Martin v Ofgem boss: Why are energy bills so high (is it green levies?) | Scrap standing charges | Is the Price Cap a rip-off?

22:47Three simple things need to happen. So you need to be over£100 in debt from that period. You need to be on benefits. So you need to be a low-income customer. And then alongside that, we are encouraging you. We really need you to engage with your energy company. so you can get yourself onto a more affordable plan and get yourself back onto an even keel. What we're saying is if you do that, then we will provide some funding to support you to be able to make that change. So I know during the energy crisis, because we basically had an inactive government at the time because of elections for new party leaders of the Tory party at the time, I set up with the big energy companies and some of the major charities an energy forum.

23:23And I remember at the time when they were talking about debt, their philosophy was, look, we can cope with past debts as long as people are paying their bills now. That's basically what you're doing, isn't it? You're basically saying, look, we're just going to have to, the past debts have gone, but we need to get people paying each month. Is that the philosophy? That's exactly right. And look, all my experience is that if a customer is in debt, the best thing they can do is find a way to engage with a company to solve the problem. Now, once you're on that path, companies actually have changed, they have improved, and they will work with you to make sure you get on a more affordable repayment plan.

23:54And our rules tell them they should do that, coming back to rules. But equally, alongside that, if you feel you can't, I know many people feel they don't want to call their energy company, then go to some of the amazing consumer groups out there and they will help you through. Systems Advice, National Energy Action. But I will reiterate, first call your energy company. Exactly. And especially if you're vulnerable, get yourself on the priority services register that means they have to treat you with extra kid gloves and they can't cut you off. But let's just play the other side of that. Ed asks, why do other customers have to pay for other people's debts?

24:26This isn't going to their debt. It's paying private companies' shareholders' dividends. It's that simple. This is bizarre. I don't have to pay for the guy in front of me when they can't afford their shop at the supermarket. How is this legal? Well, the reason that we allow companies to recover what's called bad debt is debt that they know they can never get back is because that is one of the costs you have in any business, actually. And even in a supermarket, when people take stuff away, you pay for all the costs that are involved. What we are saying here is actually we invest this 500 million.

24:55We think the company is going to get more back. We think that bad debt goes down. So ultimately, we hope that this is cost neutral at least. So look, the subtlety for those listening going, I don't get this. What's the difference? The difference is when you go to Tesco, Tesco decides the price of its goods. When you go to an energy retailer, Jonathan decides the maximum amount on their standard tariff, which two thirds of people are on, that they can charge. On their other tariffs, they can charge what they're like. So what you're effectively saying is you're having to proxy factor in business costs, normal costs of business into your pricing.

25:29Now, whether you do that right or wrong is for people to decide. But that's your argument here is we have to look at it because they've got to run a business and our job is to allow them to run a functional business because we don't want to go bust. Is that fair? It's exactly right. And look, you know, none of us want to see bad debt. None of us want to see bad debt for the distress it caused or for the cost it causes for other customers. This scheme for us is a pathway for both sides to get out of it. Rob says, well, he wants to know why you're looking after the shareholders of the energy companies and not looking after the consumer.

25:58Peter says with UK energy costs, the highest in the world, it's quite clear that the regulator, inverted commas, isn't, inverted commas, regulating for the consumer, but for the government. So, look. Okay, you want, just actually, there's another question which kind of is probably worth trying to answer. It wouldn't be better off if the regulator didn't exist, which is harsh if you are the regulator, but maybe you'd like to address that. Hypothetically, if you weren't there, what would happen? Having worked through this in this job for the last five years and seen the amount of distress that the cost of energy have caused, I know that people are angry and understand why.

26:38I have gone up and down the country seeing the impact of the gas crisis and seeing what it's done to people, so of course they are angry. But look, let's take that question of what would happen if you didn't have a regulator. We used to have this in this country. We used to have no price cap. So in 2015-16, you would have companies adding on not£2.50, but about£8 or£9 to your bill out of that£100 to make sure that they were getting more than they needed and that was going back to their shareholders. So something Off Gem does, I know we do it every three months and I know it goes up and down, but it has taken away a whole pile of extra charges.

