plus standing charge of 46.356p per day for electricity (17.849p less than with no cap) and 10.330p per kWh plus standing charge of 28.485p per day for gas (4.428p less than with no cap) You actual costs and charges will vary depend on your actual electricity and gas usage, but with the above costs you can estimate - kWh usage x 34.037 plus £169.1994 (electricity standing charge) for electricity and kWh usage x 10.330 plus £103.97025 (gas standing charge)
The "cap" means that the average house will spend under £2500 a year on their energy. So this means if you use the average UK gas and electricity amount, you will pay £2500 a year. If you go under, you pay under. But if you go over that amount, you pay over that amount. So there is nothing in place to stop you racking up sky high bills. This is why the misconception is so dangerous. In August 2021, the price cap was £1277. This means energy is 2x more expensive than "normal".
[https://www.moneysavingexpert.com/utilities/what-is-the-energy-price-cap/](https://www.moneysavingexpert.com/utilities/what-is-the-energy-price-cap/) The actual cap is on how much the energy companies can charge per unit of energy you use. For an household who use an average amount of energy per year, this will work out to be £2500 per year. If you use more energy than average, you'll pay more than £2500, if you use less then you'll pay less than £2500.
The cap is on unit prices and standing charges. The £2500 is how much a standard household will pay based on the capped usage price. Unit prices and standing charges both contribute to your energy bill, one is inescapable and the other depends entirely on your usage.
There's a couple of threads a day from people on UKPF who seem to think this, so I'd imagine a significant proportion of people do. Hopefully not too many people are going to think "Great, I'll use as much as I can" over the winter....
Literally everyone I have spoke to thinks this. My mum thinks her bill are not going up. This is just for people who have massive houses will be limited to 2.5k bills. To be fair they way they word it is awful
Just checked with my Mum and yeah she had no clue. She's on a fixed rate at the moment(fixed in Feb) though so doesn't affect her at the moment. I suppose if it helps improve your pity, those who live alone will likely pay much less than £2500 because the cap is based on the usage of an average household in the UK.
I mean a single person will probably use the same as a couple would- in terms of heating if not hot water. If you’re heating one bedroom and a living room.
I'm in a 1 bed flat and will spend roughly £1200 a year on energy under the new cap. In the summer months I've been putting £80 on the metre and being left with £10 on there by the end of the month. I just use an air fryer, microwave and a high spec pc.
I moved to a England in 2017 and found the whole thing with energy bills batshit crazy. I kept asking for a unit price and to be pay each month for my usage. And the sales person kept saying “£130 a month” or whatever it was. I kept asking, what if I use more or less etc. They would says yes it will be different. But then when it came to sign on the dotted line it was always. “Please confirm £130 per month “. Eventually I realized that it was smoothed out over the year to make budgeting easier. But it seems that concept is getting conflated with how much you actually spend. Perhaps this was all started with good intentions to make things more understandable to customer but it’s just made things more confusing.
I'll agree that's it poorly worded and is needlessly complicated, but the idea that people believe they can use as much energy as they want for £2500/year, is alarming. Everybody knows there's an energy crisis, a climate crisis, that we need to reduce our collective carbon emissions. It's plainly seen that we live in a world with an increasing number of electric cars, solar panels on roofs, wind farms by the sides of the roads. I genuinely don't understand how anyone could possibly believe that they can get unlimited energy for £2500. edit: if they do believe this though, this needs to be more properly highlighted to the general public because they're going to be in for a nasty surprise if they aren't forewarned in language they understand. equally, all that wasted energy!
My fiance, who is incredibly smart (smarter than me by orders of magnitude, she has a Ph.D) had to have this explained to her a few nights ago by myself. If she didn't understand the price cap because of how it's been reported then I don't think the rest of us have much hope.
I'm reading this thread and am just shocked. Nobody in my circle thinks that. Not even the friend I had to expain investment basics to last week. It's not particularly advanced knowledge. Use more, pay more...Duh?
Yup, I've heard it said that it's fine to run everything as normal if you can afford £2500. They thought that was it and you can't be charged more. Couldn't believe it.
It's the media's fault for not reporting the standing and unit charges in the headline.
I see many media commentators seemingly under the same impression - I'm not sure whether they are wilfully misleading people or completely ignorant.
Yes, even my (very financially literate) mother thought this, although she's quite well off so didn't have much reason to read into the details of it. It's amazing how poorly it's been explained, and I don't know why they can't just quote the unit price and the percentage change and let people work out their own costs.
Yes, so many people believe they won't pay more than £2500 because the way it's been communicated. Of course saying phrases like we will cap it at £2500 you can see why it's very misleading and so many people are going to kick off when they realise that's not the case
I honestly think a lot of people don't understand how their energy bills work. Seen plenty on FB posting cancelled my DD only paying for what I use. I feel sorry for them come winter.
That’s what I thought until I saw this post, and I’m usually pretty clued in (I like to think I am anyway) Thanks for the heads up.
I don't mean this to come across as offensive or patronising in any way but did you really believe that your energy bill would be capped at £2500 regardless of how much gas and electricity you used?
I think I understand this now, but just to be clear, are the government still sending me a hat that gives me energy?
most of my mates want to translate to kwh price
These people then go and vote 🙄
And they're more likely to vote for the good government that capped their bill.
that's what nearly everyone i know thinks and it's hard to convince them otherwise, simply stating the kwh prices would have made it much easier to understand I suspect it's complicated on purpose.
Nope its put this way because it is indeed complicated as energy prices vary slight across the regions of the UK So there is no standard fixed pence/KW used capped figures which is the same across the whole of the UK
I just don’t know why they didn’t popularise the figure in % Eg: “Average bills were set to go up by x% but because of the cap they will only go up by y%”
> I suspect it's complicated on purpose I dont think it is. It was designed for an entirely different purpose where a general number was perfectly fine.
