How exactly does Beat the Price Cap work???
This is a common question as once people understand it, they fear it’s too good to be true! But really, there are no catches.
We are energy and data geeks, which means we know a lot about what data exists in the energy industry and different things you can do with it.
Each month, your energy supplier predicts how much energy you will use. For that prediction, they use what is called an algorithm - a mathematical equation that considers things like weather patterns over the last several decades, as well as your energy use history. Everyone in industry uses the same equation, as it becomes from a regulated organisation called Elexon. Elexon later reconciles what your supplier predicted you would use and what you actually did use.
Once a supplier has made its prediction, they then buy energy to match that prediction. Your supplier then watches the market live - needing to keep trying to match the energy their customers are actually using, against what they have bought. If they get it wrong, they either have to buy last minute on the most expensive wholesale markets, or they miss it they get a financial penalty issued by Elexon.
So, if you use more energy than what your energy supplier has predicted you will use, it costs them money. If you use less than what they predicted, this has saved them from being exposed to an increased cost ie. your actions have had a financial value. Our promotion simply enables you to be paid for that financial value.
But there is a second financial value too. When you use less energy, you also use less carbon. You probably read about COP26 and know that the world needs to radically reduce our reliance on carbon emitting fossil fuels. Our transition to net zero must form 2 key parts:
Using less
Shifting to low carbon fuels.
Anything that avoids a carbon footprint, again has a financial value. There are markets that trade in avoidance carbon credits, for example. Any carbon that you save by using less energy is unlikely to be worth much just yet. But we think that will change over time. But rather than wait years for these markets to mature, we want to drive change now. So again, we’re recognising that carbon avoidance has a value and paying you for it. Whilst we may pay more than what it’s worth today, we want to prove a point that this is possible. After all, in terms of hitting climate targets to slow global warming, we don’t exactly have time to waste…
What you need to know
To participate, all you need to do is:
create an account with Labrador
submit your meter readings to your energy supplier as usual
try to use less energy
ensure you have your bank account details in your Labrador account, so that we can pay you
That is it! Simple.
You do not need to worry about:
if you don’t use less - there is no penalty
if you use less one month but more the next - we will still pay you for the month you used less
any cost - it’s entirely free to participate
if you forget to submit your meter reads - simply do it when you remember and we can reconcile any month retrospectively as soon as your energy supplier registers them
if you want to cancel - there is a button in your account to close your account at any time
How does this tie into the Price Cap?
Our promotion has no formal link to the price cap. It’s just that the price cap increase set for 1 April 2022 has got a lot of people worried about their energy bills and how they will afford them. Whilst the government has announced subsidies worth up to £350 per household, this will not cover the expected increased costs.
You used to be able to save money on your energy by switching energy suppliers and tariffs. But currently, there is a noticeable and historical lack of any cheaper options due to expensive wholesale market prices.
Which is why we launched this initiative - we wanted households to still have a way to save on their bills. Cash direct into your account - better than a pair of socks in the post or suggesting you hoola hoop to keep warm like EON and Ovo did….
Still have questions?
Check out our FAQs here
