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Economy 7 price rise in January 2023?

  • 14 December 2022
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I am confused as to why my electricity costs are going up again in January 2023.

I thought that we had a Government price guarantee which was fixed until April 2023?

 

I only have electricity as there is no mains gas in our rural Devon village.

Even with modern oil radiators, its costing over £10 a day to keep the house at 10degrees C!

 

The recent email from OVO says my day rate is increasing from 39.68p to 40.97p (3% increase)

Night rate is going up from 19.05p to 22.84 (20% increase!!)

 

I rely on my overnight rate to heat my hot water for the day.

 

 

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Best answer by Emmanuelle_OVO 15 December 2022, 11:49

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BPLightlog
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There are new figures announced for early next year. They vary by region so you should check against that and your payment method 

https://www.gov.uk/government/publications/energy-price-guarantee-regional-rates/energy-price-guarantee-regional-rates-january-to-march-2023

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Thanks, but I pay DD and this doesn't talk about Economy 7 rates. 

 

It feels like Companies can interpret the Economy 7 rates how they see fit, rather than it being clear?

Jeffus
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Thanks, but I pay DD and this doesn't talk about Economy 7 rates. 

 

It feels like Companies can interpret the Economy 7 rates how they see fit, rather than it being clear?

Suppliers are always given the choice about how they spilt the cost between peak and off-peak with E7.

So depending on your peak and off peak usage you may find one supplier is cheaper than another

 

 

 

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Are you aware if this is fixed for each supplier, or if they interpret per user?

Jeffus
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Are you aware if this is fixed for each supplier, or if they interpret per user?

Per supplier. 

But you may find some suppliers have a few E7 tariff with a different split between peak and off-peak rates. 

Firedog
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I thought that we had a Government price guarantee which was fixed until April 2023?


I discovered the same, so I did a bit of research. It’s easy to confuse the Energy Price Cap (EPC) and the Energy Price Guarantee (EPG).

The EPC has since 2018 been set by Ofgem to ensure that consumers are only charged a fair price; it prevents energy companies from profiting unduly. The EPG is a 2022 Government initiative to limit the cost of energy for the average household. 

The EPC is revised each quarter; the latest revision was published on 24 November and takes effect from 1 January 2023. The EPG was fixed at £2500 in the Chancellor’s autumn statement until 31 March 2023, after which it will rise to £3000. It will remain in force until 31 March 2024, although the limit might change again before then. Suppliers will have the difference between the EPC and EPG rates refunded by the Government. 

What E7 customers are seeing now is the result of the increase in the EPC from 1 January next. The EPG is supposed to ensure that rates set by suppliers remain within the limits it sets. It doesn’t specify maximum day and night rates; it’s up to the supplier to set them to a reasonable balance. I’m not yet convinced that the latest increase is within the spirit of the law.

Noel | I have no official status; I'm just a volunteer who comes here to help other customers. My gear: Aclara SGM 1416-B Electricity-only E7 meter; Chameleon IHD3-PPMID-AAA
Jeffus
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For my postcode at the moment here are two examples. I recommend checking out a few suppliers if you are not on a fixed rate to see which works best for you. 

Some quite big differences

Very likely you would have to call most suppliers for a quote. 

 

SSE

Day

41.98p per kWh

Night

24.27p per kWh

 

Octopus

Day

44.35 per kWh

Night

14.89p per kWh

 

Emmanuelle_OVO
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Updated on 28/09/23 by Emmanuelle_OVO: 

 

For up to date information about the current price cap please head to our website. Or check out this helpful FAQ to find out more about how this may impact you and what support is available:

 

Hey ​​​​@Blue407,

 

This is a good question and one I'm sure many of our customers have questions about, I hope this explanation helps:

 

 

Energy Price Guarantee VS Price Cap


 

Energy Price Guarantee

 

The Energy Price Guarantee (EPG) refers to the Government initiative which started October 1st, on 1st of July 2023, this is set to increase. This limits the energy bills for a typical household to £3,000 on 1 July.
 

What this means for customers who pay monthly


If you're on a variable rate plan:


With the new price cap, customers on variable rate plans will pay a lower unit rate for their energy. Your actual bills will still depend on how much energy your home uses.

As the Energy Price Guarantee (EPG) level is higher than the new price cap, it won't have an impact on what you pay if you're on a variable rate plan, but it will remain in place to protect you from future price increases.

