Standing Charges vary with tariff - why?

Tabr

If the standing charge is the cost of supplying the sproduct to me then why does the standing charge for electricity and gas vary with the tariff? It would seem to me that the standing charges would be the same across all tariffs. 

I was looking at E.ON's tariff rates. 

Here are the standing charges for electric on the Fix 18 Month Exclusive v7 tariff

Unit rate	Normal 19.683p per kWh
Standing charge	24.049p per day

Here is the standing charges for electric on the E.ON Charge v4 tariff

Unit rate	Normal 20.694p per kWh
Standing charge	21.297p per day

So if someone could explain to me why it costs more to deliver the same product on the v7 tariff than the v4 tariff I would appreciate it. 

JJ_Egan

SC is a variable  , same as unit rate .Thats the way they make up tariffs these days .

Its total cost that counts ,

Usage multiplied by unit cost  plus daily standing charges .

slimbuck

Tabr said:

If the standing charge is the cost of supplying the sproduct to me then why does the standing charge for electricity and gas vary with the tariff? It would seem to me that the standing charges would be the same across all tariffs. 

I was looking at E.ON's tariff rates. 

Here are the standing charges for electric on the Fix 18 Month Exclusive v7 tariff

Unit rate	Normal 19.683p per kWh
Standing charge	24.049p per day

Here is the standing charges for electric on the E.ON Charge v4 tariff

Unit rate	Normal 20.694p per kWh
Standing charge	21.297p per day

So if someone could explain to me why it costs more to deliver the same product on the v7 tariff than the v4 tariff I would appreciate it. 

I wouldn't seek to disagree with what the previous poster has said. Some suppliers even have tariffs that have zero standing charge. Would that mean, using your logic, that there is no cost in supplying the product to me? If one supplier can supply me the product for nothing, why does it cost with other suppliers?

Similarly, following your logic, if 1kWh of electricity costs 19.683p per kWh, why does the supplier charge 20.694p per kWh on another tariff? Surely it is all the same electricity?

That would indicate that the logic or basis of your argument is flawed.

The truth is that the regulator, after consulting with suppliers, agreed that in a fair and competitive market, the supplier could decide themselves what standing charge to apply (which could be zero) as well as what unit price to charge.

The other thing to note in your example is that the tariff with the higher standing charge is fixed for 18 months, whereas the other tariff is only fixed for 12 months. Perhaps an indication of things to come?

Does the 18M tariff mandate smart meters? The 12M tariff does. Servicing of smart meters is usually considered cheaper, not least because they do away (usually) with the need for manual meter readings to be obtained.

Is the 18M tariff available as dual fuel only? The 12M tariff is. Where a tariff is only available as a dual fuel tariff, the supplier may not care how they split the standing charge between fuels, just how much is being collected in total daily.
If a tariff is also available as electric only, then the supplier would need to take more care over the amount of standing charge allocated to each fuel.

Not a full list of possible reasons, but hopefully gives you a flavour.

daveyjp

Its called market segmentation.

It also leads to statements such as this on comparison sites.

"If you cannot find this tariff on the supplier's website, then it's likely to be an exclusive tariff with a price comparison website. To get an exclusive tariff, call or email the supplier directly to ask where you can sign up to this deal."

So secret deals are there too!

slimbuck

daveyjp said:

Its called market segmentation.

It also leads to statements such as this on comparison sites.

"If you cannot find this tariff on the supplier's website, then it's likely to be an exclusive tariff with a price comparison website. To get an exclusive tariff, call or email the supplier directly to ask where you can sign up to this deal."

So secret deals are there too!

You mean there really are exclusive tariffs such as those MSE offer in their Big Switch campaigns they offer from time to time  where they state the tariff is exclusively available from them (and their parent company, MSM)
Not much of a secret when MSE used to claim to email the details out to 12 million recipients (now reduced to just 7.5 million), and that's not including the Cheap Energy Club members who may benifit from it according to their settings, or the promotion of it on this very site.

I've only seen that statement on one comparison site, and unfortunately that particular site is not accredited by Ofgem as meeting the Confidence Code for comparison sites.

My experience when contacting the appropriate supplier about a tariff promoted on that site, and I could not see it on the suppliers own website, resulted in the following replies:

1. I'm sorry, that tariff is not one available direct from us. Do you have online access, beacuse if you do, you can see details of all our current offerings on our website. Or I can take siome detals from you now and tell you what we could offer you. I don't know where you can obtain the tariff you are talking about from. May I ask where did you see it advertised? Perhaps you could contact them and ask them if they know where it might be available from?

2. I'm sorry, that particular tariff was withdrawn from sale months ago, as evidenced by the 'April 2021' in the tariff name. We've updated our tariff offerings a number of times since then in line with general wholesale price increases, in common with most other suppliers.
We are currently on 'July 2021' tariffs (that call was made last month)
Please check our website for all our current offerings.

3. I'm sorry, but we do not offer gas only tariffs. We only offer tariffs for customers that want electricity only or dual fuel. Why not  allow us to supply your electricity too? (I didn't say, but I was really tempted to tell them the truth that their electricity was just too damn expensive. See my previous post in this thread as to why that can occur.)

I won't bother wasting my time & money calling suppliers in future. If it's not on the supplier's website, or the comparison site won't switch me themselves, I'll take it that it's not available.

MWT

slimbuck said:

I won't bother wasting my time & money calling suppliers in future. If it's not on the supplier's website, or the comparison site won't switch me themselves, I'll take it that it's not available.

Do look on the suppliers full list of tariffs though, don't just look at those listed when you enter your details in their 'switch' system.

Often there are better options in the full list that can be available if you ask for them specifically.