Standing Charges

Ultrasonic

Xbigman said:

If your energy bill is £1000 a year the £400 is worth 40%
If your energy bill is £2000 a year its worth 20%
If £4000 a year its 10%.

Even adjusting for the extra standing charge this year then a low user should not be much worse off than they would have been anyway. A very low user should actually have gained a bit.

I follow your calculations but I don't agree with your conclusion. The value of the support is still £400 to everyone.

That those who are more frugal with their energy use may need less support is a different question. To put it the other way round, why should those who have made less effort to cut energy use get more support? They shouldn't. No, not everyone can reduce energy use to the same extent based on a wide range of factors but nor is personal action irrelevant.

Would I like to see more targeted support? Yes. But whilst the premise is equivalent support to everyone I don't accept that low energy users are gaining more from the current scheme.

MattMattMattUK

I kind of see the point on both sides of the argument on the £400. It has a financial utility of £400 to everyone, but the practical utility is different. Pre-Covid I was taking home around £6.5-7k pcm, whilst I would not have turned down £400 it was not really here or there to me, it was less than half the amount I overpaid my mortgage by every month. During Covid when the government shut everything down I was taking home £1,100-1,400 pcm, £400 was more than my entire discretionary income (although I had savings) so it would represent considerably greater utility. Now business as somewhat recovered £400 is still not to be sniffed at, but the reality is also that not getting it would present me with no hardship. To some people the £400 will be the difference between an awful winter and a bad winter, to some people I know it would barely be a rounding error in their monthly expenditure. 

Ultrasonic

MattMattMattUK said:

I kind of see the point on both sides of the argument on the £400. It has a financial utility of £400 to everyone, but the practical utility is different. Pre-Covid I was taking home around £6.5-7k pcm, whilst I would not have turned down £400 it was not really here or there to me, it was less than half the amount I overpaid my mortgage by every month. During Covid when the government shut everything down I was taking home £1,100-1,400 pcm, £400 was more than my entire discretionary income (although I had savings) so it would represent considerably greater utility. Now business as somewhat recovered £400 is still not to be sniffed at, but the reality is also that not getting it would present me with no hardship. To some people the £400 will be the difference between an awful winter and a bad winter, to some people I know it would barely be a rounding error in their monthly expenditure. 

Yes some will absolutely notice the benefit of £400 far more than others, and as I said I would like to see more targeted help than a blanket £400 to everyone (and I do realise there are targeted elements as well). But I don't think that targeting on the basis of giving more money to those who use more energy would be the way to go. To me this would be the implication of suggesting that low energy users are benefiting more from the £400 than high energy users.

I want to see far more government and other messaging to encourage a reduction in energy use, and would favour tiered energy unit prices over any simple freezing of the price cap for the same reason.

savers_united

With 28mil energy customers each paying £170 per annum SC on the Elec side that is circa £4.7bn being collected through the standing charge.

I guess it would be alot more difficult for Ofgem to balance these numbers by adding to the unit rate. If we have a very cold winter or very warm summer, a large uptake in EVs then there will be more Elec consumption I. E. More money being paid in charges as part of the unit rate. If on the other hand consumption drops for whatever reason then less money than antisipated comes in, so surely the easiest, less admin intensive way etc is work out the various liabilities and split it evenly across all energy users at a time when the majority of customers are now on the SVT. 

bristolleedsfan

savers_united said:

I guess it would be alot more difficult for Ofgem to balance these numbers by adding to the unit rate. If we have a very cold winter or very warm summer, a large uptake in EVs then there will be more Elec consumption I. E. More money being paid in charges as part of the unit rate. If on the other hand consumption drops for whatever reason then less money than antisipated comes in, so surely the easiest, less admin intensive way etc is work out the various liabilities and split it evenly across all energy users at a time when the majority of customers are now on the SVT. 

SOLR costs have been added to gas unit rate..........

Xbigman

Ultrasonic said:

Xbigman said:

If your energy bill is £1000 a year the £400 is worth 40%
If your energy bill is £2000 a year its worth 20%
If £4000 a year its 10%.

