BG Tariff/Tier anomily

Surely they proportioned the number of Tier 1 units according to the number of days in each period?

Eg if the tariff says "4p per KWH for the first 1000 KWH each quarter, 3p for the rest", then for the 18/2/09 to 16/3/09 period (26 days) they should charge the higher 4p rate for the first 285 KWH (1000*4/365 * 26) and the lower 3p rate for the rest.

The trick with these tariffs is to try to get a bill which covers the summer only, ie when you aren't using your central heating. Then you could end up not using up all your Tier 1 units, saving you money. Some suppliers (eg Npower I think) try to stop this by having a lower Tier 1 threshold in the summer months.

Assuming that the units charged at the Tier 1 level have been pro-rata'd for the number of days on each tariff - and that you haven't been charged a full quarter's worth on each tariff - that seems perfectly reasonable.

I presume that you're not paying a standing charge, and that BG extract the equivalent of one from you by charging a higher rate for the first so many units each quarter? If you *did* pay a standing charge, you'd have to pay a proportion of a quarter's worth for each period you were on a different tariff.

Check the *total* number units which have been charged at Tier 1, and make sure that they are reasonable for the total period covered by the bill.

Quite.

Does it save you money? It depends how you look at it.

On the one hand, if you don't use up all your tier 1 units, this means that all of what little gas you do use is charged at the (higher) tier 1 rate, so you're paying *more* (per average unit) than if some of your gas is charged at the (lower) tier 2 rate.

On the other hand, the whole point of the tiering is that it is an alternative to the old fashioned way of having just a single usage rate, but with a separate standing daily charge. Basically, if the first

3650 units per year are charged at 1p more than the rest, this is equivalent to charging for everything at the "rest" rate but adding a 10p per day standing charge, provided you fill the tier 1 quota in every charging period. Then, if you ever don't fill the quota, you can think of it as saving some of your standing charge, so it *does* save you money.

No matter how you look at it, you've got this one the wrong way round. This is not them trying to stop you saving money, it actually saves you *more* money. By lowering the threshold, there's a higher chance that some of the gas you do use will be charged at a cheaper rate.

Incidentally, I learned to my cost that Npower's threshold is higher than BG's, i.e. they charge more units per year at their tier 1 rate than BG do at theirs. I had neglected to look at this in detail before I switched, having blithely assumed the thresholds were an industry standard. It's one of those things when you try to save money by *two* methods, once by switching suppliers, and then also by consuming less. The problem is that consuming less gas actually saves less money with NP than with BG, which is unfortunate. I still benefited from the switch, but the payoff is less.

Of course...

You do use them all up (well I do anyway) but not evenly through the year.

Yup.

Exactly.

They have a correspondingly higher threshold in the winter! Eg they'll say "first 5000 KWH annually charged at tier 1 (higher) rate" but (eg) 4000 is allocated Oct-Mar and 1000 Apr-Sep. That'll probably ensure that all Tier 1 units are used except for very low users.

Unless, as happened with me a couple of times ages ago, they keep using overestimates of readings, which I accept, then come the end of summer I correct the overestimate with my reading which is only a few units greater than the last estimate!

IIRC n-power had just about the lowest "main rate" ie Tier 2, but they made up for it by a Tier1 prices of something like 8p!!

The discussion was about what would happen if ever you didn't use them all up. It's no use then saying that in fact you always do use them all up, since that won't affect the argument, it merely makes the discussion entirely hypothetical. :-)

If you do use them all, it makes no difference how unevenly you do so. It just means that you're not saving any of the year's "standing charge". The fact that you're spreading the payments unevenly over the year is really neither here nor there, except as affected by price changes.

Oh, hang on, I think you might be right and I've got it backwards. Duh! It's unlikely that anyone would be a "low user" in winter, no matter how high they jack up the winter threshold (unless you hibernate, i.e. move South for the winter, leaving the heating on frost-protection only). But anyone who would just about manage to be a low user (in the sense of using no T2 units) in summer with a level year-round threshold, would find this more difficult when the summer threshold is reduced. The incremental saving in money, per kWh not consumed, remains at the low rate for longer before the threshold is reached at which the incremental saving goes to the high rate.

What difference will that make? They generally re-calculate the bill back from the last non-estimated reading.

Are you sure they do? Even if they did you'd have heavy usage and light usage mixed together so it may not be to your advantage depending on the bands.

I have anecdotal evidence to that effect. Besides, they'd be unlikely to send a negative bill in the event of the overestimates having been so high that an actual reading ends up being lower than the last previous estimated reading.

It really shouldn't make much difference at all, since you'll still be charged the appropriate number of T1 units for the whole period.

One thing they will do, though, even if they discard the bill-date estimates, is generate new estimated readings for any intervening dates on which there were price changes. But I dare say they will work these out on a fair seasonally-adjusted basis.

Yes it does, that's my point.

Yes it it...

Ding!

The only time they did that with me was when the actual reading was *lower* than the previous estimate!

In all other cases, they just billed from the last estimate. A couple of times, this resulted in a bill of around 10-20 units towards the end of summer!

My gas usage and actual bill diverged as they so often seem to do. Eventually it got to the point where I decided it had to be corrected and entered a correct reading online. (They were so far out that the after the winter quarter the estimated reading on the previous bill was lower than the real reading for the current bill)

Somehow (I don't know exactly what went wrong - could have been me) the reading they ended up with had no resemblence at all to the real value. IIRC I got a bill for approximately 1000 pounds (this wasn't just a digit wrong or something like that, it was a completely random reading)

This 1000 pound calculation was all charged at the most recent (highest) prices.

I then rang them up and gave them the correct value. Now when I got my corrected bill (IIRC a refund of approximately 100GBP) they'd gone back nine months and recalculated all the estimated values so that the refund was calculated based (partially) on the cheaper units from some time ago.

Tim.

Then please explain. What difference does it make?

I say it makes no difference because if you use 20 MWh in the year (say 15 in winter and 5 in summer) and 5 MWh each year are charged at T1, then you're going to pay for 5 at T1 and 15 at T2 no matter whether the 5 MWh are allocated 4/1 or 2.5/2.5 to winter/summer.

Yeah, but if you use 2 in the summer and 18 in the winter, then your summer bill won't use all the T1 units.

You claimed that if you *did* use all your T1 units, it would still make a difference whether they're spread evenly or not. Now you're talking about *not* using all the T1 units, so that's irrelevant.

Are you really Tim in disguise ;-)

What I meant was:

a) Over the year I exceed the total annual T1 units

b) Over a particular billing period, ie the summer months, I do not exceed the proportion of T1 units allocated to that billing period.

Resulting in being charged less than the full annual T1 units despite my usage exceeding the annual T1 units.

If that's what you meant, why did you jolly well say something different? "Tim in disguise"? Honestly, that's nearly deformation of character! He doesn't seem to have put in an appearance for a while.

Maybe I didn't phrase it too well...

I'll expect the lawsuit ;-)

Yeah, where is he? I used to enjoy driving him to extreme pedantry and the use of ridiculous fiddle factors when he couldn't admit he was wrong :-)