Will standing charges increase in April 23?

GingerTim

diystarter7 said:

diystarter7 said:

Hi OP

I often search for MSE articles as they are often easier to read and very accurates

Quote from link below may give us an idea

How standing charges work

Standing charges are a fixed daily rate that you pay for having an electricity and/or gas connection to cover the cost of supplying energy. Under the energy price cap, Ofgem is using standing charges to recover the costs of the huge number of energy firms that went bust last year – a total of £1 billion this year.

About £68 of the typical £1,971 a year bill under the current price cap is for supplier failures, while other costs, such as increases in fixed network costs (the cost of maintaining energy networks) and policy costs (such as green levies and the rise in the warm home discount rebate) also contributed to higher standing charges.

Currently, electricity standing charges are 45.34p per day for electricity and 27.22p per day for gas.

What does Ofgem say?

An Ofgem spokesperson said: "We looked long and hard at whether moving the costs from standing charges to usage was the right thing to do, but the numbers just didn't stack up."Our analysis shows it would disproportionately negatively affect some of the most vulnerable consumers who use high amounts of energy and are least able to reduce their use, such as those with disabilities and the elderly, while resulting in minimal savings for those it would benefit – around just £1 a month."While this was specifically in relation to recovering supplier of last resort costs, we will continue to keep standing charges under review and consult widely on any possible future changes."
https://www.moneysavingexpert.com/news/2022/08/ofgem-rules-out-shifting-the-costs-of-supplier-failure-out-of-th/


Thanks

Hi

A bit more research re SC's

Though all are guessing, reading the link below 
is in my estimation pointing to them rising. It makes sense for suppliers I
guess as hard-pushed customers cut back usage, the standing charges continue
to earn the suppliers revenues.



Quote from link below

EDF told the Observer that the daily fee was influenced by factors outside its control, including differing costs in the 14 regional networks. “The standing charge is not there for suppliers to profit from, but to cover the fixed costs suppliers incur, which have risen by over 86% in the last year,” it says.

Energy regulator Ofgem says “average” standing charges are capped at 46p a day. In fact, suppliers are free to set their own sum, as long as it does not exceed the energy price cap when combined with the price per unit of energy.

https://www.theguardian.com/money/2023/feb/06/fixed-price-energy-customers-face-bill-shock-as-standing-charges-soar

As noted avove in responses to MikeJXE, energy suppliers do not and cannot earn revenues from standing charges - and as the EDF spokesperson quoted in your article also rightly points out.

diystarter7

GingerTim said:

diystarter7 said:

diystarter7 said:

Hi OP

I often search for MSE articles as they are often easier to read and very accurates

Quote from link below may give us an idea

How standing charges work

Standing charges are a fixed daily rate that you pay for having an electricity and/or gas connection to cover the cost of supplying energy. Under the energy price cap, Ofgem is using standing charges to recover the costs of the huge number of energy firms that went bust last year – a total of £1 billion this year.

About £68 of the typical £1,971 a year bill under the current price cap is for supplier failures, while other costs, such as increases in fixed network costs (the cost of maintaining energy networks) and policy costs (such as green levies and the rise in the warm home discount rebate) also contributed to higher standing charges.

Currently, electricity standing charges are 45.34p per day for electricity and 27.22p per day for gas.

What does Ofgem say?

An Ofgem spokesperson said: "We looked long and hard at whether moving the costs from standing charges to usage was the right thing to do, but the numbers just didn't stack up."Our analysis shows it would disproportionately negatively affect some of the most vulnerable consumers who use high amounts of energy and are least able to reduce their use, such as those with disabilities and the elderly, while resulting in minimal savings for those it would benefit – around just £1 a month."While this was specifically in relation to recovering supplier of last resort costs, we will continue to keep standing charges under review and consult widely on any possible future changes."
https://www.moneysavingexpert.com/news/2022/08/ofgem-rules-out-shifting-the-costs-of-supplier-failure-out-of-th/


Thanks

Hi

A bit more research re SC's

Though all are guessing, reading the link below 
is in my estimation pointing to them rising. It makes sense for suppliers I
guess as hard-pushed customers cut back usage, the standing charges continue
to earn the suppliers revenues.



Quote from link below

EDF told the Observer that the daily fee was influenced by factors outside its control, including differing costs in the 14 regional networks. “The standing charge is not there for suppliers to profit from, but to cover the fixed costs suppliers incur, which have risen by over 86% in the last year,” it says.

