How to get Ofgem to set energy standing charges to zero?

MattMattMattUK

facade said:

Rather like the comment I read from an unknown Government spokesperson along the lines of "If we reduce the VAT on gas it will encourage people to use more"  I would suggest that most people won't use more gas simply because it is cheaper, but because they are cold and can afford to use a bit more if it is less expensive....

There is some truth in what they say, when energy is more expensive then people turn the thermostat down and heat their homes for fewer hours. Almost no one (some people with medical conditions) needs to keep their home at 22c, yet with low energy prices many would, with higher prices they would opt for 16-18c which is absolutely fine for most.

savers_united

Many forget the hidden service charge with BB as well which is the line rental, even if you never make any calls you still pay the charge somewhere. 
The reason they all charge is that it all needs maintaining / improving regardless of how much you use the service. 

I remember a conversation with a guy a few summers back, he was there watering his lawn and had a sprinkler on in the background and we got onto conversation regarding service charges and he mentioned that he was being charged during the summer whilst using next to nothing gas and went along the lines it should be scrapped as he was a low user year round. 

I said that's a great idea they should do the same for water as well and those who use the most should pay higher service charges, unsurprisingly he did not want to entertain that one. 

QrizB

wrf12345 said:

I got the wholesale electric rate via google search so be interested to hear what it actually is if that info is misleading.

@wrf12345 the answer to this question is at the link I posted. Here are a few points from it.

• Wholesale price today - £193.57/MWh (19.357p/kWh)
• Average price this week - £204.02/MWh (20.402p/kWh)
• Average this month - £182.80/MWh (18.280p/kWh)

And here's a screenshot of monthly average prices. You'll see the last time the monthly average was below £70/MWh / 7p/kWh was April 2021.

Uxb1

savers_united said:

Your suggestion of zero standing charge is only beneficial for low users which I assume you are, but what you are doing is passing the cost of maintaining the network and other costs onto higher users, A gas customer using 24000kw per annum would pay 3x the amount towards maintaining the network, green levies, meters, social funds etc than someone using 8000kw per annum with zero standing charge. But don't really see why that should be the case when we should all be sharing those fixed costs. If you use more energy you should pay more, which you do but to lump the addtional fixed networks costs onto these higher users seems very unfair. 

Appreciate this is an energy forum but why stop there, why not charge per mile you drive, those people cause more damage to the roads and more pollution, but often pay lower or zero tax than someone only doing a short run to the shops a few times a week.

Well actually I suspect that is the way things WILL be going.
Indeed charges per mile possibly at the beginning linked to the annual MOT mileage declaration and later via some sort of real time monthly rfid type auto charging.
Frequent flyers being charged more for their air ticket:
Larger energy users and indeed users at peak hours being charged more via real time variable rate pricing via smart meters. If energy becomes short in supply then the profligate users of it should expect to be rationed by excessive pricing to avoid the lower users being subject to electric cutouts for a hours at a time.
Maybe even the concept of an annual persons carbon limit - you want more than that fine but you will pay a premium for it with those who don't exceed their limit able to sell their carbon credits to those who want to heat their swimming pool in winter

wrf12345

Just to add, people with new PV installations are being charged for their use of the grid because they are lucky to get 5p kwh, 16p disappearing into ether - be a huge boost for the country if new installations were offered 18p kwh, the new smart meters able to read and credit such exported electricity so consumers would have credit during the summer to use for electric heating in the winter. Some countries let the smart meter run backwards so they are fully credited, BTW.

We have had decades of being ripped off by energy companies so if they are suffering and going bust it is tough s..., ofgem should use the occasion to cane them and let the govn take over for free. National Grid and the actual meters are not owned by the suppliers and with smart meters there should be ways of running the system without the top heavy energy companies, the current system having failed the consumer on nearly all levels.

And, just to emphasize the uselessness of Ofgem, prepayment meters - used mostly by the poor - still charge the standing charge so if you turn the gas off for six to eight months when you load up again there is no gas until you have paid off the accumulated standing charge, circa £40-60. An absolute disgrace.

bagand96

wrf12345 said:

And, just to emphasize the uselessness of Ofgem, prepayment meters - used mostly by the poor - still charge the standing charge so if you turn the gas off for six to eight months when you load up again there is no gas until you have paid off the accumulated standing charge, circa £40-60. An absolute disgrace.

