Wrong in Principle

howardtog

Ive read lots of threads about the price increases. No one seems to pick up that the method of charging is unfair.Surely the first layer of consumption should be very cheap thus low frugal users such as pensioners, single persons households benefit from low prices.
The second layer for average and hifgh users should be at a higher rate.
Daily fixed charges make this worse.
Personally as an average to high user I would lose out but surely it is better to benefit the low users who tend to be much harder hit proportionately in their use of energy.
Is this an issue Martin has ever taken up if not I think he should.

HappyMJ

Perversely that method of charging encourages people to live alone therefore using more per person than living in a larger household and sharing consumption. It would lead to higher prices due to more electricity being consumed and no option to remove standing charges as there are more meter points to pay for.

Ebico charges a flat rate which is lower than other suppliers primary rates.

Npower offers £100 per year cashback regardless of usage. For low users the cashback can beat Ebico's prices.

Cardew

In the USA I pay a cheaper price for the first 1,000kWh per month(all electric property) and then an extra 20% over that threshold.

Pincher

The intention is to redistribute wealth, but just like the tax system, the middle income will bear the brunt of the costs.

The rich will invest in solar panels, GSHP, even solid fuel steam generation. The super rich will just put in diesel generators.
The rich ends up paying less than the poor, who live in badly insulated houses, and waste more on heat.

Dave_save

Well, this just goes to show how screwed up the ''global warming/carbon reduction'' argument is, when a government, and it's so called 'green supplier industry' allows you to pay less per unit, if you consume more energy!

thenudeone

Dave_save wrote: »

Well, this just goes to show how screwed up the ''global warming/carbon reduction'' argument is, when a government, and it's so called 'green supplier industry' allows you to pay less per unit, if you consume more energy!

The government does not dictate either
1) the laws of supply and demand
Or
2) the basic economics of the industry which, like many industries, has a high fixed cost base, which means that the incremental cost of each extra unit produced is very small.

SwanJon

Remember the industry has fixed charges - some suppliers pass these on in a standing charge, others in increased first units.
These costs are the same regardless of how much you use, or if you use nothing

chris1973

The rich will invest in solar panels, GSHP, even solid fuel steam generation. The super rich will just put in diesel generators.

And don't forget the rest of us will be picking up the tab for those generous F.I.T payments paid to those fitting Solar Panels through our increasing utility bills, or should I say, the large businesses fitting them (and taking the lions share of the F.I.T in return)

The more houses fitted with them, the higher the F.I.T outlay will be, and so ultimately the higher the utlity bills will go. The days of just basing prices on wholesale energy costs is long gone, now you have to balance that with the increasing roll out and encouraged use of solar panels which in turn mean vastly increasing numbers of feed in tariff payments, which will only continue to have a negative effect on utility bills.

Ive read lots of threads about the price increases. No one seems to pick up that the method of charging is unfair.Surely the first layer of consumption should be very cheap thus low frugal users such as pensioners, single persons households benefit from low prices.

It doesn't matter whether you use 1KW/H a year, or 1,000,000 KW/H you still need connecting to a network, which in turn needs maintaining and upgrading. Those 1000 of miles of pylons which form the national grid and connect every house (Including low users) to a sub-station and then the power station weren't left by aliens, they were funded by loans which needed to be paid back, and now still need 'round the clock staff, helicopters, special equipment, Vehicles and materials to go out 24/7 and maintain them. Low-Users don't use their own unique network, they use the same one as everybody else and their cost for a connection is exactly the same to the network as everybody else.

This area used to be funded by a standing charge, but increasingly some providers are now offering increased lower tier unit rates to cover the same cost. Same thing, just a different label and method of collection

Its nothing to do with separating low energy and high energy users, its about covering the cost of running the network which supplies you with energy - the same network which supplies everybody. Every household with a meter will pay this, regardless of whether its by a more visible and obvious standing charge, or a higher unit rate for the fist xxx kw/h of energy consumed.

This is why most pre-payment customers pay a higher KW/H cost for energy or a standing charge (or both), because they also have to pay for the paypoint network and those expensive top-up machines in shops. Of course it could all be done much cheaper online / over the phone, removing these top up 'lottery' terminals which cost a fortune to operate, but sadly most utility companies think its still 1911 and not 2011 and very few have embraced the technology or even looked into it, unlike paperless billing and over the internet card payments which is pretty much the norm for / offered to most credit meter customers.

You could also argue that those on pre-payment tariffs are often those in society who can least afford high standing charges or increased KW/H rates and to pay over the odds to keep warm, and that would be UNFAIR, but I dont see this being picked up or you championing that cause?

Pincher

There may actually be a case for a flat rate that includes the standing charge, i.e. no Tier 1 & 2.

So, one kWh is 15p inc VAT, and that's it.

All the infrastructure improvement, transmission loss, FIT payments, admin cost, profit margin are included, no surcharge of any kind. Let's say for every £100 you pay, £40 for standing charge, and £60 is actually for the energy you use. So a low user that pays £500 a year for electricity, is effectively paying £200 standing charge. A high user paying £1,000 will have paid £400 standing charge.

People will still save energy, as the less you use, the less you pay.

The problem is you need to make this tariff structure compulsory, otherwise low users will choose it, but high users will choose Tier 1 and 2 tariff, and nobody will pay £400 standing charge.