Standing Charge ripoff

joeblack9

so if Northern Power hasn't increased its charges why has my standing charge doubled . Who is getting the extra standing charge money. 

[Deleted User]

It doubled in April - and there were many many threads discussing it then (and ever since).

A lot of it was the SOLR process.

Did you think your standing charge was just Northern Powergrid's charges?

GingerTim

https://forums.moneysavingexpert.com/discussion/6339555/mse-update-why-has-the-standing-charge-for-electricity-nearly-doubled

PaulJ_1960

The reason given by OFGEM for increasing standing charges does not quite stack up. Originally, as I understand it, standing charges were to pay for the cost of running the network and the implementation of "smart meters". However, given the number of smart meters now in use, the energy suppliers must now have saved a small fortune. We have not seen a meter reader in years, this job must be virtually redundant. The infrastructure to get these readings and process all the data is now automated. Why have these savings not been passed on to the customer?

We are with Eon, and they have just informed me of standing charge increase coming in October, therefore this cannot be to support the transition of the bankrupt energy companies, this figure must have been included in previous increases.

In addition, all we here about in the media, is how the energy companies are doing all they can to support their customers, if so, why a standing charge increase at this time? I would think its more about profits!

[Deleted User]

PaulJ_1960 said:

The reason given by OFGEM for increasing standing charges does not quite stack up. Originally, as I understand it, standing charges were to pay for the cost of running the network and the implementation of "smart meters". However, given the number of smart meters now in use, the energy suppliers must now have saved a small fortune. We have not seen a meter reader in years, this job must be virtually redundant. The infrastructure to get these readings and process all the data is now automated. Why have these savings not been passed on to the customer?

We are with Eon, and they have just informed me of standing charge increase coming in October, therefore this cannot be to support the transition of the bankrupt energy companies, this figure must have been included in previous increases.

In addition, all we here about in the media, is how the energy companies are doing all they can to support their customers, if so, why a standing charge increase at this time? I would think its more about profits!

Then you would think incorrectly.

The standing charge is the most heavily regulated component of the entire billing structure.  Even the expenditures on maintenance and upgrades that form part of it must be pre-approved by OFGEM before the projects start.

As you should more correctly understand it, standing charges included payments for running, maintaining, and upgrading the network, the SoLR process, specific policy objectives defined by the government including but not limited to the 'green levies', the administrative costs of each payment method, smart metering costs, charges to ensure sufficient generators are built and available to supply the network....

[Deleted User]

If standing charges were abolished today, unit prices would rise significantly favouring not only low energy users but also the millions of homes with PV solar who use very little Grid energy from March through to September.

PaulJ_1960

There is also another way of looking at the standing charges. If they were abolished and the charge applied to unit prices, then this could\would force energy companies to compete, therefore the customer could drive down unit prices. Difficult to do in the current circumstances, but it won't always be like this.

MWT

PaulJ_1960 said:

There is also another way of looking at the standing charges. If they were abolished and the charge applied to unit prices, then this could\would force energy companies to compete, therefore the customer could drive down unit prices. Difficult to do in the current circumstances, but it won't always be like this.

The standing charges equate to around the cost of 1-2kWh of use a day, there is still plenty of room for competition between suppliers on the kWh charges once we get through the current artificial capped period.

The costs are real, competition doesn't help to eliminate the unavoidable costs, but it can limit profit margin, but as the margin is already tightly controlled under the cap no amount of competition is going to help with that...

Ultrasonic

PaulJ_1960 said:

There is also another way of looking at the standing charges. If they were abolished and the charge applied to unit prices, then this could\would force energy companies to compete, therefore the customer could drive down unit prices. Difficult to do in the current circumstances, but it won't always be like this.

We had competition when there was a standing charge in the past and hopefully we will again in the future. Those on low usage also previously benefitted from the competition-lead variations between standing charges between customers.

I see no competition related argument in favour of abolishing standing charges.

molerat

Before the current situation standing charges were often set at below cost, those costs to the supplier were still there but simply absorbed into the overall customer charge.