April 2024 Ofgem Price Cap More Expensive For Low Usage ?!

[PrefInvestor]

We have solar panels and a storage battery, so the April to September period is a very low usage period for us. Electricity drawn from the Grid drops to 1-2 units a day on average (Grid usage can often be zero on sunny days where daytime solar generation covers our daytime usage and charges the battery which then covers our night time usage). Gas usage also falls to a very low figure as the Central Heating is off and we switch to using the electrical immersion heater (powered by solar or the battery) for one of our two daily water heating periods. (Theoretically we could do both water heating slots that way but I dont want the boiler to be sitting there not being used for 6 months at a stretch as I fear it might develop problems if we try to use it in that way – this way it gets to work for a short period every day).

I read our meters weekly and have done for many years (no smart meters for us !) so I know that our total usage for April to end of September 2023 was as follows:-

Gas 142 units = 1585.4 KWh
Electricity 83 units = 83 KWh

Now we took out a one year fix with Octopus last September, fixing at about 5% less than the Ofgem January 2024 rates.

Rates for our one year fixed tariff are as follows;-

Gas 7.24 per KWh, standing charge 27.47p per day inc VAT
Electricity 28.36p per KWh, standing charge 47.95p per day inc VAT

Rates for the new Ofgem Apri2024 are as follows;-

Gas 6.04/per KWh, standing charge 31.43p per day inc VAT
Electricity 24.5p per KWh, standing charge 60.1p per day inc VAT

See link https://www.ofgem.gov.uk/publications/c ... 0per%20day.

Now the April cap rates are definitely lower, but the standing charge figures have increased enormously. On these figures consumers will be paying 91.5p a day in standing charges, that’s ~£334 a year on its own without consuming any units !. Not to mention a possible extra £28 one off charge to help suppliers cover debts from consumers who haven't paid their bills.

Anyway I calculated our costs for the April to end of September period (using my spreadsheet which has proven accurate at reproducing my suppliers bills subject to tinkering with the conversion factor which sometimes needs adjusting) based on the figures given above and got the following results:-

April – Sep on our One year fix tariff
Gas £160.88
Electricity £110.10
Total £270.98 inc VAT

April – Sep on the April 2024 Ofgem tariff
Gas £152.94
Electricity £129.71
Total £282.65 inc VAT

So it would appear that for us the April 2024 Ofgem price cap is ~£12 more expensive than staying on our one year fix !. All due to the swingeing increase in the standing charges it seems to me. We will be staying on our one year fix as its cheaper and switching from our one year fix would cost £75 per fuel.

I suspect that anyone else whose usage is low might well find themselves in the same situation and for them April 2024 Ofgem cap wont be a price reduction but a price increase !.

ATB

Pref

PS Im aware that the April cap only lasts till the end of June 2024, but my primary interest was in whether it saved us enough to be worthwhile taking the £150 hit to change our tariff. To do that I felt I needed to do the comparison over the remaining period of our fix. The results seem pretty clear and any changes in the Ofgem July 2024 cap seem unlikely to affect the decision.

[monabri]

Don't get me started on Standing Charges...it is a quiet Sunday morning and my neighbours wouldn't wish to hear me moaning about rip off SC.

[Bminusrob]

I am in a similar position to ProfInvestor, albeit with slightly higer usage. We don't have mains gas round here, so I am only talking about electricity. I use on average 7 to 8 units of electricity per day, so while the quoted cost is 26.42p per unit currently, if you factor in the standing charge, I am actually paying about 34p per unit. As monabri says, it is a rip off. It means that I, and all the poor people cutting their electricity usage to the bare minimum are subsidising the people heating their swimming pools. It really needs someone like Martin Lewis to start rattling a few doors about this.

[Dicky99]

The rise in the gas s/c is quite small but for someone on low income with electric heating who already cannot afford comfort levels of heating it's a kick in the nuts for their efforts to be frugal on energy use to be for nought.

[Niksen]

All due to the swingeing increase in the standing charges it seems to me.

https://www.ofgem.gov.uk/publications/w ... els-remain

Energy suppliers are being allowed to add £28 to the bills of those who pay to cover those who don’t because the government won’t let them be disconnected, and an additional cost of £10 to those on DD because they are not allowed to charge those on PrePayment Meters more and so the higher cost of operating those is added to DD customers.

We have solar panels and a storage battery

I am surprised you have chosen a fixed rate and are not on the Agile or Flux tariffs for electricity and Tracker for gas.

[scrumpyjack]

Don't get me started on Standing Charges...it is a quiet Sunday morning and my neighbours wouldn't wish to hear me moaning about rip off SC.

