Increase in standing charges!

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How is it that the Energy Companies have been allowed to make swingeing increases in the daily standing charges?. This is just grabbing unearned no risk profit. 

Also, we might be led to believe that there is a standard unit rate for gas and electricity across the country. This is not the case. The publicised figure is an average!  Again I ask the question who is devising these complicated routines? 
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  • JoeCrystal
    JoeCrystal Posts: 3,034 Forumite
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    Most of the standing charges was to pay for all these busted suppliers and their credits with new suppliers.
  • [Deleted User]
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    How is it that the Energy Companies have been allowed to make swingeing increases in the daily standing charges?. This is just grabbing unearned no risk profit. 

    Your supplier does not set the standing charge.  OFGEM does.  It doesn't go to your supplier, it pays for all the other stuff.  The last big increase in standing charges was in April and was to cover the credit balances for customers of the bankrupt suppliers (or do you suggest those customers should have lost their money?).

    Also, we might be led to believe that there is a standard unit rate for gas and electricity across the country. This is not the case. The publicised figure is an average!  Again I ask the question who is devising these complicated routines? 
    The headlines might say this.  Nobody else does.  The publicised figure even says "this is an average" so it's not like they are trying to hide anything.

    This has been true for decades - since the old electricity boards existed.  It costs a different amount to buy, transport and supply energy in different parts of the country.
  • Sailbad
    Sailbad Posts: 65 Forumite
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    Ofgem doesn't set the standing charge, it caps it. Suppliers are free to reduce it but they don't of course.

  • [Deleted User]
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    Sailbad said:
    Ofgem doesn't set the standing charge, it caps it. Suppliers are free to reduce it but they don't of course.

    OFGEM sets the components of the standing charge that the suppliers must pay to other parts of the system - in effect this sets the standing charge.

    If suppliers wish to charge less, and make up the money from elsewhere, they can.  This is why there were zero standing charge tariffs and things previously.  

    The way OFGEM now sets the cap does not allow this make up to be done through unit prices so it must come from the supplier’s heavily restricted profit.
  • Spoonie_Turtle
    Spoonie_Turtle Posts: 8,506 Forumite
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    edited 19 October 2022 at 12:49PM
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    Sailbad said:
    Ofgem doesn't set the standing charge, it caps it. Suppliers are free to reduce it but they don't of course.

    Except Octopus, whenever they can (currently 4% discount on the standard Flexible tariff).
  • superkoopauk
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    And Utility Warehouse also (discounted by more if you take more services)
  • Sailbad
    Sailbad Posts: 65 Forumite
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    edited 29 December 2022 at 6:45PM
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    Sailbad said:
    Ofgem doesn't set the standing charge, it caps it. Suppliers are free to reduce it but they don't of course.



    The way OFGEM now sets the cap does not allow this make up to be done through unit prices so it must come from the supplier’s heavily restricted profit.
    Is it not the case that suppliers are free to adjust the standing charge and the unit rate as long as they don't exceed the caps at nil units and the median consumption units (2900 I think for electricity).
    The reason they tend not to reduce standing charge is that they would attract very low use customers and lose big spenders.

  • pochase
    pochase Posts: 3,449 Forumite
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    edited 19 October 2022 at 2:00PM
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    That was what Outfox the Market was doing with their electricity only tariff until last month. Zero standing charge, but higher unit rates.

    They have stopped doing it now, nobody knows if they have been told they cannot do it or for other reasons.

    Users over the 2900KWh were losing out with this construct.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    edited 19 October 2022 at 2:50PM
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    Sailbad said:
    Sailbad said:
    Ofgem doesn't set the standing charge, it caps it. Suppliers are free to reduce it but they don't of course.



    The way OFGEM now sets the cap does not allow this make up to be done through unit prices so it must come from the supplier’s heavily restricted profit.
    Is it not the case that suppliers are free to adjust the standing charge and the unit rate as long as they don't exceed the caps at nil units and the median consumption units (2900 I think for electricity).
    The reason they tend not to reduce standing charge is that they would attract very low use customers and lose big spenders.

    No - as pochase alludes to, it applies to all consumption levels with that same ‘slope’.

     The reason they do not do it is because it is a breach of the licence conditions, not because of a worry about losing the wrong customers.
  • Sailbad
    Sailbad Posts: 65 Forumite
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    I don't agree. There are two caps for each combination of mpan area, payment method etc. One is for max annual bill for nil units and one for 2900 units. There is a table published by Ofgem which shows this. As long as a supplier does not exceed these caps they can set whatever rates they like, but  it is not in their interest to reduce standing charge and increase unit cost to keep within the cap.
    These figures are for elec, gas is similar.


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