Standing Charge...

Gerry1

Haarlem wrote: »

At one time I would agree with you. However there is a wide variation in standing charges now they bare no relationship to the cost of the overheads you quote.

That's more or less what I'm saying. When there was only one supplier it would have been unfair not to have had some sort of standing charge. Now that there are so many you can vote with your feet.

But there's no such thing as a free lunch, the infrastructure, operations and maintenance all have to be paid for one way or another. If there's no standing charge and no usage you're being subsidised by others, but now the free market means that they have the choice of going elsewhere if they don't like it. It no longer matters as much.

bendipa

Gerry1 wrote: »

Nope.

Standing charges aren't a replacement for anything, the old Electricity and Gas Boards all had them since the year dot. After the markets were privatised some suppliers bamboozled people by claiming to have 'No Standing Charge' but they recouped the same amount by having a surcharge on the initial X units. Very people benefited except owners of second homes or lockup garages.

I don't think they were bamboozling me at all. Low users like myself have certainly benefited from no standing charges. My contract with Ebico, who did not use standing charges ended today, and I found out that with their same plan to continue, there were still no standing charges, but a minimum usage charge would now be imposed, which was well above what I was paying previously. I came across this site today and by luck found another supplier with no standing charges and no minimum usage charge. So I've now arranged to switch to them soon.

Talldave

Gerry1 wrote: »

But do they run petrol and milk pipelines all the way to your door and keep them working safely 24/7 ? :huh:

No they run a fleet of tankers to a retail outlet that's available to me 24/7 - the tankers/lorries & pumps/fridges are maintained to keep them working safely.

The energy company do nothing to ensure the pipes/cables to my home operate safely. However, they will undoubtedly come and repair them if they break.

Haarlem

Gerry1 wrote: »

If there's no standing charge and no usage you're being subsidised by others, but now the free market means that they have the choice of going elsewhere if they don't like it. It no longer matters as much.

I take your point that you have choice, and I do exercise it to get the deal I am happy with.

However I think there is a principal that you should be charged a fair price from the supplier for the costs they incur. The electricity market in the UK (and I use the electricity market as I have first hand involvement) is burdened with too many processes (many very inefficient eg installing meters) between generation and the customer paying for useage. Operators of each process have costs and take a profit. This on-cost could be reduced with rationalisation of the various processes.

Each player between generation and customer has a charge structure, with little scope for discounting. The standing charge for each supplier should be within a few pence of each other. I suspect suppliers are loading standing charges to recover costs they incur by their inefficient operating practices outside the original principal of a standing charge.

But as you say we have choice and some standing charges are a few pence with others five times as much. I am happy with my electricity deal with low standing charge and low unit costs.

The_Economist

I have to say the that I have been lucky for the last 12 months because the standing charge was extremely low I was only paying 5p a day for electric & 3p a day for gas...
Ive started looking around for a new supplier & i am shocked how much it is now.

Talldave

Earlier in the year I switched to a gas tariff with 42p daily standing charge. The gas pipes to the house received the same (zero) level of attention and maintenance as for any other supplier but I got a significantly lower unit rate. Proof, if any were needed, that the standing charge has absolutely nothing to do with infrastructure. I was simply paying a higher standing charge to access a very low unit rate, because consumption at the property was eye-wateringly high.


The closest comparison I can think of is the mortgage market, where one lender will offer a range of loans with different application fees and interest rates (the higher the fee the lower the rate). The application process is identical, regardless of which loan you go for. What's best for you depends on the size of your loan (cf total consumption in the energy market). The only difference for mortgages is that you don't get forum posts trying to persuade you that the application fee is there to ensure that the lender's IT systems and printer are all working OK. It's just the way you do business and it's very open and clear that the higher fees buy better loan terms.

UnclaimedEnergy

At the end of the day, all suppliers need to pay the same bills to the distribution network companies etc.

Some of these costs are estimates due to the actual cost not being known until months later (TNUoS for example). Suppliers therefore need to forecast these costs, which can result in different standing charges to start with.

Even if everyone had the same definite costs to pay, you would still expect some variance between suppliers.

Suppliers who want to target low users are likely to offer a small standing charge to give them a better deal.

Suppliers who want to target high users are likely to offer a high standing charge to give them a better deal.

I wouldn't look into the infrastructure reasons behind these too much though, at the end of the day suppliers will offer what they do to win certain customers.

till_man

I understand the infrastructure costs will increase in line with inflation but the standing charge is clearly not linked.

My standing charge with Scottish power is currently 7.8p on Online Fixed Price Energy December 2019

The renewal standing charge tariffs range from 23p-35p.

Almost triple.
There is no way the material cost or salaries have tripled in the last year.

Streaky_Bacon

The energy suppliers don't maintain or repair the network (except where they are also gas transporters or distribution network operators).

If the standing charge levied by a supplier was for repair/maintenance of the network, then it would be being passed on from the gas transporter or DNO.

I do not know all the ins and out of charging between suppliers and GTs/DNOs but it seems unlikely that the standing charge is simply passed on, due to the wide variation between suppliers for the same property.

It would therefore seem that the standing charge is simply part of a pricing structure decided by the supplier, which may or may not reflect their fixed costs (transporter charges, admin etc) vs variable costs (the price they pay for the energy).

Haarlem

I agree the standing charge is now just part of the charging structure, but it was there at one time to pass on the fixed costs to get the energy to the customer.

Speaking about the electricity standing charges which I know something about, posters above have not mentioned the complex electricity market in the UK with all the players with costs (and a profit element) to arrive at a consumption figure to charge the customer. It is not just the cost of fixed assets of the network.

Another element that is recovered are the system losses. This includes energy supplied and used but not billed for as the supply point has "fallen off the records".