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

[Deleted User]

wrf12345 said:

If Ofgem can't get a handle of this it needs to be closed down and things handled directly by the govn.

Ofgem is a non-Ministerial Government Department within BEIS. 

wild666

MattMattMattUK said:

wild666 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.

Incidentally, wholesale electric rate is 7p kwh against current cap of 21p so electricity should be coming down not going up.

But how to persuade ofgem - who have the power - to set the standing charge to zero - do they even have the intelligence to see the benefits of it?

I have said for some time the standing charges should be added to the price per kWh. Divide the electric standing charge price by 9, 2.93p, and the gas standing charge by 0.8p. This would add a couple of pence to the price per kWh but benefit low users, but penalise heavy users and make them think of ways to lower their usage of both electric and gas. 

It would mostly benefit people with second homes and holiday lets which are not constantly occupied, it would be negative for anyone who lived in a home year round. 

They could say that second homes will pay a SC no matter how long they are unoccupied and it only reverts to used electric and gas whilst it is occupied and the person has to provide proof of them living there and how long they will be there before a SC is bought into operation again at the property. If there was spot checks on unoccupied second homes where the owner claims to be living there whilst living at another address could then be fined and taken to court on fraud charges.

Grizzlebeard

wild666 said:

MattMattMattUK said:

wild666 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.

Incidentally, wholesale electric rate is 7p kwh against current cap of 21p so electricity should be coming down not going up.

But how to persuade ofgem - who have the power - to set the standing charge to zero - do they even have the intelligence to see the benefits of it?

I have said for some time the standing charges should be added to the price per kWh. Divide the electric standing charge price by 9, 2.93p, and the gas standing charge by 0.8p. This would add a couple of pence to the price per kWh but benefit low users, but penalise heavy users and make them think of ways to lower their usage of both electric and gas. 

It would mostly benefit people with second homes and holiday lets which are not constantly occupied, it would be negative for anyone who lived in a home year round. 

They could say that second homes will pay a SC no matter how long they are unoccupied and it only reverts to used electric and gas whilst it is occupied and the person has to provide proof of them living there and how long they will be there before a SC is bought into operation again at the property. If there was spot checks on unoccupied second homes where the owner claims to be living there whilst living at another address could then be fined and taken to court on fraud charges.

It's easy, as I suggested earlier.

Every household pays a minimum of £5 a month.^^^

If you use zero energy you still pay £5

If you use £4.99 you still pay £5 and grumble under your breath.

If you use £20 then you pay a total of £20.

No extra paperwork.
No inspectors or private detectives.
No "Cheats hotline" and quivering curtains.
No Second Homes being subsidized by other customers..

Call it a Rebateable Standing Charge, call it a Minimum Usage Charge, whatever you like.

^^^Completely made up figure purely for illustration

Sailbad

Spot on, Grizzlebeard. A much fairer system.

Gerry1

wrf12345 said:

I had a free system on a house ten years ago and the Ebico tariff with no standing charges (before the hopeless Ofgem changed the rules and made that impossible), the best quarter I got close to a bill of £10 - happy days!

Ofgem didn't ban No Standing Charge tariffs: I've recently switched my electricity to one, British Gas Zero Fixed Oct 22.

IIRC Ofgem banned the misleading practice used by Ebico and others of promoting a No Standing Charge tariff but quietly clawing it back by surcharging the first few units.  The result was that most users still paid the equivalent of the Standing Charge: only owners of second homes and lock up garages would benefit.  Ofgem specified that there should be a standing charge, but that it could be zero.  IIRC Ebico then switched to a minimum usage amount.  Neither practice seems particularly equitable.

Grizzlebeard

Sailbad said:

Spot on, Grizzlebeard. A much fairer system.

Credit goes to Ebico who were first with this idea.They campaigned for a fairer pricing system and tried to get the authorities interested, but the Industry didn't like it. I believe it was Ebico's efforts that succeeded in negotiating the Zero Standing Charge as legally valid under the mandatory SC requirement.

