Low User New Deal?

Ken68

Sorry for the delay Nada, thought STeve had signed off the thread.
Looking at the records I see I didn't switch off the boiler last year, multitude of reasons, and for y/e Mar 31 2012 the readings were 1358E/7846G and for 2011..1248/9227 .
And with the tier system low users barely got out of the higher prices each quarter and never in the summer.

Nada666

Ken68 wrote: »

[...]
And with the tier system low users barely got out of the higher prices each quarter and never in the summer.

Is that supposed to support your side of the argument rather than mine??? How on earth is that a point in favour of standing charges?

Users are confused by the way bills are printed. They are confused by credits and debits; they are annoyed by imminent payments that aren't included; they are confused by balances brought forward and adjustments; they are confused by gas meter units converted to kWhs calculations mixed in all on one line. THEY ARE NOT solely CONFUSED by two-tier tariffs.

I have never heard a single [STRIKE]idiot[/STRIKE]consumer state the reason that they dislike two-tier tariffs is because it provides a break to users with a lower consumption. I have never heard a single consumer say they like the way the less you use the more you are charged. HOW MANY OF THOSE ASKING FOR STANDING CHARGES simultaneously state "ooh, I hate paying more when I am using less"?

joncombe

I have never heard a single [STRIKE]idiot[/STRIKE]consumer state the reason that they dislike two-tier tariffs is because it provides a break to users with a lower consumption. I have never heard a single consumer say they like the way the less you use the more you are charged. HOW MANY OF THOSE ASKING FOR STANDING CHARGES simultaneously state "ooh, I hate paying more when I am using less"?

The introduction of standing charge appears to benefit one group and one group only - the utility companies. When I got a letter from Npower about standing charges they gave a breakdown of the current prices and the new prices with standing charge for the tariff I was on with them, "Winter Fix". I have quoted them below (for simplicity, just the inc VAT prices)


Before : Electricity (Economy 7)

Unit rate up to and including 728KWH per year : 26.50p
Unit rate over 728 KWH per year : 19.25p
Night rate : 6.16p

After : Electricity (Economy 7)
Daily Standing Charge : 14.5p
Unit rate : 19.25p
Night rate: 6.16p

So what has happened here is a daily standing charge (of 14.5p) has been introduced, the day rate is then the same as the old "follow on" rate after the initial units have been used and the night rate is unchanged. So for someone using exactly 728KWH per year at the day rate before would have paid 728*26.5 = £192.92. Under the new pricing system they would pay a daily standing charge of 14.5p, so 14.5p*365 + 728*19.25 = 5292.5+14014 = £193.07. So the new standing charge is pretty much exactly the same as the full usage of units at the higher rate under the old tariff. Additional units above this, whether night or day cost the same under both pricing structures. So anyone under the old system that always used at least all of the higher priced units pays roughly the same. However anyone who did not use all of the higher priced units (typically lower users) WILL pay more. In short NPower have ensured that everyone pays at least as much for electricity now as they did before but low users have to pay quite a bit more.

Similary for gas

Before:-

Unit rate up to and including 4572KWH per year: 7.729p
Unit rate after 4572KWH per year: 3.799p.

After:-

Daily Standing Charge: 49.2p
Unit rate: 3.799p

So again the unit rate charged under the new scheme is the same as before after 4572KWH have been used. So a user under the old scheme who used exactly 4572KWH per year paid 4752*7.729p = £353.36.

Now the same users has to pay standing charge of 49.2*365+4572*3.799 = 17958 + 17369 = £352.27.

So almost exactly the same and any usage beyond that costs the same now as it did before. So again anyone using the maximum amount will pay slightly yes (all of about 10p) but everyone using less than this amount will pay more now than they did before, often quite a bit more.

You can see why the utility companies like this, they can introduce standing charges which makes them more money, claim that this is better because it makes things "simpler" and it is for your benefit and if anyone complains they can push the blame onto Ofgem.

If the standing charge was really about recovering fixed costs that all utility suppliers incur you would expect it to be broadly the same accross suppliers which of course it's not. In fact I had a look at all the tariffs available to me now under NPower and the standing charges for each (they all have one now).

For electric:-

Go Save Economy 7 : Annual Standing charge : £52.89
Standard Economy 7 : Annual Standing charge : £52.89
Online price fix Aug 2014 : Annual Standing Charge : £142.19
Price fix Dec 2015 Economy 7 : Annual Standing Charge : £76.65
Price fix Sep 2016 Economy 7 : Annual Standing Charge : £82.78
Energy Online Aug 14 E7 : Annual Standing charge : £168.25

For gas:-

Go Save Gas : Annual Standing Charge : £179.75
Standard Gas : Annual Standing Charge : £179.75
Online price fix Aug 2014 Gas : Annual Standing Charge : £122.26
Price fix Dec 2015 Gas : Annual Standing Charge : £203.51
Price fix Sep 2016 Gas : Annual Standing Charge : £209.64
Energy Online Aug 14 Gas : Annual Standing Charge : £187.03

Now I would have though the fixed costs (issuing bills, reading the meter etc) would be the broadly the same with all the tariffs. However as you can see, there is a wide variety in the charges especially in the case of electricity where the highest standing charge is more than 3 times the lowest. Therefore clearly, even if that were intended to be the case, the standing charge is NOT being used to recover fixed costs. It's really just two charges by a different name and it's just as complex to compare tariffs now with a standing charge + unit rate as it was before with two unit rates. However it has had the effect of boosting the income utility companies get from low users.