27:10Let me give you another example. You know, we saw three years ago, satisfaction in the energy industry was at 66 percent the lowest it's ever been we worked hard through all of those compliance processes and by the way martin having a serious grown-up conversation with the industry to their credit actually that's gone up to 82 so we are working every day to make things better but what we can't control and that's really important that people understand this is we can't control that gas price out there or the electricity prices for generation and that's why i know people feel frustrated but our powers are limited when i was filtering through the questions with the producers the biggest single question we had i'm paraphrasing was why the hell do we pay more than anybody else in europe why do we pay we're not actually there are a few other countries in europe on domestic bills on on commercial bills we all have in europe why are we paying more than other countries so the the biggest reason why we are paying more than other countries for domestic users is the fact that we are that dependent on the gas gas price So as I said to you, if you look back to these things...

28:12Only 40 % of our energy is generated from gas. But that goes up and down quite dramatically. Yeah, but we've got all this investment in renewables. We've got all this renewable energy we keep being told about, more than other countries being brought on. And yet we're charging people based... I've got loads of questions on this, but I'm going to paraphrase. Let's do it now. Why are we charging people basically on Dutch gas prices? Why is the price cap set on Dutch gas prices when 60 % of our energy isn't? And it's charged on the highest rate at any one moment. Surely it's time to break that. Surely it's time to actually charge energy based on what we're paying for energy and stop paying people to blow wind farm energy out the water and not use it.

28:50It's broken, is it? Is that you or is that the government? So part of that is around how the market is structured. But just come back to that£40. As I say, if you look at the system as a whole, most of our electricity and gas, and I think the ten of the questions is right, right now that is based on the gas price. Now, the more renewables we build, the more we break that link. the more actually you are paying for the cost of a solar farm, you are paying for the cost of a wind farm, you are paying for the cost of offshore wind. So that is really important. That is our mission is to go to a system that no longer relies on the international price.

29:21But the truth is Dutch gas price and British gas price, they are all driven by big external factors and they are very similar. So my job is to try and do what I can with the system today, but to put the investment in to change the system for tomorrow. And look, this is the important thing is it's going to take time. You know, we need new networks. We need new generation. We're making that investment alongside trying to manage the impact of this international market. In February, I had on the pod and on the show with Adrian here, Nick Butler, former head of strategy for BP, now a visiting professor at the Policy Institute at King's College.

29:53Nick argued that most of our supply comes from sources that don't have the sort of volatility that European gas prices always have. And this is an argument for you for Ofgem to rebalance the basket that you use and give more certainty to consumers. We are not getting the gain from our renewables. We're not getting the gain. That's his push on this. He knows more about that side than I am. Consumer prices, not generation. Well, let's break it down. There are a number of fixed price contracts for renewables. Those are passed straight through, through the price cap. Why are they fixed prices? Is that the government?

30:24Is that you? Is that how they negotiate? So that's primarily the government. They issue something called a contract for difference. So it's complicated, but the net cost is pretty much the same. So in the gas crisis, those projects were actually paying back to customers because the market price was higher than the price that they charge. The rest of it, though, is still driven by the open market, and that still is driven by that gas price. And look, here's a test. But my price cap, your price cap is set on the gas price, but it's only 40 % of the bill. Why isn't it a spread of the different costs of energy?

30:53So let me explain the way we calculate the price cap. So we take that breakdown, 40, 25, and 12 and 12, et cetera. We only reflect costs in each category. So we don't say the whole price cap is multiplied by the price of the gas price. we take that 40 pounds we look at the element that's driven by gas we take it from from market prices and we pass it through every single day as that price changes now look here's my test my test is if we were paying too much if we were charging too much compared to what the companies are paying for then that profit that we allow for two around two pound fifty the actual profit of companies would be higher right now we're saying that profit is even lower than that two pound fifty So my test is always to say, if things are being overpaid for, are we seeing the profits reflected in the industry?

