Fewer tariffs demanded in energy bills reform: what it means for you

MillicentBystander

wakeupalarm wrote: »

This is what I don't understand about Ofgem's motivation for these changes.
The lazy are always going to be too lazy to switch. If they didn't switch before these changes when they were paying high standard rates to their regional energy suppliers who were generally the most expensive and far lower prices were on offer how are they going to be incentivised to switch now when the standard prices are going to be lower and automatically moved to the cheapest tariff and the cheaper deals are going to more expensive.

Before
Online advert from energy firm - Save £300 by switching.from your standard tariff
Lazy person- Nah, I don't think I'll bother

New proposals
Online advert from energy firm - Save £50 by switching from your standard tariff
Lazy person - But my energy company already puts me on the cheapest deal, I don' t think I'll bother for £50.

It's nothing to do with whether a punter is lazy or not - their fuel charges should be based on what it costs the supplier to supply that fuel. And with these proposals the cost difference between online and standard tariffs will, quite rightly, be re-aligned. Do you honestly believe an online tariff costs the supplier £300 less than a standard tariff to administer? Of course it doesn't so that means that the standard tariff punter is getting ripped off so you and i can get a 'great' deal. It's wrong and has needed sorting for years.

Plus if these so called lazy punters had all done what you and I have done over the last few years do you really think these online deals would have been anything like as good? Of course they wouldn't because they were based on the big profits our supplier were getting from their legacy/existing/loyal customers.

Cardew

MillicentBystander wrote: »

the standard tariff punter is getting ripped off so you and i can get a 'great' deal. It's wrong and has needed sorting for years.

Agreed.

My reservation is that the proposals will not 'sort it'.

MillicentBystander

Cardew wrote: »

Agreed.

My reservation is that the proposals will not 'sort it'.

I guess time will tell but the change is already happening, led by British Gas. I'm no fan of the company ordinarily but i do think them admitting what had been happening for years with regard to ripping off standard tariff punters and seeking to put it right was a pretty brave thing to do unilaterally (unlike EDF who have stated they want to change to flat unit pricing but will only do so if others agree to also do it).

You only have to check out BG's performance on the switching sites now they are adopting a fairer approach to their standard tariff customers (they are way lower than they used to be with the ever changing Websaver online tariffs) and, indeed, in my area (Yorkshire) their cheapest online tariff is just £51 more than their cheapest standard tariff at average consumption levels (which to a layman like me would seem about right with regards to extra costs of administering a standard tariff compared to an online tariff). I believe once these proposals are implemented that is the sort of pricing we will see across the board.

wakeupalarm

Nowhere did I say anything about the merits of the existing system and who it benefits and who doesn't.

The point I was trying to make is that Ofgem wants to encourage more switching by customers to seek out better deals. If £300 wasn't enough of an incentive to switch why would a reduced amount of say £50-100 suddenly encourage customers to switch?

The whole system is a farce, the fact is Ofgem's interference is restricting competition and forcing up prices the complete opposite of how a free market is supposed to work. It's proof that the current structure of the energy market has failed and rather than dealing with the failed structure they are instead moving the deckchairs to give a pretence that competition exits in the energy market.

The supermarkets have a far more dominant position but you don't see legislation to restrict them selling only 4 products each.

Same with mobile companies, why not force them to put all their customers on their cheapest tariffs?

You could easily replace the big 6 with a single monopoly company and we would be no worse off.

wakeupalarm

MillicentBystander wrote: »

It's nothing to do with whether a punter is lazy or not - their fuel charges should be based on what it costs the supplier to supply that fuel.

So are you finally admitting that a low user should pay for what it costs to supply them and a standing charge is therefore justified rather than the petrol forecourt pricing you have been championing.

Or are you still saying that a low users shouldn't pay for the meter reader, the upkeep of the pipes, the guarantee of supply and instead high volume users such as large families should subsidise these low users many of which are second home owners?

Richie-from-the-Boro

wakeupalarm wrote: »

So are you finally admitting that a low user should pay for what it costs to supply them and a standing charge is therefore justified rather than the petrol forecourt pricing you have been championing.

Or are you still saying that a low users shouldn't pay for the meter reader, the upkeep of the pipes, the guarantee of supply and instead high volume users such as large families should subsidise these low users many of which are second home owners?

