Time to ditch the standing charge?

Nails101

The standing charge is inherently unfair since each household pays the same no matter how much electricity is used. In my case the SC increased by 80% whereas the unit price increased by 38% so my SC is now over a third of my bill! I believe it is time to abolish the SC and move the cost into the unit price. That way those who use less than average electricity and are struggling to pay will pay a little less and those who use more than average will pay a little more. Seems fair to me, after all, when you fill up your car do the petrol companies impose a surcharge when you go to the till to pay for their refineries and the cost of delivering fuel to the petrol station? No, it is all factored in to the pump price. Simple. 
I also feel it unfair that all consumers end up paying for the failed electricity companies but this is a government decision, imposed by OFGEM and not the fault of the remaining energy providers.

QrizB

Welcome to the forum.

Nails101 said:

The standing charge is inherently unfair since each household pays the same no matter how much electricity is used.

On the contrary, what could be fairer than every household paying the same?
It's not as though it costs less to provide a connection, a meter, billing etc. for a light user compared to a heavy one.

pochase

Or why should heavy users pay more to cover the cost of SOLR, which is responsible for the biggest part of the increase.

Also a high use of energy does not imply that the person can better afford higher cost. You will see here on the board lots of people who need for example a warmer house due to ill health, without being able to afford it.

bristolleedsfan

pochase said:

Or why should heavy users pay more to cover the cost of SOLR, which is responsible for the biggest part of the increase.

Why are some electricity customers paying towards cost of SOLR and others not.

Separate SOLR recoup levy should have been added to all electricity bills so that everyone paid including those on long term fixed rates.

O/P whilst it will not help or change anything I agree with you 

MWT

bristolleedsfan said:

Why are some electricity customers paying towards cost of SOLR and others not.

Separate SOLR recoup levy should have been added to all electricity bills so that everyone paid including those on long term fixed rates.

The energy supplier is paying the additional SoLR costs, they get billed for them regardless of the tariff the customer is on.

Most fixed tariff T&Cs do have a clause allowing them to bill extra for newly imposed charges like the upcoming 'loan not a loan' repayments, so they will probably get hit with those, but changes in existing charges/levies just hit the bottom line for the suppliers. 

wakeupalarm

It's becoming more and more a poll tax with no account taken of customers ability to pay for an essential utility.

Look at telecoms, you don't see the huge increase in costs of moving everyone to fibre loaded on to standing charges.
But with energy not only the maintenance of the cables and pipes, but the failure of energy companies, green efficiency costs, and everything else is loaded onto standing charges.

Imagine if the cost of the financial crisis was paid for by making everyone with a bank account pay a monthly fee to have a bank account whether they had ££50,000 in savings or were in debt.

Or everyone who was furloughed during the Covid19 lockdown was made to pay for it with a fixed amount of tax added to everyone who was working whether they were on £12,000 or £100,000.

Imagine if Morrisons collapsed and all other supermarket customers were passed on the costs with a flat rate entrance fee to enter the store.

Some flat rate costs that everyone pays may be justified, but the costs of energy company failures and the credit balance protection of SOLR should not have been passed on to customers as a flat rate charge added via standing charges.

The system is totally flawed and OFGEM and the Government have been sitting on their hands doing SFA about it.

bristolleedsfan

MWT said:

bristolleedsfan said:

Why are some electricity customers paying towards cost of SOLR and others not.

Separate SOLR recoup levy should have been added to all electricity bills so that everyone paid including those on long term fixed rates.

The energy supplier is paying the additional SoLR costs, they get billed for them regardless of the tariff the customer is on.

Most fixed tariff T&Cs do have a clause allowing them to bill extra for newly imposed charges like the upcoming 'loan not a loan' repayments, so they will probably get hit with those, but changes in existing charges/levies just hit the bottom line for the suppliers. 

Have I got any of this wrong, when only some electricity customers pay the extra SOLR costs for reasons I gave in earlier post the more those who are paying it will end up paying.

Cardew

Nails101 said:

The standing charge is inherently unfair since each household pays the same no matter how much electricity is used. In my case the SC increased by 80% whereas the unit price increased by 38% so my SC is now over a third of my bill! I believe it is time to abolish the SC and move the cost into the unit price. That way those who use less than average electricity and are struggling to pay will pay a little less and those who use more than average will pay a little more. Seems fair to me, after all, when you fill up your car do the petrol companies impose a surcharge when you go to the till to pay for their refineries and the cost of delivering fuel to the petrol station? No, it is all factored in to the pump price. Simple. 
I also feel it unfair that all consumers end up paying for the failed electricity companies but this is a government decision, imposed by OFGEM and not the fault of the remaining energy providers.