 

If you're on a fixed rate plan:


The price cap doesn't affect prices for fixed rate plans. Even though the EPG level has gone up to £3,000 from 1 July 2023, if you're on a fixed rate plan your prices won't change. That's because we're keeping your prices as they are for the length of your contract to protect you from this price increase.

 

What this means for Pay As You Go customers


Pay As You Go prices are variable – these will be set by the new price cap on 1 July 2023. This means your prices are going down.

 

Gas


Customers will receive an additional discount on their gas unit rate through the Energy Price Guarantee (EPG) so that most customers will pay less than Pay Monthly customers.

This discount will be reviewed every 3 months. You don't need to apply, and there is no need to contact us – the discount is applied automatically.

Electricity


Electricity prices on Pay As You Go mean that most customers will already pay less than the equivalent for Pay Monthly.

 

Price Cap

 

The Price Cap which is set by OFGEM means the maximum cost that a supplier can charge a customer on average, per year. The Price Cap is influenced by wholesale costs. This includes distribution costs in each region. OFGEM takes a look at the underlying costs to supply energy and sets the cap accordingly. 

 

Ofgem have announced that the new price cap will be £2,074 for a typical household¹ from 1 July until 1 September 2023.

 

The EPG protection will remain in place until March 2024 and the government is still absorbing a lot of the cost. 

 

 

Why are some customers seeing a price increase despite the EPG? 

 

OFGEM has decided to amend the Price Cap to make changes to regional charges, but the EPG discount remains consistent, as an average, across different regions. 

 

The EPG is an average discount across the board, however regions that are more costly to provide energy to, will see an increase in costs. 

 

All of this will be communicated to affected customers. If you're affected by the regional pricing updates and your prices are set to increase in January, we’ll contact you over the next few weeks with an update of your change of price and forecasted costs for the year.  

 

 

What about Fixed Tariff customer’s moved to the EPG?

 

We made a promise to these customers that we would continue to monitor their accounts and if a customer becomes disadvantaged, we’ll reach out to them and inform them of the next steps.

 

 

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Firedog
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Some quite big differences

 

I read somewhere that the ‘industry standard’ for E7 assumes that 40% of consumption will be at the cheaper rate. However, there will be a point at which it becomes cheaper to apply the going single rate to all consumption; this of course involves knowing what that rate is. A starting point would be the EPG, currently 31.25p/kWh ex VAT in my region. That’s what I see if I ask OVO for a quote. (The standing charge is a bit lower - 43.58 as opposed to 43.67 in my case. That adds up to 33p a year; peanuts for the consumer, but tens or hundreds of £000 for the supplier.) It would be much fairer if suppliers were to quote renewal rates based on the historical day/night usage ratio.

 

Noel | I have no official status; I'm just a volunteer who comes here to help other customers. My gear: Aclara SGM 1416-B Electricity-only E7 meter; Chameleon IHD3-PPMID-AAA
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I am confused as to why my electricity costs are going up again in January 2023.

I thought that we had a Government price guarantee which was fixed until April 2023?

 

OVO have managed to increase my ‘estimated’ annual consumption by £115 from January, despite a price cap. I am due to move house very shortly so I can assure any OVO Admins reading that I will be happily leaving OVO for another supplier who will not be taking advantage of the current situation with energy prices! 

 

 

 

B
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I am confused as to why my electricity costs are going up again in January 2023.

I thought that we had a Government price guarantee which was fixed until April 2023?

 

OVO have managed to increase my ‘estimated’ annual consumption by £115 from January, despite a price cap. I am due to move house very shortly so I can assure any OVO Admins reading that I will be happily leaving OVO for another supplier who will not be taking advantage of the current situation with energy prices! 

 

 

 

 

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Are prices going up in January as I have not received anything.

Thank you

BPLightlog
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That depends on your current tariff and plan. There are increases in the energy price cap for some in January 

https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022

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Thank you for your help.

I was worried about the price rise that everyone was going on about.

 

Firedog
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If you’re on a fixed-rate plan, there won’t be any change until the contract ends. You can see your current rates on the latest bill, or on the Plan page at the account website. You should be able to see the rates that will come into effect on 1 January for the standard variable tariff if you enter your details at the Switch site. That should enable you to make a comparison. 

Noel | I have no official status; I'm just a volunteer who comes here to help other customers. My gear: Aclara SGM 1416-B Electricity-only E7 meter; Chameleon IHD3-PPMID-AAA
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Thank you for your help. I checked with Switch and it is not going up that much. So I can stop worrying.

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