Is this misuse of the energy standing Charges

Sachakins

Recently doing the yearly trawl for energy deals, decided its not worth looking as too much uncertainty for fixed prices and 2 to 3 times higher than current monthly bill.

Interesting was doing a comparison of the standing charges, as to quote the mse info
 "...Suppliers say it costs them to provide a service safely, including fixing problems, and this is what the standing charge covers. It includes VAT."

So I understand a variance between suppliers is inevitable, but a variance within supplier dependent on their tariff chosen I think is an unfair manipulation.
Since if the standing charge is as mse guidance notes information indicate, then all tariffs from one supplier should all have the same standing charge.

To me suppliers are unfairly treating their customers, as surely "providing a service safely, including fixing problems, and this is what the standing charge covers" does not vary from customer to customer, 

I see this as actual energy unit price manipulation, by using different standing charges between tarriffs to effect the individual tariff price.

I would like to see MSE take this up as a challenge to the suppliers and to government to force a supplier to have one standing charge fee across all of its tariff offers.

Yes it will vary by suppliers and is expected  but I believe it should not vary within a single supplier.

QrizB

The simplest solution seems to be for MSE to change their misleading description of the standing charge to instead say something like:

"Energy companies are required by Ofgem to set a standing charge. This charge may be zero. The standing charge makes up part of the total cost of your energy."

Phantom151

QrizB said:

The simplest solution seems to be for MSE to change their misleading description of the standing charge to instead say something like:

"Energy companies are required by Ofgem to set a standing charge. This charge may be zero. The standing charge makes up part of the total cost of your energy."

Why is it misleading? Surely the standing is there to cover costs not included in the price of gas/electricity. If not then suppliers could use that to undermine the cap in prices.

QrizB

Phantom151 said:

QrizB said:

The simplest solution seems to be for MSE to change their misleading description of the standing charge to instead say something like:

"Energy companies are required by Ofgem to set a standing charge. This charge may be zero. The standing charge makes up part of the total cost of your energy."

Why is it misleading? Surely the standing is there to cover costs not included in the price of gas/electricity. If not then suppliers could use that to undermine the cap in prices.

If you were to set the standing charge to cover all costs other than the price of gas or electricity, it would be several hundred pounds a year. Not 25p/day, £90/yr per fuel.

The curent Ofgem cap is £1277/yr. Energy costs are only £528(+VAT) of that, say £555/yr. Your standing charges would have to be £722/yr, roughly £1/day/fuel.

Phantom151

My bad, I wasn't aware that the cap included the standing charges. Serves me right for commenting before coffee number 2!

[Deleted User]

It is perhaps worth taking a look at this breakdown of an average electricity bill. Arguably, with the increase in wholesale prices the segment %s will have changed from the date that this pie chart was produced. The chart may change again in the future to cover such things as SoLR payments etc unless there is Government intervention. It is worth bearing in mind that it has long been Governments’ policy to treat all energy costs as a pass through cost to consumers; for example, Ofgem is consulting on adding the cost of getting supplies to public EV charging sites to all our bills, and there is the ongoing cost of the smart meter rollout. Any increase in WHD will be added to social obligation costs and so on.

QrizB

That chart will change considerably in the next cap period; wholesale costs have more than doubled, and will make up more than 50% of the next cap.

FreeBear

Sachakins said: Interesting was doing a comparison of the standing charges,

So I understand a variance between suppliers is inevitable, but a variance within supplier dependent on their tariff chosen I think is an unfair manipulation.

You want to have a look at the standing charges from the same supplier using different estimated annual consumption figures. Quite often, low energy users get lumbered with a higher SC than a high energy user would. As a low energy user myself, I think it sucks.

Phantom151

FreeBear said:

Sachakins said: Interesting was doing a comparison of the standing charges,

So I understand a variance between suppliers is inevitable, but a variance within supplier dependent on their tariff chosen I think is an unfair manipulation.

You want to have a look at the standing charges from the same supplier using different estimated annual consumption figures. Quite often, low energy users get lumbered with a higher SC than a high energy user would. As a low energy user myself, I think it sucks.

It's the same rubbish that means people on pre-payments get charged more too.

MWT

FreeBear said:

Quite often, low energy users get lumbered with a higher SC than a high energy user would. As a low energy user myself, I think it sucks.

That could only happen if the tariff offered to high users was not available to low users or you would just take the same tariff and pay the lower standing charge...

Can you give an example where that is the case?

In normal times there are a variety of tariffs available so you can pick one that suits your level of consumption.

savers_united

Or we just bump up the standing charge to a level that evenly shares the fixed costs of running the network and all the other obligations and leave the unit rate solely to reflect the price of the energy and Vat.

At least then everyone shares the costs that are fixed and makes it easier to relate to the wholesale costs via the unit rate. 

Whether a Low, medium or high users I guess there are certain costs we all must share so stick that in the standing charge, different suppliers will have different operating / admin costs so there will be differences between supplier standing charge based on paper, electronic billing and if the account if managed online etc. 


But the core costs remain the same across all suppliers.