Grizzlebeard

Gerry1 said:

wrf12345 said:

I had a free system on a house ten years ago and the Ebico tariff with no standing charges (before the hopeless Ofgem changed the rules and made that impossible), the best quarter I got close to a bill of £10 - happy days!

Ofgem didn't ban No Standing Charge tariffs: I've recently switched my electricity to one, British Gas Zero Fixed Oct 22.

IIRC Ofgem banned the misleading practice used by Ebico and others of promoting a No Standing Charge tariff but quietly clawing it back by surcharging the first few units.  The result was that most users still paid the equivalent of the Standing Charge: only owners of second homes and lock up garages would benefit.  Ofgem specified that there should be a standing charge, but that it could be zero.  IIRC Ebico then switched to a minimum usage amount.  Neither practice seems particularly equitable.

I disagree with your analysis Gerry. The practice was never banned and Ebico was quite clear in it's Ts&Cs when it introduced the Minimum Usage Fee for v4 and v5. It was not retro-applied to existing v3 customers.

Very few Ebico users payed any more - only those using less than £1 of energy a week. There was no uproar, no sudden exodus of customers, (zero exit fees anyway), and the only grumbles I ever heard were from people with empty properties and holiday homes.

ALL Ebico users who used more than £1 a week of Electric or Gas saw ABSOLUTELY NO change to their bills.^^

Most EBICO users did NOT PAY A PENNY toward the equivalent of a standing charge!

Customers with empty properties and holiday homes faced a minimum bill of £104 per year if they wanted to sign up to the new fixed term contract.

(^^ Zero v5 minimum usage was £1 a week for Elec and £1 a week for Gas. For Zero v4 the minimum usage had been £1 a week for Elec and £2 a week for Gas)

savers_united

Grizzlebeard said:

savers_united said:

Grizzlebeard said:

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.

That's very true. Everything needs paying for. The only question is is it fair for low energy users to be forced to pay more per kWh than high energy users.

I would suggest a basic level of energy is as important to well being as the NHS is. I've yet to hear anybody say "You've not paying much tax or NI so so I'm going to charge you more for your prescription pills."

All Social and Medical authorities suggest a strong link between poverty and health. Expect a big rise in demand on our Health and Social Services if this energy situation is not equitably resolved.

I am not so sure, in general the elderly, those with illness / medical conditions and those who are renting / poor quality housing will being using a larger percentage of energy. They would be hit hardest by not having SC and Instead having higher unit rates. Its those same people who would be contributing most to the networks upkeep. Yes you will have your large properties but those people can afford to heat their homes anyway and if needed could afford to improve its efficiency, someone renting or in their 70s will unlikely see the benefit of spending thousands upgrading their heating systems, new windows etc. Some unfortunately have little choice but to use higher amounts of energy to keep warm. 

I'm absolutely sure they will be using a larger percentage of their income on energy. That's the definition of fuel poverty. I doubt they will be using a larger percentage of energy per person, whatever that means.

Various Government schemes to help upgrade energy efficiency and housing quality have come and gone. The general opinion is they were a colossal waste of tax payer money with no significant benefits.

Yes true, low income households live in the most energy inefficient housing and that just makes their situation even worse. Please don't tell me that the average someone living on £15k to £25k has a lifestyle that consumes more home energy than somebody on a £60k++ income.

My point was not about fuel poverty although its part of it, its more about as most of us age we tend to feel the cold more mainly due to being less mobile, poor circulation, also certain health conditions mean that cold air can be felt more by people with chest / lung conditions then someone quite fit and healthy. 
Those with an illness, out of work / retired will often spend more time at home. I personally don't think these people should be paying higher costs v someone who can afford to have a super efficient property and all the latest gadgets with the best energy ratings.  If we all just pay the standing charge or a fixed £80 per fuel each year then those using more will still have a higher bill and those using less will pay less, so there is always an incentive to use less energy and turn the thermostat down a degree or 2 especially now with rising prices, I'm just saying that using less energy is not an option for everyone.

