Standing charges and yearly savings

Glowhallow

Hi everyone,
I have a question about standing charges and energy savings calculated by comparison sites. When I do a comparison for my energy currently (we use around 5200kwh gas and 2600kwh electric a year), a number of price comparison websites suggest I could save over £100 by switching. However, when I dig deeper into the unit price the standing charges are almost 3x what we are currently paying (5p with Eon compared to 17/18p with others). The cost of usage is a few pennies less than my current provider, but surely this dwarfs the cost of the standing charge? How come i'm being told I could save over £100 by switching when the standing charges would actually end up costing us more?
Thank you!

Robin9

As you are a comparatively user the standing charge part of you bill becomes  significant.
Look carefully at where this claimed saving comes from - it assumes that when your fix runs runs out that you will be transferred to a standard tariff.  Lots of threads on this subject.
Look at what you spend now (assuming all your readings are up to date) and what the suggested supplier will cost.

Glowhallow

Thank you Robin, that's much appreciated 

onlyfoolsandparking

Glowhallow said:

Hi everyone,
I have a question about standing charges and energy savings calculated by comparison sites. When I do a comparison for my energy currently (we use around 5200kwh gas and 2600kwh electric a year), a number of price comparison websites suggest I could save over £100 by switching. However, when I dig deeper into the unit price the standing charges are almost 3x what we are currently paying (5p with Eon compared to 17/18p with others). The cost of usage is a few pennies less than my current provider, but surely this dwarfs the cost of the standing charge? How come i'm being told I could save over £100 by switching when the standing charges would actually end up costing us more?
Thank you!

It's a fair question and one that makes me think too, I keep my eye on energy costs as do probably everyone who frequents this part of the forum. I'm currently with Avro (simple and superfixed) and apparently I can save a massive £16 a year by switching to A N Other, what stops me is the standing charge difference, Avro is 14.3 ( I think?) and new prospective supplier is between 18-26p. Now whilst the unit charges are maybe a penny or so cheaper, the high standing charge puts me off as I think because new supplier is so cheap on unit charges It's quite possible they could shoot up anytime and then any potential saving is well and truly gone, obviously taking into account fixed terms.

I suppose it's a balancing act between decent unit costs/decent SC  vs ultra low unit costs and higher SC being better if your a low user or have I got that wrong way round lol. For me though I've reduced my energy costs year on year by switching as and when good deals appear and keeping a good eye on it all.

pokora

Any variable tariff could change prices at any time. Lots of firms try to get you sign with a mega-deal and after 1-2 bills they start hiking prices. Also in dual fuel deals sometimes they offer a great price in 1 of the fuels.

Just make your own maths in case they charge you anything extra.

JJ_Egan

<could change prices at any time>

Thats only true if a variable tariff and totally false for a fixed tariff .

Dual fuel of late is not cheaper and neither are one fuel a great price .

matelodave

You have to take standing charges into account across the whole 12months worth of your consumption. It depends whether you are a light or heavy user which has the most effect on your annual bill.
For example I'm only leccy and use 7200kwh/year, so a single penny increase per kwh costs me £72 in a year, whereas a 10p increase in my standing charge only costs me 365(or 6) x 10p = £36.50 so as far as I'm concerned I can stand quite a high s/c if the unit rate is lower. For a lower user the difference is less obvious if I only use say 3500kwh/year where a one penny/kw = £35 but an extra 10p on the s/c = £36.50. So you need to have quite a low consumption for a higher price/kwh to work in your favour - you need to do your sums and work out what its going to actually cost your rather than just looking at the projected savings.

You do need to do the whole annual cost rather than just focussing on the s/c because 1p on the s/c is only worth £3.65 a year whereas a penny per/kwh cost is multiplied by the several thousands of kwh that you use.

Talldave

You only pay 365 times the standing charge but thousands of times the unit rate, so it's sometimes worth paying a high standing charge to get a really good unit rate. But comparison sites do the donkey work to find the best combination for your usage - just ignore claimed savings and concentrate on the total cost

Stompa

Glowhallow said:

Hi everyone,
I have a question about standing charges and energy savings calculated by comparison sites. When I do a comparison for my energy currently (we use around 5200kwh gas and 2600kwh electric a year), a number of price comparison websites suggest I could save over £100 by switching. However, when I dig deeper into the unit price the standing charges are almost 3x what we are currently paying (5p with Eon compared to 17/18p with others). The cost of usage is a few pennies less than my current provider, but surely this dwarfs the cost of the standing charge? How come i'm being told I could save over £100 by switching when the standing charges would actually end up costing us more?
Thank you!

Let's assume the SC increases from 5p to 18p. That would cost you an extra £47.45 per year (365 x 13p). However, on 2600kWh, a reduction of just 2p per kWh would save you £52.00 per year, so overall you'd be better off.

Glowhallow

Thanks everyone for your help, i'm not very maths confident so I think i'll need to sit down and look at the stats. Appreciate everyone's help!

Gerry1

You're overcomplicating things.  It really doesn't matter what the unit rates or daily charges are, or even if they add on your age and subtract the square root of your house number: all that counts is the annual cost based on actual meter readings.  It's easy to do the sums with electricity, but remember to convert the gas meter reading (volume) to kWh, e.g. via this site.

It's very important always to ignore all projections and claimed savings.  Thanks to Ofgem's utter stupidity these figures are highly misleading because they assume you will do nothing and let your existing energy company roll you on to their rip-off standard tariff.  Obviously you won't let them do that, that why you're making comparisons !

Start comparing using Citizens Advice and 'Switch with Which?' and then MSE's CEC and perhaps a few more because some offers are exclusive to certain comparison sites.  Always make sure that you change the setting (often hidden or called 'Filter') that defaults you to 'Show companies that we can switch you to', i.e. the expensive ones that pay commission.