Part of the problem is that they have stuffed all the costs of green schemes onto the electricity standing charge, when if it is go anywhere it should be on the gas sc to encourage nut zero.

The sc covers things that are not related to the quantity of energy you use so on that basis are not stuffed on the the unit rate. Whether they should be in the electricity bill at all is another question! It is all part of the tax principle of plucking the goose to raise as much money as possible with the least hissing!

[monabri]

The rise in the gas s/c is quite small but for someone on low income with electric heating who already cannot afford comfort levels of heating it's a kick in the nuts for their efforts to be frugal on energy use to be for nought.

12.7% increase.

[monabri]

I see I was paying 23.94p /day electric SC in March 2021. This ramped up to 45.8p / day by July 2022 and will now shortly increase to 60p.

I wish my dividend increases had been so strong in such a short time period.

[UncleEbenezer]

I see I was paying 23.94p /day electric SC in March 2021. This ramped up to 45.8p / day by July 2022 and will now shortly increase to 60p.

I wish my dividend increases had been so strong in such a short time period.

60p? You jammy swine! Ours is north of 67p

I've always been a very low user: couldn't've afforded otherwise in my formative years, and old habits die hard. Until recently I was also a low payer. So for example I'd hear the pundits on MoneyBox:
You can save three or four hundred quid a year by switching supplier.
What, from a current bill of one hundred a year?

[PrefInvestor]

I am surprised you have chosen a fixed rate and are not on the Agile or Flux tariffs for electricity and Tracker for gas.

That’s a good question Niksen, my thoughts are as follows:-

1. I’ve looked at Octopus Flux, my daughter has it and is happy with it – but they need it to get paid anything for their export whereas we receive FIT payments for our export. Also we would not adjust how we operate to try and save money on our energy bills, so we’d get hit with any usage in the expensive peak evening timeslot. I have figures for our import and export for every month of the year and did a spreadsheet comparison averaging out the Flux tariff prices into one composite price by weighting the price by hours in the day. Result was that Flux just might save us ~£150 over a year – if that’s so then that’s peanuts and not worth the risk of changing.

2. Being on the FIT tariff has other implications too. If we went to any smart tariff then we’d need to have smart meters and our FIT Provider has told us that would mean that at some point we would have to be paid for what we ACTUALLY export. Whereas ATM we are paid for 50% of what we generate (FIT deemed 50% arrangement) even if we export NOTHING, which in the winter months is often the case with the battery. Though admittedly the FIT tariff rate is much less than available elsewhere BUT it will increase with RPI every year in April for the next 20 years (RPI was 11.4% in 2023, expectations are for 5.1% for 2024). So in a few years time that just might make staying on FIT quite attractive ?. And taking smart meters is an irrevocable step that you can NEVER go back on. That said being able to bulk charge the battery during the cheap early morning timeslot and run off that for the rest of the day in the winter months is a nice idea !.

3. When it comes to our energy bills we value certainty and predictability very highly. Ive looked at Agile and the like and the prices can be very variable and can be very high on occasion as well as very low. To date we’ve seen this as a risk that we don’t want to take.

But I plan continue to monitor the situation, going smart is always an option. Going back to FIT/non-smart isn’t.

In truth I am more concerned with our gas bill than our electricity bill as we use 10x as much gas as electricity. We are already in a position where our annual electricity bill is virtually nothing. Finding a cheap non smart Gas tariff would be ideal for us.

ATB

Pref

[scotview]

In truth I am more concerned with our gas bill than our electricity bill as we use 10x as much gas as electricity. We are already in a position where our annual electricity bill is virtually nothing. Finding a cheap non smart Gas tariff would be ideal for us.

ATB

Pref

Why don't you heat your house with electricity then, move over entirely to electricity ?

[PrefInvestor]

Why don't you heat your house with electricity then, move over entirely to electricity ?

Well a variety of reasons:-

1. They dont make electric boilers big enough to heat large houses and even if they did they would be horrendously expensive to use - given the price per KWh of electricity compared to gas. We use ~10,000KWh per year of Gas to heat the house, doing the same with electricity would cost £2,500 a year at 24.5p per KWh !!!!
2. Heat Pump solutions are hugely expensive and require major changes to your house eg putting in bigger radiators and then probably redecorating everywhere afterwards. Really dont fancy any of that - either the disruption or the associated expense. Also not convinced that they work as a retrofit to a large detached house, why take the risk ?.

No I dont see us ever doing that. Hoping for Hydrogen boilers in the future myself ATM - at least that would be a single point change not affecting every room in the house.