But you pay a standing charge to have the supply to the property, irrelevant of whether you draw any energy or not.  It's no different on a credit meter you turn the gas off for 6 months you still pay the standing charge.  If you don't wish to have the supply you can have it removed and capped off.  But that won't be worth while if you intend to use it again in the future as there'll be charges.

The system isn't perfect, but no system will be.  Abolishing standing charges sounds great, especially for low users, but we will all pay it another way - that money into the industry would have to be recouped.

Not sure I see the correlation between abolishing standing charges and making people use less energy and be greener.  That's happening already due to the massively increased bills people are already seeing, and will even more so from April.  Many will be taking a really good look at their energy consumption, potentially for the first time.  not convinced reallocating the few pence SC will have any material impact in what's already happening.

QrizB

wrf12345 said:

Just to add, people with new PV installations are being charged for their use of the grid because they are lucky to get 5p kwh, 16p disappearing into ether ...

Octopus Outgoing Agile has been paying over 15p/kWh during daylight hours for the past week, and double-digit averages for the last year. Switch to Octopus and you can enjoy those sorts of returns too.

https://www.energy-stats.uk/octopus-agile-outgoing-export-southern-england-2/

QrizB

bagand96 said:

The system isn't perfect, but no system will be.  Abolishing standing charges sounds great, especially for low users, but we will all pay it another way - that money into the industry would have to be recouped.

Agreed, and there are rarely simple solutions to complex problems.

MattMattMattUK

wrf12345 said:

We have had decades of being ripped off by energy companies so if they are suffering and going bust it is tough s..., ofgem should use the occasion to cane them and let the govn take over for free. National Grid and the actual meters are not owned by the suppliers and with smart meters there should be ways of running the system without the top heavy energy companies, the current system having failed the consumer on nearly all levels.

We have not been "ripped off" by energy companies, the average profit per user, per fuel, over the last decade has been less than £30 per year, their profit is of negligible cost to the individual users.

wrf12345 said:

And, just to emphasize the uselessness of Ofgem, prepayment meters - used mostly by the poor - still charge the standing charge so if you turn the gas off for six to eight months when you load up again there is no gas until you have paid off the accumulated standing charge, circa £40-60.

Those meters still charge a standing charge because the service provision is still there, if people do not want to pay the standing charge then they can get their gas supply capped off, no gas connection, no gas standing charge, fairly simple.

wrf12345 said:

An absolute disgrace.

You seem to use emotive language as if it proves your point, it does not. If you do not understand something then the best path of action is to educate yourself, not get angry. 

Grizzlebeard

QrizB said:

wrf12345 said:

Currently, setting standing charges to zero would add approx 15 percent to the tariff rates for gas and elect but removing the daily charge of 50p (for gas and electric) would be very Green as it would emphasize the benefits of low energy usage rather than penalize it.

How would you prevent very low occupancy properties like holiday homes and second homes being subsidised by everyone else?

..snip..

This is an easy one to answer.

A new Ofgen industry wide rule might mandate a charge for 1kWh(say) of E and/or 2kWh(say) G per day whether used or not.^^^

Another way to describe it would be to say there's a standing charge equivalent to nn pence but you get the first first nn pence worth of energy for free.

All holiday home owners would still pay for the privilege of being connected as they do now via the SC.
Customers who use less than the OFGen "average" could pay less.
Customers at the OFGen "average" would see no change.
Customers who use more than the OFGen "average" would pay more.

The majority of people in fuel poverty have no option but to be low energy users so would see most benefit from this. - unlike a simple cut in VAT.

A complication perhaps is fixed contracts that need to run to term or have exit fees before new rules can be applied to them. (Exit fees should be banned anyway.) However the Standard Capped Variable tariffs should be less problem.

(^^^ Ebico began implementing this with a Minimum Usage Charge on Zero SC, but it got scuppered when Robin Hood was sold to BG. Unfortunately it hasn't been reinstated since they moved to Octopus)