If the standing charge is about "transport and supply, maintenance, reading the meter [5 realxations of frequency in 2 years and customer read tariffs], keeping supplies connected to the network and making sure the meter is safe" and in the case of gas, a standing charge will also cover any emergency gas supplies, or does it as all costs and benefits to all operators is the same regardless of region, the standing charge for gas is £0.00 - therefore it begs the question that rather than the wider merits of a debate on simplified standing charges should the standing charge for gas even exist as the standing charge variable is zero in the first place. The averaged nett nett standing charge cost to the industry of electricity was set at £13 last year yet SP is currently at 31per day which is £113 per year. .

Comment ?

victor2

Richie-from-the-Boro wrote: »

If the standing charge is about "transport and supply, maintenance, reading the meter [5 realxations of frequency in 2 years and customer read tariffs], keeping supplies connected to the network and making sure the meter is safe" and in the case of gas, a standing charge will also cover any emergency gas supplies, or does it as all costs and benefits to all operators is the same regardless of region, the standing charge for gas is £0.00 - therefore it begs the question that rather than the wider merits of a debate on simplified standing charges should the standing charge for gas even exist as the standing charge variable is zero in the first place. The averaged nett nett standing charge cost to the industry of electricity was set at £13 last year yet SP is currently at 31per day which is £113 per year. .

Comment ?

That shifts the focus from "low users shouldn't pay a standing charge" to accepting there is an overhead involved in just having the utility available, and then discussing how much that should cost the customer.
For example, all the main gas supply pipes in our area have been replaced in the last couple of years. At great expense to somebody no doubt. Ultimately funded by the consumer. My standing charge didn't increase because of the work, so I suppose I got good value for money, or you could argue that I paid for it over the previous decade(s) where no major work was required...

MillicentBystander

wakeupalarm wrote: »

So are you finally admitting that a low user should pay for what it costs to supply them and a standing charge is therefore justified rather than the petrol forecourt pricing you have been championing.

Or are you still saying that a low users shouldn't pay for the meter reader, the upkeep of the pipes, the guarantee of supply and instead high volume users such as large families should subsidise these low users many of which are second home owners?

I was talking about admin. costs. Like with most things in life those who consume more pay more, those who earn more pay more tax (unless you are amazon, starbucks etc of course). If you use more gas and electric you are getting more benefit from the services and using the infrastructure more so you pay more. It really is that simple. For instance, does someone living on their own pay more for each individual item they buy in the supermarket compared to a household with 4 members? No. And why should they?

Plus I was talking about standard tariff customers being ripped off to fund the subsidised deals you and I have enjoyed for years and asking if it was fair. And imo no it really isn't. There's no evidence to suggest these standard tariff punters are predominantly low users, anyway.

To make it clear, I don't think there should be a standing charge at all. You use more you pay more. You use less you pay less. But ALL at the same rate. Very simple concept that has stood the test of time. If the standing charge really is about everyone paying for the upkeep of the system how come each tariff has a different charge?

Cardew

I have a good idea.

Instead of a standing charge, perhaps we should pay for the first xxkWh we use at a higher rate. We could call it the tier system.

Richie-from-the-Boro

victor2 wrote: »

That shifts the focus from "low users shouldn't pay a standing charge" to accepting there is an overhead involved in just having the utility available, and then discussing how much that should cost the customer.

For example, all the main gas supply pipes in our area have been replaced in the last couple of years. At great expense to somebody no doubt. Ultimately funded by the consumer. My standing charge didn't increase because of the work, so I suppose I got good value for money, or you could argue that I paid for it over the previous decade(s) where no major work was required...

HiYa victor2,

I've never argued for the "low users shouldn't pay a standing charge", indeed the inverse, I've been slated many times over the last year in this group for stating that all [big6] users should all pay an equal portion of the service charge and that its a wrong thing that I and others have no choice but to subsidise the service delivered to others. Indeed I've long argued that there should be no service charge and no tiers, a simple,flat, point of delivery postcode unit price per kW for both fuels.

MillicentBystander puts it well as :

To make it clear, I don't think there should be a standing charge at all. You use more you pay more. You use less you pay less. But ALL at the same rate. Very simple concept that has stood the test of time. If the standing charge really is about everyone paying for the upkeep of the system how come each tariff has a different charge?

The standing charge element, even if minced into the flat 'postcode delivery' price should not be on a sliding [volume / usage] scale. Rather a fixed, flat DECC / Ofgen pre-agreed annual amount per end user. If any opportunity is given to the big6 & DECC & Ofgen to re-wind to any non fixed variable it will again be exploited to the full by the Harry Houdini suppliers and DECC alike to continue the practice of producing sleight~of~hand tariff rates.