MSE News: Ofgem steps up probe into energy prices

beany

I have always thought the way companies charge a higher rate for the first *** units then cheaper afterwards is the wrong way round.
Surely people who are careful and try and use less should be rewarded and maybe high users would be think twice if they really need to use as much

davidgmmafan

It is somewhat bizarre. As I understand it the higher rate was as an alternative to the standing charge which was supposed to cover the fixed costs of supplying a home with gas and electricity. However you would have to assume that other companies, eg petrol stations, also have fixed costs and they manage to have just one price. So in principle I don't see why suppliers aren't able to do that.

gazjoneswales

beany wrote: »

I have always thought the way companies charge a higher rate for the first *** units then cheaper afterwards is the wrong way round.
Surely people who are careful and try and use less should be rewarded and maybe high users would be think twice if they really need to use as much

Sorry but i disagree on two points.

1. The higher rate for so many units covers the cost of the standing charge. The standing charge pays for the upkeep of the networks and metering costs. Everyone who uses gas and electric uses the network to receive this so we are all responible for paying for it. If you switched it around and made it more expensive the more you use then only the high end users would pay for the upkeep of the networks which is unfair.

2. Wouldnt having tariffs costing more per kwh the more you use put off people from using gas and electric have a negative effect on people who need to use gas and electric more frequently. Think of people who rely on an electric supply for medical equipment etc. Or what about vunerable customers who use more gas during the winter, should they be worried about using gas as it gets more expensive if they use more?

I think what needs to change is that companies should conform to the same pricing structure. So if they say first x kwh at this price then all companies should use the same amount as the first x kwh.