Standing Charge

insanegloss

I suggest you read the ofgem Retail Market Review (RMR). This states that they are looking at implementing standing charge tariffs as the standard whilst still being able to offer other types of tariff should they wish.

However, as a company being effectively forced to change their pricing structure, why bother having two types? Customes (most) want simplicity and standing charges do that. Not only that, it ensures that the fixed costs are covered for every supply?

I would imagine ebico may be forced in the future to change their business model should they just be used for low users trying to escape standing charges, I mean if your customer base is low users and your costs aren't covered its commercially a cul-de-sac? That's just my thoughts...

Perelandra

Here's a link to a document on the Ofgem site:

http://www.ofgem.gov.uk/Media/FactSheets/Documents1/Factsheet%20115%20getting%20the%20best%20deal_WEB.pdf

That talks about the upcoming changes. This clearly states the removal of the 2-tier system, but as has been mentioned above this isn't compulsory yet.



[NB: I work for British Gas, but anything I post here does not necessarily reflect the views of my employer, and any errors are mine own]

Gasmad

Hi all

I've also had the npower letter. I currently pay £22 a month for electricity and £5 for Gas. I'm only connected to Gas for a Gas Fire
for use in the case of central heating breakdowns and usually receive a rebate. The standing charge will be 49p a day non-refundable, so I'm going to be paying over £160 per year for something I rarely, if ever use. Can anything be unfairer than this. I'm also on a limited income so this is a considerable blow. I will be looking switch but in the meantime, does anyone know where I can go with this.

HappyMJ

Gasmad wrote: »

Hi all

I've also had the npower letter. I currently pay £22 a month for electricity and £5 for Gas. I'm only connected to Gas for a Gas Fire
for use in the case of central heating breakdowns and usually receive a rebate. The standing charge will be 49p a day non-refundable, so I'm going to be paying over £160 per year for something I rarely, if ever use. Can anything be unfairer than this. I'm also on a limited income so this is a considerable blow. I will be looking switch but in the meantime, does anyone know where I can go with this.

At the moment all I can see is Ebico for the really low gas users.

You might be better off keeping electric with Npower and having Gas with Ebico so be sure to compare separately and see if it's cheaper that way.

You will lose half the annual discount but it's better than paying an extra £160 a year.

Wywth

insanegloss wrote: »

I suggest you read the ofgem Retail Market Review (RMR). This states that they are looking at implementing standing charge tariffs as the standard whilst still being able to offer other types of tariff should they wish.

However, as a company being effectively forced to change their pricing structure, why bother having two types? Customes (most) want simplicity and standing charges do that. Not only that, it ensures that the fixed costs are covered for every supply?

I would imagine ebico may be forced in the future to change their business model should they just be used for low users trying to escape standing charges, I mean if your customer base is low users and your costs aren't covered its commercially a cul-de-sac? That's just my thoughts...

I suggest you read the ofgem Retail Market Review (RMR)
(link kindly provided by Perelandra)
For what is says is not what you think it says. Standing charge is not even mentioned!

To be fair, I think it was suggested in the inital document put out for consultation and comments. Thanks to Ebico who fought hard to remove the mandatory introduction of an unfair standing charge (particularly for low users), it no longer is in the final document. Remember, it was British Gas who first introduced no standing charge tariffs to the energy market many years ago to help eliminate the unfairness to low users

As for the Ebico business model being a "commercial cul-de-sac", well that's what many have been saying since the company first started over 10 years ago. Ebico now have getting on for 100,000 customers and continue to go from strength to strength.

Perelandra

Wywth wrote: »

I suggest you read the ofgem Retail Market Review (RMR)
(link kindly provided by Perelandra)
For what is says is not what you think it says. Standing charge is not even mentioned!

Ha, you're right, that abbreviated version only say "removal of the 2-tier system". Funny how you can read something ones way, and then realise you'd read into it something different.

Ok, try this one- it's a more complete version:

http://www.ofgem.gov.uk/Markets/RetMkts/rmr/Documents1/The%20Retail%20Market%20Review%20-%20Updated%20domestic%20proposals.pdf

4.15 In order to reduce the scope for customer confusion and increase tariff comparability we propose that all tariffs must be of a standing charge and unit rate structure.


[NB: I work for British Gas, but any views I express are not necessarily those of my employer, and any mistakes I make are my own]

Wywth

Perelandra wrote: »

Ha, you're right, that abbreviated version only say "removal of the 2-tier system". Funny how you can read something ones way, and then realise you'd read into it something different.

