Poor Energy Communications

Posted in: Comment, News and Updates

I alternate between being irate and apprehensive about the rising cost of electricity.  Irate at the hopeless communications we've been faced with where no-one bothers to explain the "price cap" clearly.  Apprehensive at my own personal coming liabilities and those of others.  Sometimes I am irately apprehensive.

If you go onto the regulator's website, information about the energy price cap is clear enough as far as it goes:

"The price cap limits the rates a supplier can charge for their default tariffs.  These include the standing charge and price for each kWh of electricity and gas (the units your bill is calculated from). It doesn't cap your total bill, which will change depending on how much energy you use."

You then see how the price of electricity and gas will change:

Last price cap period

(1 April - 30 September 2022)

Current price cap period

(1 October - 31 December 2022)

Electricity £0.28 per kWh

Daily standing charge: £0.45

£0.52 per kWh

Daily standing charge: £0.46

Gas £0.07 per kWh

Daily standing charge: £0.27

£0.15 per kWh

Daily standing charge: £0.28

You notice two things: [i] the 86% increase in electric costs, and [ii] just how much more expensive electricity is compared to gas.

I have never heard any media outfit state that there is going to be a shift from 28p to 52p per unit of electricity (or similar for gas).  Rather, what you hear and read is something like: the energy price cap will increase to £3,549 per year for dual fuel for an typical household from 1 October.

And thus, this part of the regulator's statement:"It doesn't cap your total bill, which will change depending on how much energy you use" has been totally lost.  Hence, a lot of people are now likely thinking that their bill will be £3549 no matter how much they use.  As such, some will likely be pleasantly surprised and others unpleasantly shocked.

The £3549 figure, of course, comes from the regulator which might have known better.

The essential media story is at the unpleasantly shocked end of the spectrum with much talk of fuel poverty (where a household has above-average energy costs, and if paying those costs would push it below the poverty line as far as its remaining income was concerned) and people having to choose between heating and eating.

But how realistic is this?   Ed Conway of Sky News estimates (with great graphics) that the median energy bill from October (at the new rates and with already announced grants) will make up ~7% of household expenditure.  Historically, this is on the high side (since the 1950s it has varied between 3 and 6%), and it assumes that people will not respond to the much higher rates.  But many will (including me) as we should.  It is, after all, what prices are for – to send signals about usage.  

And with net zero in mind, reducing our consumption is exactly what we should be doing.  What an opportunity – I say apprehensively.

There is another perspective on all this.  Gas prices are rising because it is assumed that there is going to be a shortage in the coming months and so countries are buying it either to store if they can, or for delivery at a future date.  This is driving pics up and is a foretaste of the future when gas supplies run down to very low levels because there's little left.  In both cases government should surely be encouraging us to use less.  But that's a message I do not hear.

Posted in: Comment, News and Updates


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  • Assumes the government is thinking on our behalf. Conservation versus Consumerism? How will corporations make money while we still have some? And when the resource runs out, not a problem apparently. I recall that parasites try not to kill the host they rely upon to live.