Standing Charges on Gas And Electricity supplies

Anastasa

Can anyone explain to me why the standing charges levied daily by Energy Suppliers seem to have been increased along with the cost of the actual energy. Not a huge amount but still an extra amount to find.

emmajones1976

Because they are losing money hand over fist on the capped unit rate so this is a way for them to claw a bit back

Nothing more to it.

Astria

Energy suppliers are currently making a loss with the current tariffs, that's why.

I expect it'll go up again in April.

daveyjp

Utility suppliers aren't immune from inflation and extra costs on business as a result of the 'B' word.

dbks

Anastasa said:

Can anyone explain to me why the standing charges levied daily by Energy Suppliers seem to have been increased along with the cost of the actual energy. Not a huge amount but still an extra amount to find.

Have your standing charges been increased?

If you are on a fixed rate, then there should be no change to the tariff over the term (unless government intervention forces it, such as by a change in VAT rate)

There was hardly any change to standing charges in the last price cap review. Actually the standing charge cap of gas was actutually reduced by about a penny, whilst the standing charge cap on electricity increased by just a smidgeon.

One reason for an increase in standing charges is that the government are collecting one of their stealth taxes via your energy bills. Currently, it's loaded to the electricity standing charge as everyone has an electricity supply. But there are talks to transfer it to gas, because gas is seen as the new diesel in the latest government's eyes.

Hopefully, the current pressure on the government to remove the stealth tax completely (and collect it as transaparent, general taxation) may prevail.

But with pressure on the government to now also cancel, or at least postpone, the special, additional NI charge they were also planning on introducing, then they are currently between a rock and a hard place, as they promised in their election manifesto not to increase the rates of VAT or income tax.

Then again, the current government promised lots of things ...and BoJo has currently gone into hiding at his grace & favour country retreat..

Don't forget, there are no standing charges at all on the BG Zero Fix Oct 22 tariff

JJ_Egan

Dont matter what the s/c is the overall cost that counts .

markin

The SC is a fixed cost to them that they usually hide from customers to look good, but now they need to use the full cap on the SC and KWH

dbks

markin said:

... but now they need to use the full cap on the SC and KWH

There is no cap specified for kWh price.
The cap is on how much a 'typical' customer may be charged for their energy.

This means if a supplier were to set the SC below the specified cap, then they would be able to set their unit price higher than a supplier who opted to set the SC at the cap.

savers_united

The standing charge is always likely to go up over time as in theory it covers things like Maintenance of pipes, cables, meters etc. With inflation these things generally get more expensive to maintain as wages, fuel and materials increase.
So it's reflected in an increased SC, that's the theory but suppliers can choose how its applied, maybe a higher unit rate and lower SC or by subsidised SC to attract new customers. Either way there is more to the bill than just wholesale cost. 

markin

dbks said:

markin said:

... but now they need to use the full cap on the SC and KWH

There is no cap specified for kWh price.
The cap is on how much a 'typical' customer may be charged for their energy.

This means if a supplier were to set the SC below the specified cap, then they would be able to set their unit price higher than a supplier who opted to set the SC at the cap.

Maybe ofgem are dumbing it down on this page for the public but..

"The price cap limits the rates a supplier can charge for their default tariffs. These include the standing charge and price for each kWh of electricity and gas (the units your bill is calculated from)."

They also state the more you use the bigger the bill.

https://www.ofgem.gov.uk/check-if-energy-price-cap-affects-you

EDIT: But yes its a total cap they can lower the SC and rise the KWH to end up within the cap.

.........................................................

The Cap is meant to End in 2023 !

"It’s due to end by 2023 at the latest, but it could end sooner. By then we expect other reforms to bring easier and fairer access to energy deals. These include faster switching times, smart meters and other industry changes."

MWT

Those statements are not in conflict with what dbks said though.

The cap is expressed as a limit on 0kWh use which is a cap on the standing charge, and a limit on the total bill for typical use (3100kWh/12000kWh) for electricity and gas. (there are other versions for multi-rate and different payment methods) .

So the second cap covers both SC and kWh but does not explicitly limit the kWh charges, only the total of the two.