Even adjusting for the extra standing charge this year then a low user should not be much worse off than they would have been anyway. A very low user should actually have gained a bit.

I follow your calculations but I don't agree with your conclusion. The value of the support is still £400 to everyone.

That those who are more frugal with their energy use may need less support is a different question. To put it the other way round, why should those who have made less effort to cut energy use get more support? They shouldn't. No, not everyone can reduce energy use to the same extent based on a wide range of factors but nor is personal action irrelevant.

Would I like to see more targeted support? Yes. But whilst the premise is equivalent support to everyone I don't accept that low energy users are gaining more from the current scheme.

In the context of this thread, where the complaint is that the fixed for everyone standing charge is unfair to low users I am merely pointing out that the fixed for everyone £400 rebate is more than fair to low users. In this respect low users are winners who get an extra £310 not losers who have to pay an extra £90 (approx) because £310 is a bigger % of their bill. Possibly saying the £400 was 'worth more' was the wrong way to put it.

I agree with you that the more frugal should not be penalised with less support, or to flip it on its head, I agree with you that high users should not benefit with extra support. High users have the most scope to cut back.
This brings us to targeted support. It is insanity to give people money to keep using something in short supply where the shortage of supply is the driver of higher prices. It will simply drive prices even higher. Money should be given to those who cut back but with some targeted help for the elderly, disabled and benefits claimants. 


Darren

nottsphil

MattMattMattUK said:

That can also be framed as:

Customer A pays £165 pa for their grid connection, associated costs and pays 29.24p per kWh for the energy they use.

Customer B pays £165 pa for their grid connection, associated costs and pays 29.24p per kWh for the energy they use.

Customer C pays £165 pa for their grid connection, associated costs and pays 29.24p per kWh for the energy they use.

A one-off grid connection made when the house was built should be paid for over and over again?!
When you check out at the supermarket you don't expect a standing charge for maintenance of the store, the distribution network, basket /trolley hire and, most relevant of all, the checkout/payment processing/receipt.... and neither does anybody else! 

MattMattMattUK

nottsphil said:

MattMattMattUK said:

That can also be framed as:

Customer A pays £165 pa for their grid connection, associated costs and pays 29.24p per kWh for the energy they use.

Customer B pays £165 pa for their grid connection, associated costs and pays 29.24p per kWh for the energy they use.

Customer C pays £165 pa for their grid connection, associated costs and pays 29.24p per kWh for the energy they use.

A one-off grid connection made when the house was built should be paid for over and over again?!
When you check out at the supermarket you don't expect a standing charge for maintenance of the store, the distribution network, basket /trolley hire and, most relevant of all, the checkout/payment processing/receipt.... and neither does anybody else! 

The supermarket is not a fully integrated network permenantly connected to your home. You either have to go and collect your provisions from the store or pay a delivery charge. 

If you do not want to pay a standing charge then for gas gear LPG tank or bottles, and/or for electricity go off grid. You will find those options far more expensive, but you will not have to pay the standing charge. 

matelodave

Perhaps those who live furthest from the power stations would be more than happy to pay more for their infrastructure than those who live right next door. Charge it by the mile or km you could then pay a bit more or a bit less than the house next door depending on whether you were closer or further away.

Another alternative would be that you pay an insurance fee on a sliding scale, based on distance and difficulty to cover any outages and repairs of the network and those who pay less have to wait longer to get their service restored.

The alternative is that we all pay roughly the same so no one is unfairly disadvantaged by where they live and we all get services maintained or restored as soon as humanly possible despite the location of difficulty in doing it. Just my opinion you understand.

As Matt says, if you dont like it, drop off the grid, get LPG, oil, or gather wood. Install solar panels and put up with the lack of energy when the sun doesn't shine. You could also dig a well for your water and find somewhere to dispose of your effluent to avoid standing charges for water supplies and sewerage.

Tesla6518

What I cannot understand with the SC and the price cap is that you are charged a different rate depending on your method of bill payment, I thought the cap was supposed to limit the price at the maximum the energy companies could charge for unit and standing charge price,. It seems this is not the case and should be explained properly by Ofgem. The energy companies will find any way they can to increase their disproportional profits.