Welcome to the forum.

I have several holiday homes(I wish that I rent out for a few weeks each year,  with myself paying the gas/electricity bills, so your suggestion would increase my profits!!

Seriously. the overheads to supply and maintain connections to properties are the same regardless of consumption.

 

QrizB

wakeupalarm said:

Look at telecoms, you don't see the huge increase in costs of moving everyone to fibre loaded on to standing charges.

Are you sure about that? A few years back (within the past decade) my landline & broadband was under £12/month, now it's £17.

bristolleedsfan said:

Have I got any of this wrong, when only some electricity customers pay the extra SOLR costs for reasons I gave in earlier post the more those who are paying it will end up paying.

Yes you've got it wrong.

• Customers on variable rates will see higher standing charges.
• Customers joining new fixed rates will see higher standing charges.
• Customers with existing fixed rates may see higher standing charges if their contract allows the supplier to pass on increases, but otherwise their share of the SoLR costs will be paid by their suppliers.

It could be argued that energy companies will simply make up the revenue by increaing their other tariffs, but they can't increase the variable rate (it's up against the cap already) so their only option is to increase their new fixed rates (which hardly anyone will be signing up to).

MattMattMattUK

wakeupalarm said:

It's becoming more and more a poll tax with no account taken of customers ability to pay for an essential utility.

Look at telecoms, you don't see the huge increase in costs of moving everyone to fibre loaded on to standing charges.

There has been a fairly substantial rise in the cost of telecoms costs, this has been to cover the cost of the network. 

wakeupalarm said:

But with energy not only the maintenance of the cables and pipes, but the failure of energy companies, green efficiency costs, and everything else is loaded onto standing charges.

The cost of the network costs and SoLR is on the standing charge so that it generates the correct amount of revenue to cover the cost, if it was on the unit cost then it would be variable. Everyone benefits from the network, green and SoLR so the standing charge makes sense. The one that should perhaps be removed is the social component as not everyone benefits from that, but then it would need to be funded from general taxation so it makes little difference overall.

wakeupalarm said:

Imagine if the cost of the financial crisis was paid for by making everyone with a bank account pay a monthly fee to have a bank account whether they had ££50,000 in savings or were in debt.

It does depend what you mean by the cost, the headline figures that most people like to quote are not accurate, in reality most of the nominal cost quoted was actually the government guarantees put in place, which were not needed and in the QE, which was also borrowing it. What cost there was, was funded from general taxation as well as a banking levy, so some was on higher rate taxpayers and other parts on the industry itself, which would have ultimately passed costs on to customers.

wakeupalarm said:

Or everyone who was furloughed during the Covid19 lockdown was made to pay for it with a fixed amount of tax added to everyone who was working whether they were on £12,000 or £100,000.

That would probably appear particularly unjust due to the caps in place on CJRS/SEISS, with higher earners getting a lower percentage or nothing at all. However this is also a false comparison as no one was a direct consumer and also because the point of CJRS and SEISS was to avert economic collapse, something which we all benefitted from.

wakeupalarm said:

Imagine if Morrisons collapsed and all other supermarket customers were passed on the costs with a flat rate entrance fee to enter the store.

Morrisons does not provide a direct connection to your home, neither do any of the other supermarkets. 

wakeupalarm said:

Some flat rate costs that everyone pays may be justified, but the costs of energy company failures and the credit balance protection of SOLR should not have been passed on to customers as a flat rate charge added via standing charges.

It was customers that benefitted from it, in theory as we are all equally protected by SoLR it makes sense to charge everyone, adding it to the standing charge probably makes the most sense, especially when compared to adding it to the unit rate. 

wakeupalarm said:

The system is totally flawed and OFGEM and the Government have been sitting on their hands doing SFA about it.

The system is not idea, but it is far from "totally flawed" and they are not doing nothing about it, but it would appear they are not giving you the subsidised energy you seem to wish they did. 

Astria

Ok, lets roll it into the unit charge, the first 25 kWh/month will cost you £1, with a minimum charge per month of £20. Additional kWh will cost 30p.

I'm sure we've done that before and people were confused about it, unable to compare tariffs easily, and demanded it be separated to make things easier.