Campaign to ban Standing Charges

Neil_EngUK

Why doesn't MSE campaign to abolish energy Standing Charges?

I understand the excuses the gas and electric companies use, but they are just swizzing their customers out of even more money.

Energy companies should include their costs with their commodity prices, like honest reputable traders.

Standing charges also inhibit the savings incentive to curb energy use and reduce emissions.

[Deleted User]

You clearly don't understand the concept if you are suggesting that they are "excuses" and "swizzing their customers".

Would you suggest that petrol and diesel suppliers include the cost of road building in their prices?

pfpf

no thanks. everyone is struggling and each individual has their own preferences/ideals. scrapping SC and upping the unit rate would wipe us out, as it may come April anyway.

Astria

You do know that the energy companies don't decide on the cost of the standing charge, don't you?

GingerTim

OFGEM sets the standing charge. Energy suppliers don't get to keep it, let alone make a profit on it.

https://www.ofgem.gov.uk/information-consumers/energy-advice-households/check-if-energy-price-cap-affects-you

Standing charges are a daily fixed amount we pay suppliers for our gas and electric. It varies by region due to the different costs to transport power to where we live.

The charge pays for costs that are fixed for a supplier on a per customer basis. This includes service administration fees, connections to and maintenance of the energy network and government schemes to help reduce carbon emissions and fuel poverty. 

This is a difficult time in the energy market, with volatile prices to buy energy on the wholesale market affecting all our bills. 

While the rates we pay for standing charges and the units of energy we use are commercial decisions for suppliers, if you're on a default energy tariff  - your supplier's standard variable offer - Ofgem sets a cap on your rates. This is to make sure what consumers are charged is a fair reflection of supply costs and no more than absolutely necessary. And if costs fall, you see this passed on in your charges from suppliers.

Suppliers can decide how they structure their standing charges within the cap Ofgem sets, as long as the overall tariff structure does not lead to default tariff customers paying above the relevant cap level.

We're working around the clock to make sure the cap fairly reflects the global situation.

The cap increase this October reflects a number of factors:

• The wholesale price for gas this winter has more than doubled since the last price cap announcement in February. From around 197p/therm at the start of February to 556p/therm in mid-August. An increase of over 180%.   
• The wholesale price for electricity for delivery this winter has more than tripled over the same time. From around £188/MWh at the start of February to £618/MWh in mid-August. An increase of 235%.
• When an energy supplier exits the market, these costs are split across the standing charge and unit rate you pay for each unit of energy used. The global rises we’re seeing in gas prices mean this is a very challenging time and quite a few suppliers have left the market. 

dunstonh

Why doesn't MSE campaign to abolish energy Standing Charges?

Because it would increase the unit price and would be unfair.

I understand the excuses the gas and electric companies use, but they are just swizzing their customers out of even more money.

You would only come to that opinion if you didnt know how the pricing works and what it is for

CanNeverThinkOfAUsername

Oh no no, please do not ban standing charges. I would only pay more per unit to cover all the costs that the standing charge covers & would prob be worse off!!!

wittynamegoeshere

I do understand the reasoning for standing charges.  However, it would be beneficial if they were removed and the equivalent amount loaded onto unit rates.  Then lower users (usually poor) would pay less, and heavy users (big houses or don't care about the environment) would pay more.

Seems fair to me.  Plus it would make billing vastly more transparent if the unit rate is the one variable, then you could actually compare on price without a computer and some meaningful competition might emerge one day.

Tesco charges per item.  They don't charge a fixed fee to cover the cost of the building and staff costs when you walk in the door, they cover this overhead from the item cost.  This is how almost every business outside of the energy cartel works.

[Deleted User]

wittynamegoeshere said:

Tesco charges per item.  They don't charge a fixed fee to cover the cost of the building and staff costs when you walk in the door, they cover this cost from the item cost.  This is how almost every business outside of the energy cartel works.

Tesco either own or rent the building, and the cost for this doesn't change depending on footfall.  That is the big difference.

pochase

You mean the poor users with their second  or third homes?

ariarnia

it would be good if it would be possible to not pay the standing charge for vacant properties if someone is in hospital or if probate is taking a long time and the services arent being used at all. like the council tax grace period. discomnection and reconnection is expensive and not really an option. but that will only be a very small number of people each year. i would also hope that we have more tariffs in the future that are 0 standing charge. then people can decide for themselves if they are better off with higher unit rates and no charge (very low users) or paying the charge. but thats also not going to happen until theres some competition again so 2 years plus.