Ok, try this one- it's a more complete version:

http://www.ofgem.gov.uk/Markets/RetMkts/rmr/Documents1/The%20Retail%20Market%20Review%20-%20Updated%20domestic%20proposals.pdf

4.15 In order to reduce the scope for customer confusion and increase tariff comparability we propose that all tariffs must be of a standing charge and unit rate structure.


[NB: I work for British Gas, but any views I express are not necessarily those of my employer, and any mistakes I make are my own]

You need to take the whole document into consideration if you are to avoid any misunderstanding.

e.g.


3.11. Concern was expressed regarding our proposals to set the standing charge and/or regional adjuster to allow standard tariffs to be expressed in a single national unit rate. A number of respondents were concerned that our proposals would prevent suppliers from reflecting their fixed costs in the standing charge and would result in low or zero standing charge offers (which benefit low volume users) being removed from the market.
3.12. We are no longer proposing to set the standing charge to deliver an at a glance comparison of tariffs across the market, as we recognise and accept both the practical difficulties in implementing the policy as well as the risk of unintended consequences. Instead all consumers will be given personalised information on their estimated annual energy costs by their current supplier, using a prescribed methodology and as far as possible, suppliers will be required to use this methodology when selling to individual consumers. Finally, to address the particular challenges presented by the most sticky and vulnerable consumers, we propose to trial the Market Cheapest Deal scheme.

and also one of the main aims of the whole proposal which was:
(page 8)

• Put an end to complicated multi-tier tariffs, requiring all tariffs to be set out in a simple standing charge and unit rate structure

So there seems nothing here to prevent a supplier setting a standing charge at 0.0p per day providing they don't have a multi tier unit charge

briskly_2

The Ofgem document is even more confusing because section 3.18 on page 49 states:

"3.18. Some respondents were concerned that our proposals (particularly our tariff proposals) might have a negative impact on vulnerable consumers. We have changed significantly our tariff proposals which are now based on limiting the number and complexity of tariffs rather than implementing a fixed standing charge.

We have considered the potential for unintended consequences in our IA, and consider that the risk of vulnerable consumers being negatively affected is now lower. "

Yet, on page 8 one of the key proposals is that:

"Put an end to complicated multi-tier tariffs, requiring all tariffs to be set out in a simple standing charge and unit rate structure; "



So Ofgem can't even stay consistent within their own report. My take on this is that there is government pressure to bring in standing charges to that the £200bn needed for the infrastucture changes and "green" measures can be taken from every household in this way and leave the unit energy charges largely untouched so that they are comparable to international prices. They can then say that UK gas prices are the same as those in Germany, say, disregarding that we may be paying 5x more to start with.

Wywth

briskly wrote: »

The Ofgem document is even more confusing because section 3.18 on page 49 states:

"3.18. Some respondents were concerned that our proposals (particularly our tariff proposals) might have a negative impact on vulnerable consumers. We have changed significantly our tariff proposals which are now based on limiting the number and complexity of tariffs rather than implementing a fixed standing charge.

We have considered the potential for unintended consequences in our IA, and consider that the risk of vulnerable consumers being negatively affected is now lower. "

Yet, on page 8 one of the key proposals is that:

"Put an end to complicated multi-tier tariffs, requiring all tariffs to be set out in a simple standing charge and unit rate structure; "



So Ofgem can't even stay consistent within their own report. My take on this is that there is government pressure to bring in standing charges to that the £200bn needed for the infrastucture changes and "green" measures can be taken from every household in this way and leave the unit energy charges largely untouched so that they are comparable to international prices. They can then say that UK gas prices are the same as those in Germany, say, disregarding that we may be paying 5x more to start with.

I think it's consistent, when taken into context what the original proposals were. i.e for there to be a fixed, uniform standing charge (subject to possible regional variations) that all suppliers had to charge. This requirement is what they have decided against for the reasons given

dave8204

I've just switched to Npower after Eon introduced a Standing charge only for Npower's first letter to me after confirming the switch told me that they're introducing a significantly higher one in May! I'm also a low user,my bill last year was all of £20.
I've just received a letter from British Gas offering me a fixed tariff until 2014.I havn't checked out their prices yet but the letter also offers me £50 discount after 3 months and another £50 after a year if I get both Gas and Electricity through them.Even if,as I suspect,their prices are higher than Npowers the discount might well swing things the other way.There is a charge of £35 for each if you cancel before July 2014.
I don't know yet how this shakes out but I'll be giving them a call,or I might just go back to EDF for my Electricity and Gas.
Remember the good old days before privatisation? Aren't we all grateful now for the "choice" we were promised?