Electric heating - forget it IMHO (UNLESS YOUR PROPERTY WAS BUILT TO DO THAT FROM THE START !!!!!).

ATB

Pref

[PrefInvestor]

12 months worth of Gas bills from Sep 2022 - Aug 2023 amounted to ~£1,150. We are are on a slightly cheaper Gas tariff now so this year it should be less. An even cheaper Gas tariff would be better still !!!!.

Electricity I'm not so bothered, our total annual usage from the Grid last year was 860 units. Only ~10% of that during Apr/Sep, the balance in the winter months.

ATB

Pref

[DrFfybes]

We have solar panels and a storage battery, so the April to September period is a very low usage period for us. Electricity drawn from the Grid drops to 1-2 units a day on average (Grid usage can often be zero on sunny days where daytime solar generation covers our daytime usage and charges the battery which then covers our night time usage). [...]

I read our meters weekly and have done for many years (no smart meters for us !) s

.

Might be worth getting smart meters then going on Octopus Flux. Cheap inport 2-5am, but more expensive import and better export 4-7pm. Charge the batteries overnight at a rate slightly below the export, so when the sun comes up you're charged and making money, and between 4-7pm you get about 30p/kWh export. On a cloudy day you still benefit from the 15p overnight, can set your immersion on a timer(?) to benefit, and when the sun fades in winter I top the batteries up 3-4pm (or 2-4pm in Dec/Jan) to make sure we don't use anything much between 4 and 7pm.

But yeah, the standing charge sucks.

Paul

[Hallucigenia]

2. Heat Pump solutions are hugely expensive and require major changes to your house eg putting in bigger radiators

No they don't - you can get so-called high-temperature heat pumps now which have the same flow temperature as a gas boiler, so no radiator replacement needed. They are slightly less efficient at high temperatures, but in the real world they very seldom need to go up to those temperatures so there's little difference. See the results from this project which installed heat pumps in a range of properties :

https://es.catapult.org.uk/news/heat-pu ... s-boilers/

[PrefInvestor]

2. Heat Pump solutions are hugely expensive and require major changes to your house eg putting in bigger radiators

No they don't - you can get so-called high-temperature heat pumps now which have the same flow temperature as a gas boiler, so no radiator replacement needed. They are slightly less efficient at high temperatures, but in the real world they very seldom need to go up to those temperatures so there's little difference. See the results from this project which installed heat pumps in a range of properties :

https://es.catapult.org.uk/news/heat-pu ... s-boilers/

Well what you say conflicts with everything I’ve read on the topic and even now internet searches return recent articles which say that radiators DO need to be resized in conjunction with heat pump systems. But maybe you work in the heat pump industry or have had one installed yourself ?. Didn’t work out so well for John Humphrys (the ex Radio 4 presenter) though did it ?!.

I am sure that work is in progress on making heat pumps an efficient mdchaism for heating UK homes. But I have no wish to be on the bleeding edge of this technology, nor am I prepared to shell out a 5 digit sum for an installation with government subsidies for taking up the technology steadily falling too by the look of it. Our heating costs are manageable ATM. An affordable solution that is easy to install is going to be essential to address the huge volume of people with gas central heating systems in the UK in the future. I will watch and wait to see how things develop.

ATB

Pref

[Hallucigenia]

No they don't - you can get so-called high-temperature heat pumps now which have the same flow temperature as a gas boiler, so no radiator replacement needed. They are slightly less efficient at high temperatures, but in the real world they very seldom need to go up to those temperatures so there's little difference. See the results from this project which installed heat pumps in a range of properties :

https://es.catapult.org.uk/news/heat-pu ... s-boilers/

Well what you say conflicts with everything I’ve read on the topic and even now internet searches return recent articles which say that radiators DO need to be resized in conjunction with heat pump systems. But maybe you work in the heat pump industry or have had one installed yourself ?. Didn’t work out so well for John Humphrys (the ex Radio 4 presenter) though did it ?!.

Well there's a lot of propaganda and ignorance around this subject. But high-temperature heatpumps exist (just Google them), and since they produce water at the same temperature as a gas boiler, why would you need to change the radiators?

and as was demonstrated by the study I linked to above, in the real world they don't run much less efficiently than a traditional heat pump.

It's hard to comment on individual installations, but it seems that Humphreys installed his several years ago, so was using earlier technology, and it was in an old cottage he used at the weekend, so one suspects he was letting it cool right down and then was hoping to warm it up again within a few hours, which is not a pattern that suits heat pumps.