And any social funds that are set up to help these people with extra charges are added to everyone else's bill, so one way or another with no standing charge but higher unit rate the fuel grants would need to be increased and everyone's bill goes up as result.

I do think however that the standing charge should be alot clearer about what it covers, so if everyone was charged £80 per fuel per year then it should be broken down to look something like this. 

Green Levies £10

Social Fund £10

Network costs £50

Ofgem charges (SOLR etc) £10

At least then everyone can see that the above costs quite rightly should be evenly shared between every household regardless of usage. 

MWT

savers_united said:

I do think however that the standing charge should be alot clearer about what it covers, so if everyone was charged £80 per fuel per year then it should be broken down to look something like this. 

Green Levies £10

Social Fund £10

Network costs £50

Ofgem charges (SOLR etc) £10

At least then everyone can see that the above costs quite rightly should be evenly shared between every household regardless of usage. 

That level of detail is already available if you want it, from the Ofgem spreadsheet, but there seems to be little appetite for anything more granular than standing charge/kWh from the more discerning users out there, with the majority not getting beyond the "£1277 per year" headline number...

Gerry1

Grizzlebeard said:

Gerry1 said:

IIRC Ofgem banned the misleading practice used by Ebico and others of promoting a No Standing Charge tariff but quietly clawing it back by surcharging the first few units.  The result was that most users still paid the equivalent of the Standing Charge: only owners of second homes and lock up garages would benefit.  Ofgem specified that there should be a standing charge, but that it could be zero.  IIRC Ebico then switched to a minimum usage amount.  Neither practice seems particularly equitable.

I disagree with your analysis Gerry. The practice was never banned and Ebico was quite clear in it's Ts&Cs when it introduced the Minimum Usage Fee for v4 and v5. It was not retro-applied to existing v3 customers.

You seem to have misunderstood what I was saying.  Ofgem did ban 'multi-tier' tariffs, i.e. those where the first few units were charged at a higher rate than the rest.  Several companies had been offering these tariffs, promoting them as 'No Standing Charge', which was misleading because in practice only empty properties or garages were likely to benefit.  If you did the sums all that they had done was to take the existing standing charge and load it on to the kWh rate charged on the first kWh or two each day or the first 90 kWh or so each quarter.  In other words, punters thought that they were getting a cheaper deal but in reality almost everyone paid exactly the same, the surcharges bolted on to the initial units added up to the equivalent of the Standing Charge.

Almost a decade ago Ofgem stated

"All tariffs will have a standing charge and a single unit rate. Suppliers can set the standing charge at zero if they wish and some are doing this. This means that complex two tier tariffs will no longer be allowed."

and

"All tariffs shown as a standing charge and single unit price"

Grizzlebeard said:

Gerry1 said:

Ofgem didn't ban No Standing Charge tariffs: I've recently switched my electricity to one, British Gas Zero Fixed Oct 22.

IIRC Ofgem banned the misleading practice used by Ebico and others of promoting a No Standing Charge tariff but quietly clawing it back by surcharging the first few units.  The result was that most users still paid the equivalent of the Standing Charge: only owners of second homes and lock up garages would benefit.  Ofgem specified that there should be a standing charge, but that it could be zero.  IIRC Ebico then switched to a minimum usage amount.  Neither practice seems particularly equitable.

Ebico was quite clear in it's Ts&Cs when it introduced the Minimum Usage Fee for v4 and v5. It was not retro-applied to existing v3 customers.

Very few Ebico users payed any more - only those using less than £1 of energy a week. There was no uproar, no sudden exodus of customers, (zero exit fees anyway), and the only grumbles I ever heard were from people with empty properties and holiday homes.

ALL Ebico users who used more than £1 a week of Electric or Gas saw ABSOLUTELY NO change to their bills.^^

Most EBICO users did NOT PAY A PENNY toward the equivalent of a standing charge!

Agreed, but I never made any such claims (nor did you accuse me of so doing...)