Smarter ways of billing for energy use

TooMuchEnergy

It may be an old idea, but could Energy Companies charge for units at amounts that increase as more units are used? Re-starting the price from a low base each quarter, then increasing over the quarter with each unit consumed?

This would automatically help the less well-off, as their bills would be lower than with a fixed charge per unit. No government intervention necessary; the help would be targeted naturally.

Of course higher consumers of energy may find themselves paying more, but may be motivated to remove a chunk of energy use to avoid the higher rates. 

So win-win. Everyone uses less energy.

At least this is a measure that pretends to attack the problem. All I see and hear from economists and such-like in the media are different descriptions of the problem. Then they entreat Government to intervene somehow, but do not recommend anything that imaginative.

Does anyone like the idea or have a better one?

molerat

So those that "need" to use more energy pay more than those that don't.  There are many reasons for high energy use.

How does it help the less well off who often live in poorly insulated homes ?

How do you "target" it, you have said everyone has the same billing principle.

The rich who can afford a more energy efficient home and lifestyle will end up paying less.

And targetting often costs more to implement than blanket measures often missing out those in most need as has been seen with the current "targeted" measures.

[Deleted User]

TooMuchEnergy said:

It may be an old idea, but could Energy Companies charge for units at amounts that increase as more units are used? Re-starting the price from a low base each quarter, then increasing over the quarter with each unit consumed?

This would automatically help the less well-off, as their bills would be lower than with a fixed charge per unit. No government intervention necessary; the help would be targeted naturally.

Of course higher consumers of energy may find themselves paying more, but may be motivated to remove a chunk of energy use to avoid the higher rates. 

So win-win. Everyone uses less energy.

At least this is a measure that pretends to attack the problem. All I see and hear from economists and such-like in the media are different descriptions of the problem. Then they entreat Government to intervene somehow, but do not recommend anything that imaginative.

Does anyone like the idea or have a better one?

Sorry - I don’t like your idea at all. Let me explain why.

I have PV solar and I do not import any electricity from early March until late October. If your system was introduced then I would benefit enormously from what is effectively a zero standing charge. I wouldn’t contribute to the costs of running the Grid; pay much towards supplier failures or contribute to other social costs. I am not alone in having PV solar. There are also some very well off people who live in well insulated homes: they would also benefit from your proposed scheme.

The ‘old idea’ was actually the reverse of what you are proposing. We used to pay a high unit rate for a given number of units each quarter, followed by a cheaper rate for the rest. The higher unit cost covered what is now known as the standing charge.

I am also not sure that with a unit price of 50p/kWh, people need any incentive to reduce their energy consumption.

Sorry.

stewie_griffin

We’ve seen a few similar posts to this recently and the assumption seems to be that the less wealthy will also be low users, but this isn’t the case for the reasons given above.

QrizB

TooMuchEnergy said:

It may be an old idea, but could Energy Companies charge for units at amounts that increase as more units are used?

Currently, Ofgem doesn't permit tariffs with multiple rates like that (it was thought to be too confusing for the public). It would need a change to the SLCs.

EssexHebridean

Can you explain how you’d make your idea work for - for example - those  in all electric households where their electric use seems at first glance sky high, until you take account of there being no gas use to add on?

TooMuchEnergy

Just saying that if your consumption is lower, then your bill is less than at a fixed rate per unit. I  feel sure that those with less-insulated homes are still going to manage to reduce their consumption this winter somehow. People are resourceful. 

But thoughtful responses!

Yes I am sure Ofgem don't allow this. Were the approach deemed effective for poorer energy users, the fear of confusing people should not warrant keeping the current way. 

pochase

The other problem, if suddenly the high energy users reduce their usage by 20%, where do you get the money to still subsidise the low energy users.

Why should low energy users even be subsidised? It is not at all clear that they have any problems to pay for their energy, second homes, holiday homes, home with solar panels, people who leave the country for extended times during winter, or just people who have a low usage while have a lot of money. So somebody for example who has cancer and needs the additional heat will subsidise a millionaire?

TooMuchEnergy

I see the point that if you have two fuels into your home, you get the low start rate twice. So I understand the idea is not good-to-go. Still believe that working on a different approach than fixed unit costs has promise though

TooMuchEnergy

Pochase asks where would the money come from to subsidise, if high energy users reduce their usage by 20%? I would hope from lower profits for Energy Companies!

I take the point about the individual cases itemised. The numbers in those categories must be overwhelmed by those who are not though?

Smarter ideas welcome too. Anything better than the 'hope something turns up' offerings I keep seeing

pochase

Lower profits than 1.9%?  And even those 1.9% are under consultation if they should/can be reduced.

Maybe you should get some basic information first.