Cap include unit and standing charge?

Sharash

With the increase in gas and electricity does the cap include cost for standing charge?  Comparatively the unit price increase is minor vs already ridiculous standing charge - This has doubled!  That can’t be right?  If infrastructure already in place does it cost x2 to push it down the pipe?  

molerat

https://forums.moneysavingexpert.com/discussion/6339555/mse-update-why-is-the-standing-charge-for-electricity-nearly-doubling-from-1-april#latest

QrizB

Welcome to the forum.

This is explained in a sticky post at the top of the forum page:
https://forums.moneysavingexpert.com/discussion/6339555/mse-update-why-is-the-standing-charge-for-electricity-nearly-doubling-from-1-april

Sharash

OFGEM should be embarrassed about their response on reasons for standing charge hikes.  None of that makes any sense or justifies the huge rise.  Moving customers was because everything crashed due to already challenged services.  How much does it cost to add someone to a database.  It’s a crock. 

daveyjp

Sharash said:

OFGEM should be embarrassed about their response on reasons for standing charge hikes.  None of that makes any sense or justifies the huge rise.  Moving customers was because everything crashed due to already challenged services.  How much does it cost to add someone to a database.  It’s a crock. 

It doesn't cost much to add to a database, but what usually happens when a business goes bust is anyone they owe money to can generally whistle for it.

With utilities the customer gets back any credit and this has to be paid for.  Where should it come from if the company no longer exists?  The only way can be a levy on all customers to act as an insurance in the event of failure.  Unfortunately the system was overwhelmed and the insurance pot is empty so it needs filling again.

Ultrasonic

Sharash said:

OFGEM should be embarrassed about their response on reasons for standing charge hikes.  None of that makes any sense or justifies the huge rise.  Moving customers was because everything crashed due to already challenged services.  How much does it cost to add someone to a database.  It’s a crock. 

That's ignoring the bigger reason that costs were incurred by companies accepting customers from failed suppliers: they were forced to sell energy for less than it cost them to buy due to the limit of the price cap.

Chrysalis

Sharash said:

OFGEM should be embarrassed about their response on reasons for standing charge hikes.  None of that makes any sense or justifies the huge rise.  Moving customers was because everything crashed due to already challenged services.  How much does it cost to add someone to a database.  It’s a crock. 

The core issue is the fixed direct debit system, on this system most accounts are in credit in autumn (when most went bust), and the credit balances are preserved, so transferred to new companies.  These losses are socialised, so everyone has to pay them back, the increase in standing fees are to get this money back spread across every customer. Burden generally biggest on single adult households and other low users.

Two obvious solutions moving forward.

1 - Make Variable direct debit in arrears default payment method, some people would probably choose to stay on fixed so this would only reduce the problem.

2 - Make credit balances stored in an intermediate government agency so protected from the risk of companies doing a titanic.