Standing charge increase explanation (and why it doesn't seem to make sense)

MWT

FeaturelessVoid said:

I'm stlll waiting for an answer as to what has happened to the the pot we've been paying into for the last few years, but I suspect I won't get a coherent one.

You've had the answer multiple times, you just don't seem to believe it.

The SoLR Levy is to recover the costs incurred running the SoLR process, it does not anticipate the costs, it recovers them after the event...

gt94sss2

FeaturelessVoid said:

I'm stlll waiting for an answer as to what has happened to the the pot we've been paying into for the last few years, but I suspect I won't get a coherent one.

There is no pot. It's a PAYG system.

Ultrasonic

Marvel1 said:

Shame the standing charge is more for those on a prepayment meter - most are on one for a reason.

I guess the logic here is that it costs more to supply and administer such meters? If the additional cost due to the SOLR process etc were higher for those on prepayment meters that would be wrong but I hope and suspect that it isn't.

Gerry1

Marvel1 said:

Shame the standing charge is more for those on a prepayment meter - most are on one for a reason.

There may have been some justification way back when the meter reader had to collect all the half crowns or whatever (and sometimes the meters had been broken into), but any extra costs to the energy company must be vanishingly small today.  It just exacerbates fuel poverty.

The energy companies are also paid in advance and can earn interest on the money, and by definition it's not possible for a prepayment customer to build up a large debt and then vanish and there's no DD that might bounce.

In any case, any extra costs should be shared between all consumers in the same way that sending a letter from Scilly to Shetland costs no more than one from Mayfair to Marylebone.

MattMattMattUK

Gerry1 said:

Marvel1 said:

Shame the standing charge is more for those on a prepayment meter - most are on one for a reason.

There may have been some justification way back when the meter reader had to collect all the half crowns or whatever (and sometimes the meters had been broken into), but any extra costs to the energy company must be vanishingly small today.  It just exacerbates fuel poverty.

The costs associated with pre pay meters are available on the Ofgem website, the additional charges for prepay are only allowed to cover costs, they cannot profit from them.

Gerry1 said:

The energy companies are also paid in advance and can earn interest on the money, and by definition it's not possible for a prepayment customer to build up a large debt and then vanish and there's no DD that might bounce.

Many people seem to be under the impression that "interest" can be made from prepayments/balance payments on account, the reality is that they don't. It is very difficult to vanish with unpaid debts, debt collection is fairly successful. A bouncing DD does not cost the provider and then they will start debt recovery. 

Gerry1 said:
In any case, any extra costs should be shared between all consumers in the same way that sending a letter from Scilly to Shetland costs no more than one from Mayfair to Marylebone.

Why should it? Stamps are a single price due to ease of operating the system, couriers charge different prices for highlands and islands to reflect the additional cost. 

Ultrasonic

Gerry1 said:

Marvel1 said:

Shame the standing charge is more for those on a prepayment meter - most are on one for a reason.

There may have been some justification way back when the meter reader had to collect all the half crowns or whatever (and sometimes the meters had been broken into), but any extra costs to the energy company must be vanishingly small today.  

I'm not convinced that's true, at least for systems that use 'keys' that have to be taken to shops to top up. If we get to the point it's all done using smart-meters and online top-ups it may be more true but I can still see it will take more to administer.

QrizB

Ultrasonic said:

Marvel1 said:

Shame the standing charge is more for those on a prepayment meter - most are on one for a reason.

I guess the logic here is that it costs more to supply and administer such meters?

That's how Ofgem calculate the cap, yes. See the entry for PAAC on the section 2 tables of the default tariff cap model here.

For electricity there's a £3.84 cost allowance for administering a DD account, £15.43 for a credit account, £27.39 for a prepayment account.

MattMattMattUK

Ultrasonic said:

Gerry1 said:

Marvel1 said:

Shame the standing charge is more for those on a prepayment meter - most are on one for a reason.

There may have been some justification way back when the meter reader had to collect all the half crowns or whatever (and sometimes the meters had been broken into), but any extra costs to the energy company must be vanishingly small today.  

I'm not convinced that's true, at least for systems that use 'keys' that have to be taken to shops to top up. If we get to the point it's all done using smart-meters and online top-ups it may be more true but I can still see it will take more to administer.

If it is online and done by DD or Faster Payments then it will be quite a bit cheaper, but if people are doing their online topup via a card the the cost will likely be 0.7-1.2% of the topup plus probably 5-10p per transaction so even then an increased cost could be justified.

Gerry1

QrizB said:

Ultrasonic said:

Marvel1 said:

Shame the standing charge is more for those on a prepayment meter - most are on one for a reason.

I guess the logic here is that it costs more to supply and administer such meters?

See the entry for PAAC on the section 2 tables of the default tariff cap model here.

For electricity there's a £3.84 cost allowance for administering a DD account, £15.43 for a credit account, £27.39 for a prepayment account.

Couldn't find it, but I rapidly lose the will to live when facing a big list of Ofgem gobbledegook !

I wonder how accurate those costs are for smart meters that merely need a code to be entered?  They're probably still including the costs of installing a coin meter and counting all those half crowns...