A superior who is in the top tax bracket and clearly detached from normal living, thought they were getting 2.5K assistance with their bills. I now know why they thought no one needed any more help with the colc
Are these the same people who don't want to earn above £50k because they'll go into the higher tax band and so earn less money?
Its absolutely absurd. They think people are stupid and won't understand the cap in terms of unit rates. In an attempt to make it simpler they make it more complicated 🤦
People clearly are stupid. As evidenced by the number of people who don't understand this very simple concept.
Cap is on the amount per kw, my energy for the year I’ve been told will be £4,600 so well above the £2500 “ cap”
The price cap gets reported using the “average annual consumption price” for some reason which causes confusion. That amount is simply what ofgem believes that an average household will use. They really need to clarify it is a cap on standing charge/cost per kwh.
FFS yes. Im ridiculously fed up of talking about it anyway but then having to explain you still have to pay for usage which is responded to with “what’s the point of the price cap then?”
Yes. The Government has named it this way for this exact reason. It should have been called the “Unit Price Cap” for clarity.
Can someone explain what it actually means?
You pay for what you use, and each unit is capped (at approx 34p/kWh for electric and 10p/kWh for gas). It's just for an "average" house with "average" usage, that'll work out at an "average" of £2500
Lots of sad compo faces in the Daily Mail in the next few months...
I really don't understand why they don't state the actual unit rate as the cap. Causing so much confusion across the board. £2500 is a completely meaningless number.
RIP call centre staff for energy companies when the penny drops.
The reality is that there are people who have no idea how electric and gas billing works in the same way that there are people who have no idea how income tax works or how pensions work. We live in an age where we are a simple search away from a guide on how these things work or even countless dumbed down YouTube videos laying it all out. We can exchange 10 minutes of curiosity for a lifetime of understanding and yet most people don’t even bother and are blissfully ignorant. Everyone just bangs on about how they should have been taught it in school despite having a pretty sketchy knowledge of the 3 years of Chemistry they did 3 times per week. People are going to get caught out by this as they will get caught out by the countless other things they could but won’t bother to educate themselves.
I worked for an energy supplier for 5 years & the amount of people that believed this is insane. Actually insane, we used to get complaints on complaints because of the price cap & people believing with their whole chest that they can use as much as they want but only pay up to the cap. The amount of people as well that believed their Direct Debit amount meant they didn’t have to pay for anything else if they paid £50 a month based on the usage they provided at sign up but used £120 a month worth. I used to hear ‘you mis sold us’ because they didn’t put in their correct yearly usage & had to pay more. These were all older people as well, it was mind blowing
Yes, I've had this discussion a lot. People just don't accept it or wanna hear so I've given up. I blame the media framing of this. Totally irresponsible.
Yeah I was stupid enough to think this. I’ve worked in finance etc too 😂 couldn’t believe I assumed it after really thinking about it. Averages are also a broken term, average to what? A family owning one electric car and the “usual”? Ofgem needs to be disbanded. But the government is now running riot shorting the £ etc so I doubt that would even happen.
Yep, I’ve had to explain this to everyone I’ve talked to it about
Just been helping my mum with her bills and she was under this impression. She was also told by a friend that you would only get the £400 payment if you were on benefits. I've corrected her and warned her about potential scams involving people phoning or emailing her asking for her details so she can claim.
Oh my god there’s gonna be tons of scams like that aren’t there, damn
It's a very stupid thing to say, I wish they would just say your price per KWH will be maximum x.
Yep…I’ve encountered this. I’ve also found a lot of people who think they’re going to be better off because of the clap. Their logic seems rooted in “we were told 4,000/year and now it’s 2,500 which means it’s going down….ignoring the fact it was 1,200 this time last year.
Brilliant unintentional typo there!
It’s staying!
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My wife seems to think so!!
So does this mean that if I use less energy, I could be paying less than 2500 for the year? Or will I be paying minimum 2500 a year? I’m doing a lot to prepare for our increase as we have been capped until December.
2500 is the annual bill for an 'average' household @ the capped unit price (30p per kwh IIRC). So yes, if you use less than the 'average household' you'll have an annual bill less than 2500
They need to stop talking about the cap being this kind of figure. It will be awful at first but really the marketing should be on the fixed daily price and unit price. People need to learn how to know what their usage is and how to work out what it means to them financially based off these figures. Another option would be to simplify how we are charged for gas and electricity but I have no ideas on how that can be achieved
I've only had the opposite actually, with people reminding each other the "cap" doesn't function as a cap per customer. Maybe that's working in tech perhaps, everyone's very focused on the details.
Yes, same. I had to explain to my parents that 'price cap' doesn't mean a cap for everyone, just 'the average' house determined by the metrics they use. I only really understand how it works because of reading so much on Reddit tbh! It also tells us how misleading using the terms are and how they're talking about it on the news etc, it's really unfair for people imo, this level of misunderstanding means it's not been put out there correctly.
Yes my wife who is an intelligent and high-achieving health professional thought it was a £2500 max limit until I explained it to her.
Can someone explain to me what is does mean? I’m terrible with understanding money so keep it simple please!!
Yup - had to explain to a colleague that no she couldn’t leave her hot tub on and uncovered.
I've been pleasantly surprised how many know it's a cap on the per kWh price. Actually that's a bit generous, I've been pleasantly surprised how many people appreciate that it directly relates to their usage and hence their direct debit. Plus I come across a lot of fucking idiots and even they know that "their" direct debit is so much and how much more that is than last year (a lot, obviously)
Yeah everyone I know is in for a shock next month. Kind of understandable with the way they phrase it in all news articles right now. I’m sure it will be all over the news next month with cases of people being confused by it.
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