Standing Charges for gas and electricity

PhylPho

OK, I get it that the Standing Charge is levied by suppliers in regard to the cost of actually supplying your home with gas and electricity. What I don't understand is how come there's such a variance between different companies.

Our present EDF tariff ends on October 30th. We pay 18.90p per day SC electricity and 26.25p per day SC gas. We're now looking at alternative suppliers, pending receipt of our full year EDF consumption / energy cost statement later this week.

Quotes we have from prospective suppliers feature daily Standing Charges ranging from as low as 13.80p to as high as 32.20p.

We're told that SCs are meant to reflect a supplier's costs overhead, but if that's true then how come EDF's recent Easy Online Exclusive Sept19v3 set that tariff's daily SC at 13.587p for gas and 13.587 for electricity? Did EDF suddenly get a better deal itself on the cost of supply to our home? Or is it the case that SCs are actually being used by energy companies to manipulate unit consumption figures?

Is there no OFGEM stipulation as to what level of SC a supplier can charge on the basis of supply cost incurred + supplier percentage profit?

Finally . . . As noted, we've only been with EDF a year and now await our total annual consumption / total cost statement. What we're wondering is if the figures we're to be provided with will exclude what we've paid in Standing Charges -- seeing as how SCs are always said to be about the volume of energy supplied, not the amount of energy used -- or will those costs be lumped into the overall figure for energy consumption expenditure?

Clarification from anyone who understands this stuff will be appreciated: thanks.:)

System

PhylPho wrote: »

OK, I get it that the Standing Charge is levied by suppliers in regard to the cost of actually supplying your home with gas and electricity. What I don't understand is how come there's such a variance between different companies.

Our present EDF tariff ends on October 30th. We pay 18.90p per day SC electricity and 26.25p per day SC gas. We're now looking at alternative suppliers, pending receipt of our full year EDF consumption / energy cost statement later this week.

Quotes we have from prospective suppliers feature daily Standing Charges ranging from as low as 13.80p to as high as 32.20p.

We're told that SCs are meant to reflect a supplier's costs overhead, but if that's true then how come EDF's recent Easy Online Exclusive Sept19v3 set that tariff's daily SC at 13.587p for gas and 13.587 for electricity? Did EDF suddenly get a better deal itself on the cost of supply to our home? Or is it the case that SCs are actually being used by energy companies to manipulate unit consumption figures?

Is there no OFGEM stipulation as to what level of SC a supplier can charge on the basis of supply cost incurred + supplier percentage profit?

Finally . . . As noted, we've only been with EDF a year and now await our total annual consumption / total cost statement. What we're wondering is if the figures we're to be provided with will exclude what we've paid in Standing Charges -- seeing as how SCs are always said to be about the volume of energy supplied, not the amount of energy used -- or will those costs be lumped into the overall figure for energy consumption expenditure?

Clarification from anyone who understands this stuff will be appreciated: thanks.:)

Under Ofgem rules, tariffs have to be based on a daily standing and a unit price. HOWEVER, suppliers are free to set a standing charge of zero.

Standing charges have moved away from being simply related to the cost of getting energy to your home: they now included all fixed costs that the supplier incurs. Does it actually matter?

In my view, too many people focus on the charges and not the total cost. Provided you are able to make an informed judgement about your annual usage in kWhs, then it doesn't matter one jot. That said, as my main variable is gas usage, I do run three comparisons before I choose my next gas supplier based on usage plus/minus 10%. More often than not, the cheapest supplier doesn't change but occasionally it does. It then comes down to guessing how cold or not Winter might be.

As a general principle, suppliers that offer a high daily charge and low unit price are targeting high energy users. Conversely, suppliers that offer zero standing charge tariffs are looking at low energy users.

It could be a lot simpler. Ofgem could do away with standing charges but this would result in nothing more than higher unit prices. Finally, standing charges are not just profit. Only 33p in every £ that we all pay for our energy is linked to wholesale cost: 25% is network costs: 18% is social and economic costs; 17% operating costs; 5% VAT. You can work out the profit for yourself (source Ofgem Aug 18)

PhylPho

Hengus; thanks as ever for your informative reply. One thing I'm still curious about: will my annual energy consumption statement due this week from EDF include in the costs shown the amount paid in Standing Charges?



I know I can do the math when the statement's finally here (kWh x units) but just thought I'd ask beforehand, save the old brain from yet further fade.

JJ_Egan

No SC is not consumption.

PhylPho

JJ_Egan wrote: »

No SC is not consumption.

Thanks JJ: appreciated!

System

PhylPho wrote: »

Hengus; thanks as ever for your informative reply. One thing I'm still curious about: will my annual energy consumption statement due this week from EDF include in the costs shown the amount paid in Standing Charges?



I know I can do the math when the statement's finally here (kWh x units) but just thought I'd ask beforehand, save the old brain from yet further fade.

For the avoidance of doubt, the Annual Statement from your supplier will include words such as:

Over the past 12 months you have used 9295kWh (including estimated readings)

Your total costs were £322.57

Based on your current tariff and usage, your personal projection for the next 12 months is £310.29

There are a lot of ifs and buts in the above. The two key bits of information are the usage in kWhs which is accurate PROVIDED the end of year reading wasn’t estimated by the supplier, and the total annual cost which includes all elements of a bill: that is, usage, standing charges and VAT.

All that said, I still look at two statements a year apart and do my own annual projected usage calculation. In the case above, Zog was spot on as I was giving them a reading once a week.

redux

Some suppliers have a range of tariffs which differ in standing charges and unit prices.

A couple of years ago I noticed that the current supplier here Scottish Power had 3 main tariffs with about 8 and 16 and 32 pence per fuel standing charge.

I surmised it might be worth having the 8p in the summer, with higher unit charges but usage is only about 2 gas units a day, and the 32p sc and cheaper gas units in the winter.

An hour or so of figures on the back of an envelope showed this was true, worth about £60 a year.

This might be worth considering, aim for slightly higher standing charge at the moment, so cheaper units for the winter, but only if it's possible to swap tariffs easily in future without incurring transfer charges every 6 months. See if your existing supplier has anything like this, or it could be worked with 2 suppliers without cancel transfer fees.