Standing Charge vs No Standing Charge

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  • Wywth
    Wywth Posts: 5,079 Forumite
    Hi Candy

    The information you were given in 2012 was correct at that time. However, this changed after our price increase on 18 January 2013.

    At this time, we introduced Standing Charges across all our tariffs.

    Standing Charges replaced our previous two tier charging structure where the first amount of kWh used were charged at a higher rate.

    It isn't an additional charge but another way of covering the costs of things like maintenance, reading the meter, keeping supplies connected to the network and making sure the meter is safe.

    We do understand this change won't please all of our customers, particularly those with very low/no usage. Feedback has told us, though, a majority of our customers prefer this method of charging.

    Sorry you're unhappy with this change Candy but hope this is of interest.

    Malc

    So nothing to do with Ofgem ordering you (and every other supplier) to stop 2 tier charging and change your tariff to this approach. :cool:
  • Former_E.ON_Company_Representative:_Malc
    Former_E.ON_Company_Representative:_Malc Posts: 6,558
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    Hi Wywth

    These changes came about as part of our Reset review. This was launched in November 2011 and looked at all our relationships with customers.

    Following this review, many of our customers and consumer groups told us they preferred simpler pricing with a single unit rate. We listened to this and replaced two tier pricing with standing charges.

    Malc
    Official Company Representative
    I am an official company representative of E.ON. MSE has given permission for me to post in response to queries about the company, so that I can help solve issues. You can see my name on the companies with permission to post list. I am not allowed to tout for business at all. If you believe I am please report it to [email protected] This does NOT imply any form of approval of my company or its products by MSE"
  • Nada666
    Nada666 Posts: 5,004 Forumite
    We listened to this and replaced two tier pricing with standing charges.
    Which is neither simpler nor single rate.

    Not that I blame you - but you must know that your bossses and accountants are rubbing their hands with (hang on, can't use imagery like that) are getting very excited when consumer groups and Ofgem are advocating swingeing increases and a frightening swing to non-progressive pricing.
  • I also am now about to be fined a sum of £15.12 stc combined , for gas and electric , just being introduced from May the 1st 2013, by my suppliers N Power.
    gas 42.4p inc vat daily stc
    electric 9.9 inc vat daily stc
    Total 52.3 daily x 365 days = £190.85 a new stc introduced per annum

    I am a very low user and economise the best I can , their forecast of my use next year is £412.00, but now a stc is increaseing my bill approx 50% with £190.85 STC.
    This is all supposed to make my bill simpler hmm! thanks N power but I recon I was doing ok without your help.

    Ref my low useage, only but heating on if I feel it is cold enough As I live alone , Spend a lot time in the small backbedroom/computer room.
    Cook with a pressure cooker or halogen grill all 1 pot, start some frozen foods off in microwave first etc.
    Electric shower.
    I have pretty much a small fixed income and not on any benefits, so where do I conjour up the extra 190 from, as well as the council tax increase.

    I realise I am luckier than many , but there is always something comes along to erode any savings, we all make.

    Had to ditch the national trust subscription this year, so there is 55 quid towards it, and because of the cost of diesel it is too much to travel too far anyhow.
    Think I will stop moaning now, At least I have a roof over my head and 3 meals a day If I want them, and health is pretty sound too, peace out.
  • Candy53
    Candy53 Posts: 2,548
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    I feel so strongly about the standing charges, that I decided to set up an E petition, but it says the creator's full name is seen by everyone.

    This is so dangerous. I would never put my full name anywhere on the net. Where are the safe guards??


    Candy
    What goes around, comes around.
  • Inigo_Montoya
    Inigo_Montoya Posts: 1,214
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    zerog wrote: »
    Ebico's standing charge will be 0p per day - at least that's what we should be hoping for.

