Campaign to ban Standing Charges

bristolleedsfan

Chrysalis said:

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.

You are on 2018 version of Agile tariff, versions of Agile that Octopus launched from late July onwards significantly higher standing charge, 51p per day in South West as an example.

wild666

StocktonFlyer said:

My previous supplier did not have a standing charge... but they did have an annual membership fee.

They went bust, by the way.

OFTM used to have a monthly fee on their electric but nothing on the gas, I don't know if they still have any customers paying a monthly fee I left them in December 2018. I suspect they've put everyone on a SC like other suppliers as the monthly fee was possibly losing them money.

EssexHebridean

For those still thinking “but it’s not FAIIIIR” when it comes to the SC - try thinking of it like a delivery charge. Sure, that tin of beans is 40p on the shelf in the store - but how much is it if you want to get it delivered to your home? Most stores will also not deliver just a single tin of beans, so you might have to also buy many more “units” of beans to hit the minimum price for delivery - not something we have to worry about with our gas and electricity. 

It makes me smile sometimes that many of the same people complaining about SCs think nothing of paying a couple of £ a week to get their shopping delivered! 

wild666

18.6p was added to the SC for failed suppliers and recovery of money that was used to put those from failed suppliers to be able to get back any credit they had with the failed supplier plus the administrator's costs. 

I just wonder when this 18.6p will be removed from the SC, if ever, will the suppliers that are left and OFGEM keep the 18.6p on the SC thus keeping the electric SC high.
OFGEM claim it cost billions but just how many billions if it's £2 billion the 18.6p then the £67.89  yearly charge is nearly £2 billion per year if there are 28,000,000 homes paying the daily 18.6p it should be stopped by Jan 2023 at the latest. 

pochase

That is the reason that they should be removed in April.

If you check the Auxilione forecasts they remove them also in April.

Question is just what will happen with the ongoing loss from Bulb customers, way beyond the 2 billion mark and adding every day as they cannot hatch. There was talk this loss will also be recovered through standing charges and this might add years of high standing charges.

MattMattMattUK

wild666 said:

18.6p was added to the SC for failed suppliers and recovery of money that was used to put those from failed suppliers to be able to get back any credit they had with the failed supplier plus the administrator's costs. 

That is part of the SoLR process and is fully documented. 

wild666 said:

I just wonder when this 18.6p will be removed from the SC, if ever, will the suppliers that are left and OFGEM keep the 18.6p on the SC thus keeping the electric SC high.

It will be removed in time, originally it was expected to be April 2023, but that is ignoring the £4-6 billion cost of Bulb going into administration which is currently directly funded by the government, but may be added going forward. It cannot be kept forever based on the current rules OFGEM operate under as they specify what the Standing Charge consists of.

wild666 said:

OFGEM claim it cost billions but just how many billions if it's £2 billion the 18.6p then the £67.89  yearly charge is nearly £2 billion per year if there are 28,000,000 homes paying the daily 18.6p it should be stopped by Jan 2023 at the latest. 

The cost of all suppliers who went bust excluding Blub stood at £2.48 billion, it was expected that the costs of SoLR on the standing charge would be removed in the new price cap (not EPG) prices which go live in April 2023. What happens will depend on the successor program to the EPG, as well as if the costs of Bulb are added and if the pricing methodology is changed.

QrizB

pochase said:

That is the reason that they should be removed in April.
If you check the Auxilione forecasts they remove them also in April.

I'm sure Ofgem said we'd be paying for last year's failures for two years, not one. So don't go expecting a big reduction in standing charges in April 2023, no matter what Auxilione might forecast.

ariarnia

Chrysalis said:

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.

i think the standing charge is the standing charge. for all users on all tariffs. the company have to pay it. the difference between the standard tariff (with the cap) and other tariffs is how the company gets the money. if the charge is 5p and unit cost is 10p then as long as they make at least 15p from you they can afford to pay the charge to the government and networks. thats why pre cap you would see fixes and variable rates with higher or lower balance between the two elements (or four elements on duel fuel) and it was up to you to work out which was the best for you. with the cap that doesn't really work as the discount/cap is only on the unit cost to suppliers could reduce the sc but can't up the unit cost to balance it. 

for the rest. adding it to the unit cost would work out better for low users but most users would be worse off. and the poorest dont tend to be low users because of old appliances or boilers or health issues or whatever. and the regional variation is because it costs a lot more to provide electric to 5 people in a field in the middle of wales or top end of scotland than to 500 in the same sized area in the middle of a city. its supposed to be more 'fair'. 

ariarnia

QrizB said:

pochase said:

That is the reason that they should be removed in April.
If you check the Auxilione forecasts they remove them also in April.

I'm sure Ofgem said we'd be paying for last year's failures for two years, not one. So don't go expecting a big reduction in standing charges in April 2023, no matter what Auxilione might forecast.

now they also might have to cover the cost of the cap as well? it/the governemnt hasn't decided yet i dont think how thats going to be paid for. 

SAC2334

There are still a couple of zero standing charge tariffs around with Ebico Zero Green Fixed and Utilita Smart Energy .
MSE have a comparison in Cheap Energy Club but they advise to filter by annual usage not monthly and only in kwhs .
Low users benefit but the kwh rate is higher for the first block of units .
This is how most tariffs worked when I started meter reading in 1998 but most people did nt realise they were still paying the full standing charges via block tariff with the first block of kwh s in any month paid the standing charge