Why are standing charges increasing rapidly

593jim

I can understand that energy prices are increasing on the world market but companies are increasing standing charges without any explanation. These charges seem to have no bearing on their costs. I have already been quoted over 30% increase when my current protected deal ends in April.

MWT

From the perspective of the Ofgem price cap they are not increasing much at all, it is just that previously suppliers were keeping them lower than they had to, now they are being set at the level allowed by the cap as they need to do what they can to recover costs. 

Thrugelmir

Standing charges not only cover the fixed cost of providing gas/electric to your home. They also include Government levies such as those to fund Co2 emmission reduction. Going green is going to be costly. 

[Deleted User]

593jim said:

I can understand that energy prices are increasing on the world market but companies are increasing standing charges without any explanation. These charges seem to have no bearing on their costs. I have already been quoted over 30% increase when my current protected deal ends in April.

Bear in mind that low charges are usually associated with high unit prices. Think back to the days when Ebico used to offer a zero standing charge tariff. Sadly, for them, it was not a profitable tariff when, for example, PV solar owners et al switched in for 6 months a year. I would suggest that a 30% cost increase is modest given the rapid rise in gas and electricity prices plus the cost of power failures.

Ultrasonic

I'd just view the standing charge as one of the two parameters that suppliers can adjust to set the total price, rather than thinking of this aspect of the bill paying for anything specific. The big variability of this in the past, inicluding tariffs with zero standing charge, prove this as far as I'm concerned.

Sea_Shell

The only thing that really matters is your personal usage and the overall cost.

Standing charge x 365 plus

Rate per kWh x actual usage plus VAT (if not already included)

The answer is what you should be comparing.

Obviously it helps if you have accurate data for your usage...saves guesswork.

wittynamegoeshere

Aren't standing charges excluded from the cap for fixed tariffs?  They could offer you a deal for £5 a day in the hope that you were daft enough to take it.

I suspect that many are (finally) starting to look at the unit price, and energy suppliers have worked this out.  So they're hoping to hide a chunk of extra profit in the standing charge instead.

In a similar but opposite way, home broadband/phone deals are usually compared using the fixed monthly fee, including by MSE.  But when you look at the call and/or call package costs they're often horrendous.  This is the sort of thing these businesses do, they appear cheap according to whatever the likes of MSE use to compare, and hide their profit in the bits that many don't look at.

QrizB

wittynamegoeshere said:

Aren't standing charges excluded from the cap for fixed tariffs?  They could offer you a deal for £5 a day in the hope that you were daft enough to take it.

As a rule, the cap does not apply to fixed tariffs.

markin

Expect them to rocket up when the 2-4 billion cost of the failed companies is added to it by ofgem.

4B so far, over 27 million households £148 each over 2-3 years.

https://www.itv.com/news/2021-12-09/household-energy-bills-set-to-rise-by-up-to-900-a-year-in-april

wild666

The standing charge should be the same for electric and gas across the board the only thing that a supplier can sell cheaper should be the units of electric and gas in kWh's. 

wild666

wittynamegoeshere said:

Aren't standing charges excluded from the cap for fixed tariffs?  They could offer you a deal for £5 a day in the hope that you were daft enough to take it.

I suspect that many are (finally) starting to look at the unit price, and energy suppliers have worked this out.  So they're hoping to hide a chunk of extra profit in the standing charge instead.

In a similar but opposite way, home broadband/phone deals are usually compared using the fixed monthly fee, including by MSE.  But when you look at the call and/or call package costs they're often horrendous.  This is the sort of thing these businesses do, they appear cheap according to whatever the likes of MSE use to compare, and hide their profit in the bits that many don't look at.

I haven't used my landline in over 10 years yet when I was with BT they still charged me for line rental the only thing I needed the line for was the BB connection.