31:37And I don't think we are yet. I'm going to go straight into another question, Adrian, if that's okay. Barbara Guppy says, When Ofgem order supplies to pay a customer compensation, that money should come from director's bonuses, not the cost of business. As a cost of business, every customer is funding compensation. As a charge on director's bonuses, there'd be an incentive for change improvement of business practices that cause a complaint. Same true of fines, I suppose. Are they proper deterrents if it's just coming out of increasing customer costs? Well, imagine where that money comes from. So if you've got a price cap market, the price is fixed.

32:11They can't put their prices up to pay that fine. The only place it comes from actually is ultimately the profits of the company or up to the shareholders to work with the management as to how that's divided between salaries and profits. So it does hurt companies and they do pay attention. And also, you know, the voice we have, the way we talk about the sector is really powerful. So it's not just about the money. It's also about saying, look, which company has gone wrong? We talked about O2 earlier. I'm sure all this publicity is not something that O2 welcome. No, and I long may continue doing it.

32:41On the back, Adrian. Joanna, why won't you reduce the standing charge so that people simply pay more for the more energy that they use? Jonathan, just give me a look because he knows I'm coming in with a lot of follow ups on the back of this. but go with this one first. Well, Adrian, just to say up front, we know the strength of feeling out there on standing charges. I mean, I remember when we issued a consultation, we're a regulator. I think Martin's fair to say our consultations in general are fairly boring. We had somewhere like 30 ,000 to 40 ,000 people reply. Biggest ever. Biggest ever that we've had.

33:12Now... I may have been responsible for a bit of that. Now, let's just start with the basics. As you know, as we talked about, that standing charge is to pay for your networks and to pay for the... I'm just going to... For those who don't know, the standing charge is the daily amount that you pay to have the facility of gas and electricity. And then there's a unit rate that you pay for each unit or kilowatt hour of gas and electricity you use. Just a glossary. Now, we can't get rid of that cost. So if it doesn't stay on that fixed unit on the standing charge, then it has to go to the unit rate, which goes up and down with what you use.

33:44Now, the problem we found by just cutting it, saying, OK, we're going to have a lower standing charge and a higher unit rate, is we saw there are some families who have very, very low incomes, who live in drafty homes or, for example, have electric heating or have disabled children that would have been made a lot worse off. So the only way to be able to do that is if we found there was some kind of targeted support alongside it that makes sure those families, that kind of, that loss was somehow offset. Now, we haven't got to that yet. So just, I was involved in this debate. Yes. And I agree on that particular point.

34:16the way we wanted to bring the standing charge down was that that needed government to put that targeted support in not you and this was a failure of being joined up between government and regulator and i know that you wanted it to happen so i'm not going to beat you over the head with a stick on that one so as you know martin we then looked at saying well let's divide up the price cap let's have a low standing charge price cap and a high standing charge price which is my suggestion yes which is what you put put to us now we we looked hard at that in fact that was our preferred option I believe, at one point.

34:43The reason why we didn't do it there, and I know you're going to ask us questions about this, but the reason why we didn't do it there was with two things, really. First of all, you know, when we look at the evidence of what customers want, it's not always what you'd expect. Some people actually said to us, do you know what, even if I have to pay more, I'd like to have a lower standing charge. So there's a lot of kind of complexity in what tariff people want. And secondly, just the way in which the complexity of administering the price cap becomes, We felt that was too hard. So what we've said is we want customers to have that choice.

35:14Our current consultation, and we're still consulting, says every company should be providing you with a lower standing charge option. Now, that's still out for consultation, but our idea is for all those 40 ,000 people that took the time to write to Ofgem, you should be able to look into the fixed-term market. You should be able to find a tariff that gives you a lower standing charge. Now, the reason I was quite scathing of your proposal to do this by a compulsory option outside the price cap mechanism is twofold. So let's deal with each of my two objections. My first objection is the price cap mechanism is price capped.

