Energy Costs Standing Charge

NJB1234

My provider 'Outfox the Market', who in the past have offered a good service and competitive rates, have just released their new tariff from April 22 and sadly this introduces a substantial standing charge for both gas and electric.  This works against the environment as it doesn't reward efforts to reduce consumption and minimises any savings due reduced demand in spring/summer period. 
Surely OFGEM needs to look at ways to eliminate the standing charge mechanism so as to encourage and reward reduced consumption.

[Deleted User]

Hi,

do you mean remove the sc and bump up the unit prices?

QrizB

Welcome to the forum.

There are dozens of other posts from people complaining about standing charges, including this one from only a few minutes before you asked.

The cost of providing a supply of gas or electricity to your property is the same, regardless of how much gas or electricity you use.

NJB1234 said:

This works against the environment as it doesn't reward efforts to reduce consumption and minimises any savings due reduced demand in spring/summer period.

Under the October 2021 Ofgem cap, you were paying 4p/kWh for gas and 21p/kWh for electric. Under the April one, you will be paying 7p/kWh for gas and 28p/kWh for electric.

Unless they've changed maths since I was at school, 7 is more than 4 and 28 is more than 21. Reducing usage will reward you more from April to October than it did from October to April.

Surely OFGEM needs to look at ways to eliminate the standing charge mechanism so as to encourage and reward reduced consumption.

The cap on standing charges is set by Ofgem. The increase has been decided by  Ofgem. Ofgem appear to be entirely comfortable with standing charges.

Astria

Surely with the government pushing for people to drive more electric cars, the energy consumption is only going to increase, not decrease. It won't be long until the SC is increased again to upgrade the grid to allow more capacity for charging electric vehicles.

NJB1234

[Deleted User] said:

Hi,

do you mean remove the sc and bump up the unit prices?

Yes, that way the focus is on actual consumption and any reduction achieved through better insulation and turning off lights etc get maximum reward. 

NJB1234

Welcome to the forum.

There are dozens of other posts from people complaining about standing charges, including this one from only a few minutes before you asked.

The cost of providing a supply of gas or electricity to your property is the same, regardless of how much gas or electricity you use.

NJB1234 said:

This works against the environment as it doesn't reward efforts to reduce consumption and minimises any savings due reduced demand in spring/summer period.

Under the October 2021 Ofgem cap, you were paying 4p/kWh for gas and 21p/kWh for electric. Under the April one, you will be paying 7p/kWh for gas and 28p/kWh for electric.

Unless they've changed maths since I was at school, 7 is more than 4 and 28 is more than 21. Reducing usage will reward you more from April to October than it did from October to April.

Surely OFGEM needs to look at ways to eliminate the standing charge mechanism so as to encourage and reward reduced consumption.

The cap on standing charges is set by Ofgem. The increase has been decided by  Ofgem. Ofgem appear to be entirely comfortable with standing charges.

My point is that the OFGEM cap should set as a maximum unit charge and there should be no specific SC these costs should be rolled into the unit charges. That way efforts to reduce consumption and thereby help 'save the planet' and keep you own energy costs as low as possible get maximum pay back. 

NJB1234

Astria said:

Surely with the government pushing for people to drive more electric cars, the energy consumption is only going to increase, not decrease. It won't be long until the SC is increased again to upgrade the grid to allow more capacity for charging electric vehicles.

But if you go the whole way and don't have a car at all you will be unreasonably penalised if you have to pay an increased  service charge that finances a grid upgrade to facilitate car charging.  

QrizB

NJB1234 said:

My point is that the OFGEM cap should set as a maximum unit charge and there should be no specific SC these costs should be rolled into the unit charges. That way efforts to reduce consumption and thereby help 'save the planet' and keep you own energy costs as low as possible get maximum pay back. 

That's an opinion and you're entitled to hold it.

Edit: I've looked at the numbers. If the standing charge was zero, for the April cap:

• The gas unit price would increase from about 7.3p to 7.8p;
• The electricity unit price would increase from about 28p to 31p

Do you really think those changes will significantly improve efforts to reduce consumption?

savers_united

There have been many of these "Why are standing charge so high" posts recently, but those posting seem to miss the main reason for the standing charge and seem to use rewarding those who cut their usage to justify scrapping the charge.

It's simple that no matter what the unit or standing charge, the more energy you use the more you pay. So higher users get a higher bill. So there is always an incentive to cut energy to save money, scrapping a standing charge will at most add a penny to gas and maybe 2p to Elec unit rate, with the recent increases that is not really going to change habits.

The standing charge is not some evil charge to ensure that low users are hit with a fixed amount, its a charge that when worked and applied correctly covers the infrastructure and associated services and liabilities / levies to get energy to your property, that is regardless if you use 5000 or 50000kwh, have 2 or 200miles of pipes and cables to your property.

If you use 5000kwh or 50000kwh per annum you still get the option of a smart meter fitted & connected to the the communication network, if there is a storm you still get the same service to restore you supply and level of compensation.

So in the world of energy there are fixed costs regardless of the amount energy you use, without a standing charge you would be passing the majority of these costs onto higher users via the unit rate. Its been standing charges that have brought us greener energy, helped insulate houses, pays for the social energy fund, again don't really see why a higher users should be paying the bulk of these costs. 

In fact in other industries / sectors its the lower users who pay higher charges such as delivery and free to those who spend over x amount. 

smileguy

Perhaps the new increased standing charges are to pay for all the new cables that are getting laid around the coast to connect up new wind farms  to the grid 🤷‍♂️.

Peggy0628

I don't know about others but in my case on some days, the standing charge for gas is more than the actual cost of gas used. I have GCH, gas cooker/oven and a combi boiler. There are days when I only use gas to heat water for my shower and that costs less than the daily standing charge... Removing the SC and raising the unit price would actually save me (and others will low gas usage) quite a bit of money in the long term...