standing charge - does this mean

lkmc01

This is aside from direct debits.

By paying a standing charge as apose to a A and B rate tarrif I understand this to mean that my gas costs in the winter months would be on the low side, whereas in the summer months in would be on the high side. Paying a standing charge sort of balances out the cost more over the year, as, regardless of the month it is, you pay a set amount each day before usage charges.

Am I right?

Wywth

lkmc01 wrote: »

This is aside from direct debits.

By paying a standing charge as apose to a A and B rate tarrif I understand this to mean that my gas costs in the winter months would be on the low side, whereas in the summer months in would be on the high side. Paying a standing charge sort of balances out the cost more over the year, as, regardless of the month it is, you pay a set amount each day before usage charges.

Am I right?

Sort of.... but not quite

Where a supplier offers a choice of standing charge or 2 tier pricing on the otherwise same tariff, then as long as you use at least the higher tier 1 amount in any billing period then the overall costs are generally the same.

Where an issue may arise for gas is that during the summer months, then a gas consumer may not use all the tier 1 quantity (especially if they don't cook by gas) which would result in a higher overall charge if they then move to the standing charge option.
(Because a standing charge is incurred irrespective of the amount consumed)

The charge in the winter, when you probably use all the tier 1 units, will be the same whichever way you were charged.

wakeupalarm

I thought all energy companies will be moving to standing charge tariffs only as per Ofgems policy. The only people who will be able to keep 2 tier tariffs are those already on them until they expire or come to the end of their fixed terms.

Wywth

wakeupalarm wrote: »

I thought all energy companies will be moving to standing charge tariffs only as per Ofgems policy. The only people who will be able to keep 2 tier tariffs are those already on them until they expire or come to the end of their fixed terms.

That's correct.

People said they wanted simplicity, even if it meant higher prices.

Well of course the suppliers welcomed ofgems suggestion that forced higher prices, at least for low users. Whether it makes it any simpler remains to be seen... :cool:

Cardew

I am assuming that ofgem's policy on a daily standing charge will not prevent firms adopting Ebico's charging structure of a flat rate for every kWh consumed - with no discounts, and the same price for every method of payment. Obviously the simplest tariff on the market.

I was surprised that ofgem didn't make a ruling to simplify the many discounts applied to tariffs; dual fuel, payment by DD, prompt payment, loyalty(i.e. discount after 12 months).These discounts can be a percentage, a fixed sum, xp off the first y kWh, or Nectar points.

Wywth

Cardew wrote: »

I am assuming that ofgem's policy on a daily standing charge will not prevent firms adopting Ebico's charging structure of a flat rate for every kWh consumed - with no discounts, and the same price for every method of payment. Obviously the simplest tariff on the market.

I was surprised that ofgem didn't make a ruling to simplify the many discounts applied to tariffs; dual fuel, payment by DD, prompt payment, loyalty(i.e. discount after 12 months).These discounts can be a percentage, a fixed sum, xp off the first y kWh, or Nectar points.

Ebico did initially write to Ofgem objecting to the forced introduction of a daily standing charge.

I think Ebico eventully accepted the Ofgem decision as it essentially says suppliers may not use 2 tier pricing, but to set a daily standing charge.
Ofgem do not specify what the daily standing charge should be (and so it varies by supplier adding to the confusion).
I think Ebico plan to set their daily standing charge at 0.0p per day

Cardew

I can see some people switching to Ebico just for the summer months!