35:51What could happen here is a company could launch a lower standing charge option and the costs it takes from the standing charge could be put on the unit rate. but it could then also increase the unit rate by even more than that and be more expensive than the price cap because the price cap is a regulated price and these no standing charge options aren't. So effectively, what I could do if I were a scurrilous energy firm is I could order a low standing charge option but with outrageous unit rates, which effectively means no one is going to sign up for it because you shouldn't be getting it and you don't have policing on that.

36:25Well, so we are absolutely on to that problem. So within those regulations that we're proposing, we're saying that that transfer has to be reasonable and we are going to be monitoring that really closely. And a bit like you described in the O2 situation, we will have the data to say, are the costs being transferred fairly here? So we think we have the test to address that problem. OK, number two. The main reason for me suggesting this, and that it was in the price cap mechanism, is some of those who are the greatest victims of the disproportionately high, in my view, standing charge are older and vulnerable customers who do not switch.

37:03Someone with onset dementia, as an example. By making this a choice mechanism, they will not gain the benefit of a low standing charge as a low user. They will face the moral hazard that if they cut their bills, they don't get the gain from it. You've got many older people who don't use their gas in winter, but are paying a high standing charge for it. My proposal was that you have two price cut options. And then for vulnerable people, we can get into what the definition of that is later. But let's say priority service register, as an example, you would default to automatically switching them to whichever one is cheaper within the price cut mechanism based on their prior use prior years usage with an opt out mechanism.

37:42that would protect the most vulnerable people in society. That is my biggest frustration with the scheme that you've got. Many of the people who need this most won't access it because they're the people who don't switch. Look, we are really concerned about that group. As I said, when we looked at it, actually people's preferences don't necessarily align with what a company might do in that. But these people won't have replied to your survey. These are the people who won't be engaged. That's why people like me and others are trying to voice for them. Sure, and the complexity of doing that became too much.

38:12But look, the story isn't over. Why was it too complex? I mean, I could do it on a calculator now for anybody. I don't believe an energy firm couldn't. Well, it's the number of different tariffs you have. But within the price cap, there are only two tariffs, if you've done it within the price cap. There are two tariffs, but there are also two tariffs by payment type. There are two tariffs by payment type by area. But people don't change payment type frequently. I'm sorry, I don't believe that's a valid excuse. So I still think that for that group, the most important thing is something more systematic and more strategic which comes back to that first option we explored now we haven't what like a social tariff so so alongside the social which isn't being introduced by anybody unfortunately even though all governments have looked at it and that's not you but so the this as we say this offer of a choice is the first step in what we're doing the other thing we're doing martin which you might have seen over summer which you know there's a big debate out when we announced it was we are saying actually we need a more fundamental look at all the costs in the system.

39:06So going back to where we started, that breakdown of the bill, as I've said, the investment in low carbon is going up, the investment in networks is going up, we hope wholesale is going down. So those fixed costs are rising. So we have launched something, I'm afraid in regulator speak, called the cost allocation review, not the most glamorous title. But that's exactly going to answer the question that says, how do we sort this once and for all? And we are working closely with Government Martin, and we do hope we get to a more systematic solution. But that's three or four years away, whereas the standing charge thing is meant to be coming in in January.

39:35Exactly. So this is a first step. Okay. So Margaret wants to know, should she be worried about OVO? Is it going under? So I know there's lots of speculation in the press. All I'd say is we don't comment on any company and exactly where they are. But we work across the sector to make sure that companies are well capitalised. Now, I can't guarantee any company isn't going to go under because, you know, these are private companies and of course they have financials that change over time but we are in a much better place as a sector than we were in 2021 and the truth is even if the worst happened with one of the big companies we've been through this with bulb as a customer your system runs you still get your energy and we showed when that when bulb failed in 21 the end of 21 22 we were able to look after customers and get them to a new supplier and the data systems are better now for protecting the credit when a firm goes bust because you've improved that.

40:26The main risk, I'll be blunt, if any firm, I'm not saying any will, but if any firm were to go bust, your main risk, you'll get continuity of supply and your credit will be protected. Your main risk is that if you've chosen that firm to get a cheap deal, you could lose that cheap deal when you're ported to a new firm if that firm went bust. And if prices had gone up in the interim, you would have missed out on the opportunity to keep a cheap deal from another firm. You could switch again, but they may not be as cheap. That's the primary risk of a firm going bust. That's true. That's true for the very small companies.

