Petrol station style pricing

davidgmmafan

I've been wondering for a while why doesn't Ofgem just put an end to itself as it is a complete waste of time? Only joking.

I've not read the CMA report but I've read about it and frankly I've not seen anything which wil l make the market better in terms of customers and switching. One thing I've seem discussed before which never seems to get implemented is petrol station style pricing.

Now I assume the counterargument is that it penalises low users, or high users, I'm not sure which but apparently somebody loses out. Suppliers also make much of the fact there are fixed costs of supply gas and electricity and getting it to your property - but petrol stations have fixed costs too so I really don't think this point has much weight.

Standing charges also penalize low or zero users (empty properties) and a lot of people don't understand them which make switching less likely.

Why hasn't this been seriously considered? What would make it so much worse than the confusopoly we currently have?

Whilst I'll admit Ofgem's four tariff rule and TCR thing was a waste of time I fear that removing the cap will just mean a proliferation of tariffs with most customers too confused to engage in the market.

Any thoughts? I'm struggling to see a bad thing to say against it. People could see at a glance which tariff is cheaper and that has to be a good thing.

JJ_Egan

Petrol style pricing ???
I buy my fuel at xx price . I know this price before i fill up . I don't know how much i want neither do i know how much i want in the next twelve months .
That is identical to how i buy my gas and electric .I can see my which tariff is cheapest but admit it takes an extra 30 seconds on each comparison to find the rates .

Standing charges where introduced due to users not really understanding the alternative method .

lstar337

Didn't we have this thread a couple of months ago? It was stupid then too.

davidgmmafan

Why is it stupid? My point is what is special about gas and electricity suppliers? The higher and lower rates were just a hidden standing charge. Every other company has fixed costs and they include this when setting their prices.

I could sort of understand the standing charges if they were pretty much uniform but I've heard people reporting wild variations therefore I believe it is just another way of confusing some customers.

PS I'm very sorry I don't monitor the forums religiously, I hadn't seem it discussed before so thought it was worth a post.

Sosumi

The difference is that you drive your car to where the petrol station is, whereas your energy supplier has to transport it to you and maintain your meter(s), whether you use a lot or a little.

Cornucopia

Consumers seem able to cope with complex tariffs for mobile phones. Maybe the issue with utilities isn't tariff related?

The problem for the Regulator is that they are being dragged in two different directions. Simplifying things suggests imposing a simple tariff model on suppliers. However, they are also interested in innovation, which suggests not imposing anything on suppliers.

The suggestion regarding Standing Charges is that the margins are so small that the Standing Charge + Unit Charge model fits the true costs very closely. If Standing Charges were abolished, then Unit Charges would rise, probably beyond a cost-neutral position for larger users.

One possible simplification that the Regulator could consider is to have consumption bands (Small, Medium, Large) that consumers would slot into based on their annual consumption, and then have the option of a Standing Charge-free tariff within those standard bands. This kind of model has worked well with Telecoms, Pay-TV, etc., and I think consumers would readily understand it. The industry already has a system for estimating supply at individual addresses, so it would be easy to estimate a property's band even if there was no actual usage data.