Campaign to ban Standing Charges

dunstonh

So, given that standing charges are justifiable, then is it fair that in my massive house in the middle of the countryside I pay the same as someone in a terraced house in a town? 
There are as many metres of cable feeding just our house as there are in some streets.  Surely those poor townies are subsidising this rich person?

In any business, there are elements of cross-subsidy.    
A rural property would have longer routes of cabling and most of it will be above ground.   However, that makes it easier to repair than city locations where roads may have to be closed and dug up.  Cities also tend to have multiple circuits to properties, whereas in the countryside, there is often just one.

The cost of supply is factored into the equation at the regional level.

My point, in case it's too subtle for some, is that there isn't any correlation between the standing charge and that household's fixed costs anyway, and it definitely isn't fair.

The cost is calculated and shared equally by everyone in that region.  That is far cheaper than paying for analysis of every property in a region and working out individual costs.    

[Deleted User]

wittynamegoeshere said:

So, given that standing charges are justifiable, then is it fair that in my massive house in the middle of the countryside I pay the same as someone in a terraced house in a town?  There are as many metres of cable feeding just our house as there are in some streets.  Surely those poor townies are subsidising this rich person?

My point, in case it's too subtle for some, is that there isn't any correlation between the standing charge and that household's fixed costs anyway, and it definitely isn't fair.

And that correlation is precisely why London has cheaper standing charges than Northern Scotland or Devon/Cornwall.

[Deleted User]

Hi,

jings, why do people not understand that for gas/electricity/water/ phone/broadband, there must be a supply system to get it to your front door, so that's why you pay a standing charge.

[Deleted User]

I remain to be convinced that anyone can come up with a system that treats all energy consumers fairly. We have friends of our age that have been on BG’s SVT for decades. Is in fair that they should be required to contribute towards SoLR costs or failed supplier consumer credit protection as part of their standing charge? They didn’t elect to follow MSE’s advice to ‘ditch and switch’ to the cheapest supplier: many of whom no longer exist.

As an aside, if you recall Ofgem had a cunning plan to force these reluctant switchers onto cheaper tariffs. I guess that may now be in the shredder.

Standing charges may appear to be unfair, but I always worry when those proposing a change tend to be those who see themselves as benefitting the most.

jrawle

wittynamegoeshere said:

This is one of those internet debates that's a bit pointless really.  Anyone can point out any issue with anything if they choose to.

There are pros and cons to either approach, winners and losers, deserving or not.  There are definitely lots of losers with the current system, but that proves nothing.

The judgement is in deciding how many winners or losers there are with each approach and making a decision on what's the best method on balance, and I'm pretty sure that none of us have access to the data that would define how many of each there would be, plus I'm certain that none of us has the authority to decide how it should be done so none of it matters really.

Analogies can be unhelpful at times, it's quite easy to stray so far away from the actual subject that you lose track of the point.

[...]

Up to that point, I thought what an excellent post and a voice of reason. Then for the last two paragraphs, you immediately go back to arguing against standing charges, pretty much contradicting all the things you said in the preamble, continuing the debate, giving an analogy and highlighting how people can currently lose out. Or does it only apply to people arguing to keep standing charges?

This topic comes up again and again on here, and my reply is always the same. Neither a system with nor without standing charges is "fair" or "unfair". As you rightly say, there are winners and losers in both instances. When there was genuinely a competitive retail energy market, some supplies had higher standing charges, while some had higher unit rates (even with zero standing charge). This was pretty much the only thing that distinguished different suppliers (putting aside customer service and gimmicks). Without standing charges, there would be one supplier that was the cheapest, and everyone would go with that one. The issue now is that we no longer have a competitive marketplace, just single prices set by the regulator.

[Deleted User]

jrawle said:

wittynamegoeshere said:

This is one of those internet debates that's a bit pointless really.  Anyone can point out any issue with anything if they choose to.

There are pros and cons to either approach, winners and losers, deserving or not.  There are definitely lots of losers with the current system, but that proves nothing.