40:54But the big companies, we just keep them going. We just keep them going and then we transfer them whole almost onto someone else. I'm going to move on from... Ash had a question next, which is, why can't we switch to an energy pricing system not tied directly to wholesale gas? I think we've covered that, Ash. I hope I covered your question earlier on that one. Adrian, do you want to... Have you got next? Yeah. Kev wants to know, why call it a price cap? Sounds like we're getting value when we are continually getting ripped off. And Molly wants to know, why can't you just cap bills lower? The big energy firms aren't struggling.

41:22So, I mean, on the second question, it all comes down to that£2.50 out of 100 that we started with. So we have to allow them to make some profit. They're making less than that£2.50 right now. But the frustration for me, and I know for the frustration for everyone out there, is we don't control the cost elements that go into it. So when you went through that, sort of went through the gas crisis, when gas prices were really high, it was the people getting the gas out the ground. They would be paying 20 pence a unit and making£6 a unit at some point. And that's the thing that Ofgem, even the British government don't really control that market.

41:54And that's why we think building this infrastructure, taking the system to a different place, means we have a much more stable system and we get away from this constant up and down of the gas price. Just on the price cap, Bill Wells asks, when are we going to get rid of the crisis measures from the pandemic? And he's particularly talking about the three monthly energy price cap revisions. You know I don't think you should have moved from changing the price cap every six months to every three months. Isn't it about time you put it back and gave us a little bit of stability that's moving in there?

42:23You did it to help protect companies from volatility. That volatility has gone to an extent, the extreme volatility. Isn't it time to go back to a six-monthly system? So we are looking at how the price cap operates, and we're continually thinking about how we might review it. And we are coming forward with possible changes. But the funny thing is, I asked that question quite recently in Ofgem, and we looked at what customers were telling us. And again, there's quite a mixed view. Some people prefer to have more regularly updated prices and some people prefer to have stability. I mean, the only counter is the one advantage of it is we haven't got enough people on fixes and special deals.

42:58Too many are on the price cap now. You would accept that. I agree. It should be a third, not two thirds. And the theatre of the price cap change actually does encourage people to switch. That's the only slight positive of it. We should talk a bit about how the opportunities in this market are going to change as well. So, you know, we talked a lot about fixed deals and the price cap. What we're beginning to see, though, is particularly for anyone who has new technology, like solar panels, like batteries, is a whole set of things out there that will bring your bill down. So one thing I want to work on in the next few years is how we bring those time-based tariffs to life so that everyone can benefit from them.

43:36And to be clear, not just the wealthy households with the Teslas, but actually how do we get this equipment into vulnerable households that actually helps them get cheaper energy because they're buying it cheaper from them. And as you know, I've spoken to you in the past, my great concern is because these are not trans, time of use tariffs change every half hour, that we have to force companies to publish an algorithm so that people can actually compare them properly. I mean, individuals won't be able to do it, but, you know, organisations will be able to do so because it's all very well saying we've got a 30-minute tariff, it's got no price listed, and therefore we have to be very careful that time of use tariffs is a great advantage for the economy, it doesn't become negative for the consumer on that.

44:09But I want to go, I've got a very interesting question for you next, and we haven't got long. This is from Claire Coutinho, right, who you're laughing because you will know is the shadow secretary of state for energy and is the former secretary of state for energy. Now, I'm interested in her question. This is literally on a reply from me saying, got questions for Ofgem and she's come back on it. Now, I've got to ask you her question, but I also want to know how much do you have to listen to your political paymasters when they are both in power and out of power, which is why I'm fascinated. She's got a question here.