    I would be hoping for that too but the report I linked too specifically says that the plan is for the standing charge is to set by ofgem not the supplier
  • joncombe
    joncombe Posts: 320
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    I'm pretty annoyed about this as well as a low user myself. It seems with standing charges low user pays more because of the impact of the standing charge. Currently I pay £26 per month for my gas usage with NPower. The standing charge means the monthly cost is £15 before I've even used any gas, so it will be a big increase. High users also often pay more because the new unit rate is lower than the higher rate before (for the first X Units) but higher than the follow on rate for subsequent units, so users using a lot of units at this follow on rate will also pay more. So some winners, some losers but it does seem especially bad to introduce new tariffs that hit lower users the most.

    I do remember when many suppliers abolished standing charges on some of their tariffs saying it was because consumers didn't like them. Now suddenly it's being done because consumers do want a standing charge? Offering choice is surely the best for consumers so offer some tariffs with and some without seems sensible.

    If this was about simplifying charges it should be a case of suppliers offering a single unit rate, so you pay for what you use. Use 100 units pay 100 * the unit rate. Use 1000 units, you pay 1000 * the unit cost and so on. That would make comparison simple but standing charges do not because it then makes the calculation difficult to work out if a cheaper unit price would work out cheaper if the standing charge is higher. I don't thing Ofgem is going to force suppliers to use the same standing charge. Certainly I've seen quite different standing charges between different suppliers. EDF have a daily standing charge of 26.25p for example for gas, which is almost half what NPower are going to charge.

    On the Ebico blog they seem to think they have agreement with Ofgem the standing charge *can* be zero. They have a post on their blog but I'm too new a user to be able to post a link to it so go to their webpage and click blog, it's the most recent post. It says:-
    Instead, suppliers must charge a standing charge – although, thanks to Ebico customers’ lobbying efforts, the standing charge can be zero)

    I've also checked the Ofgem website. Going to the homepage and then selecting the "Read our simpler tariff factsheet" suggests that standing charges don't have to be included at least on fixed term tariffs but standard tariffs do, but it doesn't say at what rate or if the rate can be zero.

    I've made a complaint to Npower but their response was basically "it's our policy to introduce a standing charge, we're not going to change our policy or introduce a low user tariff. We are introducing a standing charge because Ofgem require us to and all providers will be doing likewise so if you switch to another supplier without a standing charge they will probably introduce one too".

    NPower are I believe going to pay a 1 off credit for customers who will end up paying more. Interestingly, the FAQ on their website (again I can't post a link but it's the first question).

    It suggests 60% of gas customers will receive this one off credit. So it suggests actually a lot more customers are impacted than the letter suggests and I suspect they are introducing a standing charge (and particularly such a high one) so they can make more money in the hope people won't switch to another provider, particularly if they can blame Ofgem for it and say other providers will be doing the same.

    As a result of this change I'm switching to Scottish Power on a tariff that is fixed for 12 months and has no standing charge. If they introduce a standing charge after it ends, I will most likely switch to Ebico.

    However the Ofgem documentation is far from clear and they have a policy of not responding to consumers only to consumer groups (e.g. Citizens Advice, Which? etc). However I do believe they have to respond to Freedom of Information requests, which individual consumers can raise. So I have submitted one to try and find the answers. Again sadly I'm not allowed to post a link as I have not made enough posts.

    To find it, go to the what do they know website (all one word) search for the Authority "Office of Gas and Electricity Providers" and it is the first request (currently). So far I've had an acknowledgement but nothing more. If someone with enough "points" can post a link I'm sure it would help others, but I'll post a message when I get a reply.
  • HiYa Malc - E.ON Company Representative,
    maintenance, reading the meter, keeping supplies connected to the network and making sure the meter is safe

    The Ofgem RMR origins of the newly introduced standing charge are supposed to cover the costs that are outside of the suppliers control eg where there is no possibility of contractual negotiations or efficiency savings.

