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

wrf12345

Perhaps the actual compromise would be to remove standing charges on gas only and have a much higher rate to encourage minimal use of central heating and hot water. Then encourage solar/wind by allowing new installs to have the electricity generated fully credited to the householder (already within the tech of smart meters), storing up credit in the summer for use in the winter. With pv panels still falling in price, this would give a nice boost to solar installers, with a much quicker payback for the owner without needing the expense of battery storage or extra geen levies. In turn, all the new solar would see less firing up of gas generator plants, accumulated lower demand perhaps easing the gas price.

MWT

wrf12345 said:

Perhaps the actual compromise would be to remove standing charges on gas only and have a much higher rate to encourage minimal use of central heating and hot water. Then encourage solar/wind by allowing new installs to have the electricity generated fully credited to the householder (already within the tech of smart meters), storing up credit in the summer for use in the winter.

Wind generation is unsuitable for the vast majority of the UK housing stock, and storing up a credit for the winter just adds to the imbalance in winter/summer solar generation, time-shifting the demand like this just leaves you with a generation deficit.

We are still stuck with the base problem that 'encouraging' people to use alternatives to gas through price increases presupposes that there are affordable alternatives that people can decide to use, and right now that simply isn't the case.

Major price increases in gas would just result in more people freezing to death next winter...

MattMattMattUK

MWT said:

jrawle said:

People have vested interests here. Light users want no standing charge, and heavy users want a cheaper unit rate. I'd suggest the solution is a balance between the two. What doesn't make sense is to link the pricing to a breakdown of the supplier's costs, any more than it does for products in the supermarket.

The problem right now is the cap has become the price...

It does make sense to set a cap based on a breakdown of costs, the problem is when the costs are going up so fast that the methodology for the cap lags too far behind and the cap then becomes the price...

This is the problem with the government meddling in the market, they have largely broken it. Interestingly by the end of Q1 this year the energy suppliers are estimated to have lost more than the profit they made in the previous three years, by the end of this year, even with the rise in the price cap the estimate is that they will probably lose another two years profits. Depending on exactly what the government decides to do later this year and next they may well be in a position that the entire profits from the last decade are wiped out in less than two years. 

MattMattMattUK

wrf12345 said:

Perhaps the actual compromise would be to remove standing charges on gas only and have a much higher rate to encourage minimal use of central heating and hot water. Then encourage solar/wind by allowing new installs to have the electricity generated fully credited to the householder (already within the tech of smart meters), storing up credit in the summer for use in the winter. With pv panels still falling in price, this would give a nice boost to solar installers, with a much quicker payback for the owner without needing the expense of battery storage or extra geen levies. In turn, all the new solar would see less firing up of gas generator plants, accumulated lower demand perhaps easing the gas price.

There doesn't need to be a "compromise", there is no rational reason for one.

If the government wanted to encourage solar and wind installation they could start by removing the 20% VAT that they added to the cost in 2017. The problem with encouraging people to load up in summer and then draw down in winter is it does nothing to manage supply issues. In summer we generally have a surplus of energy, people are rarely running their heating, days are lighter for longer so both gas and electricity usage drop significantly. In winter when we need more energy PV generates a lot less, although wind can be higher, but there are almost always issues with installing wind domestically and many of those can not be got around easily. 

Standing charges should cover the cost of network provision, unit charges should cover the cost of the units of energy. 

wrf12345

Latest info suggests that the govn will loan the energy companies money to take £200 off the bills, to be repaid later when rates drop - to be repaid by higher rates? Effectively, s/c's paid by the govn and repaid by high users later on!

60 percent increase in rates with £200 off, means low users at circa £500 will not see an actual increase, so a very Green move to encourage low use.

wrf12345

Too much to hope for, £200 off in Oct then pay back per account £40 over five years.

No breakdown of the new elect or gas kwh rates or s/c's

£150 off council tax but it is going up by 3 percent but better than nothing.

GingerTim

wrf12345 said:

Too much to hope for, £200 off in Oct then pay back per account £40 over five years.

No breakdown of the new elect or gas kwh rates or s/c's

£150 off council tax but it is going up by 3 percent but better than nothing.

It's in the Ofgem press release: https://www.ofgem.gov.uk/publications/price-cap-increase-ps693-april

From 1 April the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 28p per kWh for electricity customers and 7p per kWh for gas customers

And see point 4 for a breakdown of how the network and operating costs are increasing.

wrf12345

So no more dividends and salary cuts for the energy sector?

Astria

28p & 7p will be cheaper than some fixes !

MattMattMattUK

wrf12345 said:

So no more dividends and salary cuts for the energy sector?

The "energy sector" is huge and diverse. The energy providers, the ones that households deal with are losing money, by the end of next year, unless there is a huge drop in wholesale prices they are estimated to have lost more than than they made in profit in the entirety of the last decade. Wages will not be cut as that would breach employees contracts. 

Electricity generators are seeing different results depend on how they produce electricity, with solar, wind and nuclear experiencing increased profits and those generating from gas seeing profits drop or even turn to losses, depending on how much energy they had sold in advance. 

Fossil fuel producers, those who explore for, then extract fossil fuels have slightly increased profits, but they already pay 40% tax on those profits, so a chunk goes to the government, they are majority owned by pension funds, so most of the rest of it goes to pensioners in a roundabout way. 

It would really help if you made at least some attempt to understand the energy industry.