44:44She could have probably asked you when she was Secretary of State for Energy. Anyway, Claire says, I've got one. Would axing the carbon tax on electricity generation lower the cost we pay for gas, wind, solar and nuclear? And would that benefit consumers? Clearly, it's a politicised point. She's a shadow minister. So her question first, then my question on it after. Fine. I mean, first of all, I should say to Claire, she knows this. Regulators talking about tax policy is a bit like sort of swearing in church. We don't really get involved in what the Treasury does. But in technical terms, it might bring down prices.

45:14But then you've got to think about all the things you're selling to Europe and how you're going to respond to those. So that really is a matter for politicians to debate rather than one that I get into. Who pays for Ofgem and how much interaction and input does the Secretary of State for Energy have on what you do? So we're divided into two, really. So we have the bit that we've talked about today, the regulator. That's paid for by customers direct from their bills. We have to get Treasury to approve it, but it's a... How much of my£100 is you? Out of£100, it's less than 25 pence, I think, roughly.

45:46Roughly, roughly. But we also have another part that delivers all those government schemes. So that makes sure that you get those wind farms paid properly so they can be built and everything else. That's paid for principally by the government directly out of taxpayers' money. Now, look, we have to be honest. In this world, energy strategy is really set by government policy. They're the ones that design the schemes that get the wind farms built. They're the ones at Set Direction, which Ed Miliband has done, getting us towards 2030. But we are independent. We have to make independent choices and independent judgments about what we need.

46:20So, for example, at the end of this year, we are going to end a massive negotiation with those network companies as to how much money they need to build the network we need for the future. We do that independently, and the Secretary of State is not allowed to input into that. This may well be our last question, depending on time. And I apologise to the questioner. I have lost their name. But it's a simple one. And I think when will renewables start lowering our bills? Because they've added to our bills. When will we start to see the dividends? So I think what you're going to see over time is that wholesale element, that£40 go down.

46:51The investment in renewables go up slightly. And then once those two things even out, we think it's going to take some time based on cost today. Then bills will start to come down. Now, the system cost, when we look at the analysis and said... Just a reminder for those people. We're talking£40 per hundred, not an actual£40. It's£40 per hundred. So 40%. Exactly. So when my colleagues in something called the system operator did the big plan, they said roughly, roughly, these two things balance each other out over the next five years. And then we begin to see, so as you get into the 2030s, costs come down.

47:21And that doesn't mean that prices can't come down, because of course, government has many policies that might bring down our prices and bring down our bills. And really, that's a matter for them. Okay. But it's quite a long time away, isn't it? I mean, basically, as a country, we are, the idea is, or the concept, whether it works or not, I'm just not going to get involved in that. It's not worth my while. We are investing now to bring down prices in the future. But I know you'll hate this question. The Labour government promised energy prices down by£300 during the life of the Parliament, energy bills down.

47:54Do you think there's any realistic chance of that happening without massive governmental intervention? So I think you've got to do both. I think the government policy will need to bring down prices and we'll need to regulate to make sure that we manage costs as best we can. Now, I haven't got a... What should the government do to bring down prices? What could it do? I won't say should, you can't say that. I'll cut you what it should. What tools are within its option range? Well, look, I mean, we all read the papers. We know that there is speculation that the Chancellor's thinking about tax changes.

48:22So that's the VAT we talked about. Although I would simply take that and cut it off the standing charge. Then it's a flat one for everybody and not just higher users who gain more, but go on. I've been copied on that letter, so I think I've seen that. The other thing is you could look at some of these legacy renewable levies, for example. So there are things that government can do. But ultimately, when you look at system costs, the investment will make it more stable and will allow them to apply policy to bring costs down. Thank you so much, Jonathan Brearley, boss of Ofgem. OK, so Jonathan Brearley has left the studio.

48:54I'm sitting here mulling what was said afterwards. Probably the most interesting thing, and it's just a small point in there. I thought was on the where he explained about how much profit energy firms can have. I always knew it was a£2.50. But what was a really interesting rationalisation for me was that they must have the pricing right because the actual profit that energy firms make is less than the£2.50 per£100 that they are allowed to do, which, I mean, does make logical sense. Now, what's really interesting about this, though, is one of the great difficulties when you're a regulator is they only regulate the retail side.