    Surely "maintenance, reading the meter, keeping supplies connected to the network and making sure the meter is safe" are all areas of influence within your control.
    Disclaimer : Everything I write on this forum is my opinion. I try to be an even-handed poster and accept that you at times may not agree with these opinions or how I choose to express them, this is not my problem. The Disabled : If years cannot be added to their lives, at least life can be added to their years - Alf Morris - ℜ
  • Question for the low user group :

    If the standing charge is about "maintenance, reading the meter, keeping supplies connected to the network and making sure the meter is safe" then the cost of loss to the provider for your 'low use' is precisely the same as anyone on these Islands regardless of their use.

    Put another way. in the circumstances of an abnormally low consumption a supplier may have some scope for a reduction in costs of ,say, billing and metering. They will never be able to reduce these to a zero. There are always going to be costs so the supplier either loses money on the tariff [that will ever be allowed to happen] or will smear the loss over over the higher use consumers. This will result in cross subsidy of me paying for someone else, I'd rather you pay your own costs thanks !.
    Disclaimer : Everything I write on this forum is my opinion. I try to be an even-handed poster and accept that you at times may not agree with these opinions or how I choose to express them, this is not my problem. The Disabled : If years cannot be added to their lives, at least life can be added to their years - Alf Morris - ℜ
  • Nada666
    Nada666 Posts: 5,004 Forumite
    edited 5 April 2013 at 12:25AM
    Question for the low user group :

    If the standing charge is about "maintenance, reading the meter, keeping supplies connected to the network and making sure the meter is safe" then the cost of loss to the provider for your 'low use' is precisely the same as anyone on these Islands regardless of their use.

    Put another way. in the circumstances of an abnormally low consumption a supplier may have some scope for a reduction in costs of ,say, billing and metering. They will never be able to reduce these to a zero. There are always going to be costs so the supplier either loses money on the tariff [that will ever be allowed to happen] or will smear the loss over over the higher use consumers. This will result in cross subsidy of me paying for someone else, I'd rather you pay your own costs thanks !.
    As has already been mentioned, this is a far right-wing policy. To save people like you (edit: I mean, modest, average, and higher users) one, two, three pounds per year at most others have to pay one or two HUNDRED pounds extra. The 'subsidies' are not equivocal for the two groups. (Edit: it isn't one household pays one hundred pounds extra so another household saves one hundred pounds - there are fifty or one hundred households paying £1 or 50p extra to save that other household one hundred pounds.) Plus, of course, many of the higher consuming households can themselves also receive a break over a summer quarter.

    You are correct - it is fairer to charge everyone a larger sum. But where do you draw the line? There are other subsidies a damn sight higher that people pay.

    1) Let's ban interest free repayments. If you don't pay within seven days then introduce late penalty fees immediately and interest for the repayment period.
    2) Let's ban subsidised prepayment meter tariffs.
    3) Let's ban optional meter change charges and one flat fee charges - ban companies from waiving charges, or averaging charges
    4) Let's ban all the 'vulnerable' household subsidies - by definition the only households that receive subsidies (from other customers) are households that qualify to receive an extra basic income in the first place.
    5) Let's ban cashback. £60, £101 windfalls are orders of magnitude* more significant than the two-tier costs.
    6) Let's not charge such a ridiculously low standing charge in the first place - clearly, to be fair, it should be thirty or forty pounds per month, not thirteen (taking Co-op price as average).

    Of course, you may agree that this should take place. The thing about two-tier tariffs is the cost is, surely, pretty small and one of the last things that needs changed. The low users still have to pay two to three times per kWh what others are charged. They still mostly cover their determined standing charges - it is essentially the kWhs that they receive at a bargain rate. Plus they have the flexibility to use more when they need more (a flexibility that is lost with tariffs such as Ebico's).

    Most people, I would think, who pause to think realise that the two-tier tariff is a reasonable compromise between the competing demands. Most people, I would hope, who pay £1200, £1300 per year would be happy to sacrifice the opportunity to pay £2.50 less to prevent someone else paying an extra £250 even before they have switched a single light on.

    Of course, I may well be wrong. It is 2013. This is money saving expert. There is no such thing as society.

    * orders of magnitude? clearly not true. I'll leave that hyperbole there anyway
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