Unless you are living under a large rock or pay no heed to the news, it is inescapable that yesterday’s energy cap price hike announcement from regulator Ofgem hasn’t hit home.
The Ofgem price cap is important as an estimated 22 million UK customers are on default tariffs directly impacted by the rise. Going by the rough assumption that a customer equates to a household, of which there are 27.8 million, approximately 80 per cent of the population is affected.
Ofgem calculates standard energy usage by using what it terms as Typical Domestic Consumption Values (TDCV) of 2,900kWh of electricity and 12,000kWh of gas. Of course, very few homes are exactly typical, with larger properties with more occupants routinely using significantly more than TDCV.
Back in October 2021, Ofgem increased the TDCV-related price cap to £1,277, using 21p/kWhr for electricity and 4p/kWr for gas, plus various standing charges. Customers using pre-payment meters pay slightly more.
Now, the price cap rockets up to £1,971, up by a staggering £693, or 54 per cent. Electricity rises from 21p to 28p (33 per cent) while gas climbs from 4p to 7p (75 per cent!) in the wake of soaring wholesale prices.
Defending the decision to increase the cap by quite so much, Ofgem said “the energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.”
“Over the last year, 29 energy companies have exited the market or been put in special administration in the wake of soaring global gas prices, affecting around 4.3 million domestic customers.”
Is there merit in trying to circumvent the default tariff rises by opting for a fixed deal? Energy companies are counting on another Ofgem-instigated increase in October 2022 and are hedging their bets accordingly.
For example, my provider Octopus Energy is offering a 12-month fixed deal at a cost of 40.27p/kWhr for day-use electricity and 9.94p/kWhr for gas. Both are substantially higher than the present cap. Nevertheless, I don’t fancy paying up to £5,684 for a year’s usage so will take my chances on the default tariff. Heck, even the so-called ‘loyalty’ plan pushes my estimated bill the wrong side of £5K!
This farcical situation is exacerbated by the knowledge that today’s fixed rates may well prove to be of relative value come October. It’s plausible and, indeed, likely energy companies will increase their fixed rates in line with additional uplifts to the cap. Think about it for a moment: a statement such as that is plain scary.
In the face of this energy price tsunami the Government is providing a £150 payment for homes with an A-D Council Tax banding together with a £200 loan to be repaid at £40 per year for five years. Feels much like coming to a gun fight with a blunt pocketknife.
Why it matters to the PC enthusiast
None of this is unanticipated. We’ve been told for months energy prices are only going one way. Relief won’t be at hand until next year, at the very earliest, according to industry bosses, so 2022 is the year of the spike.
“The real pain comes from gas prices going up by a minimum of 75 per cent”
Once-in-a-generation price hikes like these ought to worry the PC enthusiast who spends much of their time in front of the screen and typically owns many electricity-guzzling devices. We wrote an article back in December detailing how much electricity is used by common appliances dotted around most homes.
What follows details multiple tiers of electricity usage taking into account the new TDCV. Low-usage consumption is defined as running that particular appliance for three hours a day, five days a week. Mid-usage consumption is set to six hours a day, six days a week, and, finally, high usage is calculated on the basis of nine hours per day, seven days a week.
Of course, some folk leave computers on 24/7 and the final figure, however unrealistic, reflects this. You wouldn’t run a PlayStation 5 all day and all night, would you? But the fridge and/or freezer is a continuous guzzling beast. To make things interesting we’ll include common household appliances as a point of reference.
|Microsoft Xbox Series S||85W||£18.58||£44.58||£77.92||N/A|
|Philips 75in Ambilight TV||132W||£28.95||£69.22||£121.08||N/A|
|Club386 Test PC (idle)||49W||£10.70||£25.74||£45.23||£103.03|
|Club386 Test PC (2D load)||202W||£44.15||£105.94||£185.39||N/A|
|Club386 Test PC (gaming)||457W||£99.86||£239.67||£419.44||N/A|
|Philips 43in UHD PC monitor||95W||£20.75||£49.82||£87.19||N/A|
|iiyama 34in UWQHD PC monitor||33W||£5.30||£17.31||£30.29||N/A|
|Samsung fridge freezer||32W||N/A||N/A||N/A||£67.29|
|Hotpoint chest freezer||35W||N/A||N/A||N/A||£73.59|
|Ethereum mining rig||412W||N/A||N/A||N/A||£870.40|
My tumble dryer will chew through 560kWr over the year based on 160 weighted drying cycles. Based on Ofgem’s April 2022 default cap, that’s another £153 out of the coffers, while two people having a 10-minute 9kW electric shower each, every day, adds up to another £306 hit to the rapidly depleting wallet.
There’s serious cause for alarm for cryptominers. Given the exorbitant levels of energy costs now, a three-card rig producing 170MH/s and pulling 412W from the wall – in a well-tuned state – will cost nearly a grand on the new tariff. By that reckoning Ethereum needs to stay at over £1,000 a coin for such a rig to break even, excluding substantial hardware procurement costs.
An explosion in energy prices affects every household to varying degrees. Heightened electricity figures are bad enough, but the real pain comes from gas prices going up by a minimum of 75 per cent, unless you are lucky enough to be on a long-term fixed tariff whose cost is significantly below the Ofgem cap. Even then, if the provider goes bust, you’ll be switched over to the vastly more expensive default tariff with a larger supplier.
Now more than ever, it pays to watch exactly how much energy you use. Cuddling your pets for warmth may be a measure too far, but it pays, literally, to disable the overclock and opt for energy-efficient components. From a cost perspective at least, 2022-2023 is shaping up to be a winter of discontent.