49:31But when people see profit announcements from big companies, you know, like Centrica, Centrica is a vertically integrated firm. In other words, some of its money comes from British Gas, who sells us gas, but it also has Generation and other arms and its profits, which are reported about all the different arms. So the bit that Ofgem regulates and the bit that Ofgem doesn't regulate. And what we've found is a lot of these vertically integrated firms that go right down from Generation to retail energy, they've made very big profits. And they're reported as very big profits, but not necessarily from the retail arm.

50:06And we don't have a regulator regulating the non-retail arm. I mean, arguably government could do it, but it's an international market, so it's tough to do. So it is quite a complicated web here, working out who's making what money and are people really being ripped off. The instinct says yes, and yet some of the facts behind it say, well, not quite as much. I mean, the ripoff is coming further away than from the direct company that you pay. which is a tough circle to square. I was also fascinated by some of the green stuff that came in there. That is going to be the debate over the next five years.

50:39Things are swinging. There's a huge militancy from people who are pro-green, and there's a militancy from people who are anti-green measures or anti-renewable and climate change type of measures goes on out there. I mean, I always remember the most interesting thing for me on that while I'm mulling on this. I used to have a tool on my website called Pick Me a Tariff. And the key to Pick Me a Tariff was you had a number of balls. Think of them as balls. I think it was 21 balls. I designed it. And you had five different categories that you could put them in. There was price. There was service. There was green.

51:16There was price certainty and big name, that type of stuff. Now, what would happen in green is a few people would put a lot of their balls. So the more balls you put in there, the more when we chose a tariff for you, we weighted how many, you know, how important that subject was in terms of your criteria. And then we could say, well, this is the one that fits what you want. But quite a few people put a lot of balls in green, but most people hardly put any in. In fact, if I remember the stat right, I think 60 percent of people didn't allocate anything to green, Even though at the time when you were doing polls, it was something like 70 or 80 % of people in polls said green issues are really important.

51:54But when it came to a practical choice that no one saw, and we never saw in individuals, I was looking at agglomerated data, a practical choice on something that would really affect them in their homes. What was always fascinating to me is, in a way, people weren't willing to put their money where their mouth was. They weren't putting balls in the green pot. I think the average was something around one ball out of 21 went in the green pot. So I think there is an interesting debate to be had on that friction going forward between building our renewable and green strength as a country and the increased immediate costs that that will mean that Jonathan was accepting himself.

52:29Anyway, that's just me mulling. In a moment, I'm going to give you a quick summary of what you should be doing to cut the amount that you pay for energy. But I think podcast producer Matt with me and someone had a question about O2 that came in during the show, didn't they? Yes, he texted in. It's from Phil Bridgend. It's hard to say. Phil Bridgend. Phil Bridgend. Phil Bridgend. Let's see, you messed it up as well. Sorry, I will read the text now. It could have been Phil Manose. I changed that from the Simpsons version. There we go. Okay. Morning all. Regarding O2 price rises and the 30-day penalty-free period, you actually can't leave penalty-free if you wish to transfer your number over if you still have your device contract in place.

53:08If you wish to take your number with you, they ask you to pay off your device plan immediately. You can only leave penalty free by not asking for a PAC code. Is this right? No, I don't believe it is. In fact, interestingly, in the letter I've written to the Chancellor about O2, one of my notes is about this as a perceived rather than a real problem. Now, I think the actual answer, and I need to be straight, I've been digging into this and I haven't got a full answer. It seems to me that if you got your contract direct from O2, then you can leave your airtime plan penalty free. So the airtime plan is what the price has gone up by, the amount that you pay, you know, for the minutes and texts and data that you use.

53:49But you can keep your handset plan separately and continue to pay that monthly. But I'm checking whether that also applies to people who bought their handset via resellers on an O2 contract. And I'm not sure about that yet. So generally, as far as I believe right now, let's call it a 90 % certainty, you should be able to leave O2 for your airtime plan, but continue to pay off your handset as it is a separate loan agreement on a monthly basis with O2. And if you can't, that's something that we'll be raising as well. But I think you can. But forgive me for only being 90 % on it at the moment. Now, on to some of those practical saving tips.

