It sounds to me like another "Little Earner" for the suppliers.

fedz_2

Does anyone know the reason for the two rates charged monthly by Electricity suppliers?
Rate 1: for the first 225 units is charged at nearly 15p per unit.
Rate 2: charge is nearly 10p per unit thereafter.
Customer services say that rate 1 is charged based on a national average charge.
But they can't explain why this is so.
Can anyone enlighten me on this?
It sounds to me like another "Little Earner" for the suppliers.

oldwiring

Hidden standing charge!!!!

Cardew

Most tariffs without a standing charge do this(EBICO are one exception)

It is only an advantage if you have very low useage in a quarter. I have an annex(with separate elec/gas supply) which is rarely used, so I gain a little.

fedz_2

:rolleyes: When I suggested that this two tier charging was a form of standing charge. I was told that it wasn’t because some suppliers made a standing charge in addition to the tiers....no more of an explanation was forth coming

What a load of snakes we have in what is laughingly known as our utilities!
UK Customer's don't really have any power this was ceded to the utilities during privatization. They say how much its going to cost and we just pay...good innit?

Cardew

fedz wrote:

:rolleyes: What a load of snakes we have in what is laughingly known as our utilities!
UK Customer's don't really have any power this was ceded to the utilities during privatization. They say how much its going to cost and we just pay...good innit?

That is not strictly true, the utility companies are regulated and do not have a free hand; all rises must be justified. The increases over the past couple of years have largely been attributed to the increased worldwide wholesale prices.

justtoclarify_2

It is the modern version of a standing charge. Most annoying is BG who when I was a customer constantly cancelled the previous bill (which I had paid promptly) to recalculate the new bill over a longer period to re-coup their minimum charge. This penalising me for not using energy when I did not need to. This behaviour is particularly annoying when price changes occur in the billing period, strangely they also estimated the bulk of my usage after the price increase!

Low users pay more for less energy under this dual tariff scheme, surely it would be better to encourage people to use less energy by charging more for very high usage.

Cardew

justtoclarify wrote:

It is the modern version of a standing charge. Most annoying is BG who when I was a customer constantly cancelled the previous bill (which I had paid promptly) to recalculate the new bill over a longer period to re-coup their minimum charge. This penalising me for not using energy when I did not need to. This behaviour is particularly annoying when price changes occur in the billing period, strangely they also estimated the bulk of my usage after the price increase!

Low users pay more for less energy under this dual tariff scheme, surely it would be better to encourage people to use less energy by charging more for very high usage.

Agree about the 'creative estimating' of pre and post price rise consumption; there have been a number of threads on this point. Not confined to BG I would add.

Some States in the much maligned(for wasting energy) USA charge more for electricity over a certain threshold. I have a property where I pay US 2 cents more per kWh for all electricity in excess of 1,000 kWh per month. Bearing in mind there is no gas it is a pretty low threshhold.

Alleycat

Help!! Can someone explain in really simple terms this two tier system. I have been sat trying to work out how they split the two different amounts with no success. We are on EDF online billing if this makes any difference. It doesn't appear to be based on percentages or anything easy for me to understand.

Thanks.

Cardew

Alleycat wrote:

Help!! Can someone explain in really simple terms this two tier system. I have been sat trying to work out how they split the two different amounts with no success. We are on EDF online billing if this makes any difference. It doesn't appear to be based on percentages or anything easy for me to understand.

Thanks.

Tier 1 is a fixed number of units

For Electricity for most utility companies it is 900 units pa(225 a quarter). If the billing period is not exactly 3 months it is calculated pro-rata.

For Gas most companies have 4,572 kWh pa in Tier1 but for EDF it is 5,860 kWh pa. - again pro-rata for each billing period.

Sponge

I know it's been answered, but I'll add my circumstances in the hope it helps further.

The tiered system is usually used where there isn't a standing charge in place. So it is, in effect, a 'hidden' standing charge.

I use Scottish Power Online Dual Fuel with a standing charge. I pay a fixed amount each day for both gas and electricity. (11p per day for gas, 12p per day for elec.) I then pay a fixed amount per kWh for each, irrespective of how much I use.

I opted for this method of billing as I calculated it was cheaper for me to pay the standing charge and single tiered price.

If a company shouts about having no standing charge, it's usually because they have a tiered system where they recoup the difference by charging more for the first x number of units per supply, then charging less for amounts over.

As consumers, the challenge is to calculate which is best for you based on your usage. I've been looking into switching again, but the playing field seems to have levelled and any savings are smaller than they used to be. It's further complicated by the fact my usage goes up and down like a yo-yo. I obviously use more gas in winter (central heating) than in summer, but on top of this fluctuation my consumption varies month to month. Even if I use my highest consumption figures (e.g. home all day in the winter) in the calculators, their results still don't convince me it's worth the time & effort to switch for what could be a small saving based on my winter figures, but no saving (or more expensive) based on my summer figures.

In the mean time, I sticking with my current supplier. I'm more than happy with their online service and sometimes that's worth more.