The judgement is in deciding how many winners or losers there are with each approach and making a decision on what's the best method on balance, and I'm pretty sure that none of us have access to the data that would define how many of each there would be, plus I'm certain that none of us has the authority to decide how it should be done so none of it matters really.

Analogies can be unhelpful at times, it's quite easy to stray so far away from the actual subject that you lose track of the point.

[...]

Up to that point, I thought what an excellent post and a voice of reason. Then for the last two paragraphs, you immediately go back to arguing against standing charges, pretty much contradicting all the things you said in the preamble, continuing the debate, giving an analogy and highlighting how people can currently lose out. Or does it only apply to people arguing to keep standing charges?

This topic comes up again and again on here, and my reply is always the same. Neither a system with nor without standing charges is "fair" or "unfair". As you rightly say, there are winners and losers in both instances. When there was genuinely a competitive retail energy market, some supplies had higher standing charges, while some had higher unit rates (even with zero standing charge). This was pretty much the only thing that distinguished different suppliers (putting aside customer service and gimmicks). Without standing charges, there would be one supplier that was the cheapest, and everyone would go with that one. The issue now is that we no longer have a competitive marketplace, just single prices set by the regulator.

The supplier that had a no standing charge tariff found that its model no longer worked. All suppliers incur costs that have to be recovered. Many consumers whose homes have PV would love to have a zero standing charge supplier that they could switch to for 6 months.

ariarnia

jrawle said:
 The issue now is that we no longer have a competitive marketplace, just single prices set by the regulator.

hopefully it won't be too long before we do again.

i think you make an important point thats sometimes missed though. i'm against reduction of choice more than i'm pro standing charge. standing charges are a for a thing. they're not 'profit'. maintenance has to be paid for. but in 'normal' times people can choose to go for a supplier who includes the cost in the unit fee (having a lower or 0 standing charge)

but those dont tend to be the cheapest per unit. some people seem to want same the old cheap deals and options but without the standing charge. but you can't just take away the charge and expect the unit rates to stay as low as without the standing charge being included somewhere.

this way (at least when the end times are over and we have an energy market again) it means its up to the individual if a low or 0 standing charge tariff with a higher unit rate is right for them or not depending on their annual usage. sorry for the analogies again but a taxi costs more per mile than driving your own car but all the costs are included for each trip so for someone who only goes a few miles a year a taxi is cheaper than the cost of maintaining and taxing your own car. but everyone would kick off big time if road tax was abolished but all fuel was then charged per mile at the same rate as taxi trips. 

MattMattMattUK

wittynamegoeshere said:

MattMattMattUK said:

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 overhead from the item cost.  This is how almost every business outside of the energy cartel works.

Tesco do not supply directly to your home as part of the base cost, you either pay additionally for delivery, or you go and get it yourself. 

Utterly irrelevant.  Every business has fixed and variable costs, whether they do or don't deliver to your house makes no difference.

You don't get to claim something is irrelevant just because you don't like it, that is irrational. Tesco do not maintain a network wired/plumbed directly to you home, therefore you are not required to pay them a standing charge. If you do not want to pay a standing charge for energy you can disconnect yourself from the network and have your power delivered by other means. 

The standing charge and the unit rate were decided to be the "fairest" method, everyone who is connected to the network pays for the network, they then pay for the energy they use separately. I get it, there are a lot of people on here who want the standing charge abolished so that "someone else" pays for it, that is a fundamental selfish position.

SAC2334

When I sts

Chrysalis

GingerTim said:

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. 

Not 100% sure, but I think its only regulated that heavily on the SVR, Tariffs like Agile have a significantly cheaper SC.

To me the SC feels weird, primarily for two reasons, it doesnt fit with how other services are sold in other sectors, and it feels like (especially for people connected to gas who use little gas) akin to a protection racket.  At the very least they need to get rid of the regional variance, but preferably I would like to see these costs absorbed into unit costs to further encourage lighter use and to encourage more efficiency instead of "oh we just up the SC to pay for this stuff".  When I moved to Agile in the summer I had an increase of about 8p on my unit rates, but ended up slightly better off even then due to the SC reduction, thats a sign SC has simply got too big as a proportion of bills.