54:30What tariffs should you be on right now? What I actually wanted to do in this bit on the back is to talk to you about what you should be doing with your energy bills right now. And that all starts with the price cap. Just to go back to what the price cap is. The price cap is the default tariff that you pay if you haven't switched. So if you've never switched or you've come off a fix or a special deal and not done anything, you are on a priced capped standard tariff. Regulate a set and I call it the pants cap. Now, the price cap, as you've heard, moves every three months. It went up 2 % in October.

55:07The current prediction is it will come down around 1 % in January, so not very much. And then it's much further away. The January prediction is pretty solid because the assessment period for that ends in, well, not long, in just two and a half weeks. It's a three-month assessment period. It's 19th of August to 17th of November. It ends on the 17th of November. So that price is likely to be pretty set. It's going to be down around 1%. The April one is much more crystal ball gazing, but up 6 % in April is the current prediction because of increased network costs is what I'm hearing, and then down 1 % in July.

55:39So the price is pretty set for the next year to be, on average, probably slightly more than it is right now. And then you contrast that to what the very cheapest tariffs on the market are. And they are fixes. and you can lock in right now at up to 13 % less than the current price cap, giving you absolute surety that you know what you are going to pay. Now, if you're looking for a simple solution, you can either stick on the price cap that we think is going to stay where it is, maybe go down a smidge and then up a bit more than a smidge and then down again, or you can lock in at 13 % less than that rate for a year.

56:19And most of the cheapest fixes, by the way, and do go onto a comparison site, preferably one that's whole of market because your cheapest depends on where you live and what you use which is why I'm not listing specific tariffs but most I've got a list of top six in front of me most do not require you to have a smart meter not all of them require you to be on direct debit there is choice out there but if you are on a non-smart prepayment meter there isn't much choice of fixing and all of them have early exit penalties though octopus has one it's not that cheap that doesn't have early exit penalties so if something were to change you would be able to get out of that one.

56:51Although I would probably, if I'm fixing, be hedging to just getting the cheapest at the moment based on the current predictions. There are other alternative tariffs out there. We talked with the regulator about time of use tariffs. If you're a sophisticated user or an EV user, you have an electric vehicle, it's absolutely worth looking at specific electric vehicle tariffs, especially if you drive a lot, and that is a big proportion of your house bill that give you much cheaper rates overnight. Or then there's things like the Octopus Agile and tracker tariff. The tracker tariff changes every day.

57:19It can be very cheap. The agile tariff, electricity only changes every 30 minutes. For some sophisticated users, it is extremely cheap and sometimes you're paid to generate electricity overnight. So there are a lot of options out there. Simple, go and get yourself the cheapest fix. If you've got an electric vehicle, look at an electric vehicle tariff. If you're a sophisticated user who knows how to manage your energy stuff, you probably know what you're doing anyway, so you don't need me to tell you. I would be looking at the time of use tariffs like the Octopus, Tracker or Agile. It's just a little summary on the back of the podcast so you can go and take some practical action.

57:54But savings at the moment, you know, clearly of 200, 250 quid a year on average are easily possible for most people by fixing based on the predictions. So if you're sitting here on a price cap, go on to a whole of market comparisons out, sort yourself out. And that is it for this week. If you've enjoyed it or found it interesting, please do tell your friends. you've been listening to the Martin Lewis podcast and why not subscribe? Then your pockets will be pleased with you. We tend to put out a new episode every Thursday and now on Mondays too in the form of our new Question Time podcast where you can ask me absolutely anything and everything.

58:30If you've got a question, just email martinlewispodcast at bbc.co.uk. And if you haven't enjoyed it, well then why have you been listening for this long? You can't blame anyone else for that, you know. Sometimes you just have to go and have a damn hard look in a mirror.

58:58Martin Lewis is the founder of moneysavingexpert.com but of course other consumer and price comparison websites are available you can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk the offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double-checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.