Energy regulator Ofgem says “average” standing charges are capped at 46p a day. In fact, suppliers are free to set their own sum, as long as it does not exceed the energy price cap when combined with the price per unit of energy.

https://www.theguardian.com/money/2023/feb/06/fixed-price-energy-customers-face-bill-shock-as-standing-charges-soar

As noted avove in responses to MikeJXE, energy suppliers do not and cannot earn revenues from standing charges - and as the EDF spokesperson quoted in your article also rightly points out.

Hence why I quoted as where is the evidence it is solely for that purpose? Is it ring-fenced and if so how?

EssexHebridean

Dolor said:

EssexHebridean said:

Dolor said:

MikeJXE said:

macman said:

MikeJXE said:

Mstty said:

MikeJXE said:

IMO yes as it's the only way energy companies can get more out of you when you are using less. 

It's.not set by the energy companies.

As far as I can remember I have always paid a standing charge, I keep being told it's for the infrastructure 

So are you saying thats not true the government takes it all. ? 

The energy companies (by which in this instance I assume you mean the retail suppliers) neither own nor maintain the supply network. That is done by National Grid, and the regional DNO's. SSE and SP also have some share in the ownership of the electricity grid.
You need to distinguish between the wholesale suppliers, distributors, and retail suppliers, as they are totally separate companies doing totally separate functions.
Just referring to 'energy companies' as one amorphous profiteering mass is extremely misleading.
He didn't say 'the gov't takes it all'. He said that the s/c level is determined by the regulator.

It seems to me only I answered the question from the OP

will standing charges increase from their current levels ?

I do know what the standing charge is I have been told many many times  but thats irrelevant to the question. 

Everyone else seems to have got sidetracked by my answer explaining what the standing charge is instead of sticking to the post. 

Perhaps it should be renamed Government levy or tax or whatever is appropriate so that users are not confused and will know exactly what they are paying for.

Does this government want to be more transparent ? I think not 

It is not a Government tax per se. The standing charge covers the cost of getting energy to your home AND the cost of Government energy support schemes PLUS the cost of failed suppliers.

The Government could have chosen to bin the Consumer Levy which would have left millions of consumers out of pocket as their credit balances would have realised pennies for every pound.

The ongoing argument about adding a hydrogen levy to the standing charge is that it would be a hidden Net Zero tax.

There are already aspects of the current SC that are related to Net Zero, no? Is the Hydrogen thing going to be buried in with those, or a specific item on its own? (Apologies if this has been mentioned and I missed it!) 

Make of this what you will.

Why do we need a levy and what will be the impact on consumer bills?

The purpose of the levy is to provide long-term funding for the hydrogen business model, which will enable hydrogen producers to overcome the operating cost gap between low carbon hydrogen and fossil fuels.

The levy is not expected to be implemented until 2025 (subject to legislation being in place) and so we do not expect it to have impacts on consumer bills before then. Once introduced, we expect its impacts will ramp up as we look to deliver our 2030 hydrogen ambitions to improve energy security. As policy development on the levy is ongoing, with a number of key decisions still pending, there is uncertainty regarding the precise impact of the levy on consumer bills.

Source: Gov.uk

So what do we think. Finish clearing the SOLR debt, the Bulb situation then leaves the SC with an uplift, and when that finishes the Hydrogen levy means we STILL have the uplifted charge?

Come to think of it - heaven help us when we have to start explaining that one to people as well, as seemingly there aren’t enough words of one syllable to make clear that the SC is NOT a revenue earner for suppliers! 

Edit for typo. 

MikeJXE

GingerTim said:

diystarter7 said:

diystarter7 said:

Hi OP

I often search for MSE articles as they are often easier to read and very accurates

Quote from link below may give us an idea

How standing charges work

Standing charges are a fixed daily rate that you pay for having an electricity and/or gas connection to cover the cost of supplying energy. Under the energy price cap, Ofgem is using standing charges to recover the costs of the huge number of energy firms that went bust last year – a total of £1 billion this year.

About £68 of the typical £1,971 a year bill under the current price cap is for supplier failures, while other costs, such as increases in fixed network costs (the cost of maintaining energy networks) and policy costs (such as green levies and the rise in the warm home discount rebate) also contributed to higher standing charges.

Currently, electricity standing charges are 45.34p per day for electricity and 27.22p per day for gas.

What does Ofgem say?

An Ofgem spokesperson said: "We looked long and hard at whether moving the costs from standing charges to usage was the right thing to do, but the numbers just didn't stack up."Our analysis shows it would disproportionately negatively affect some of the most vulnerable consumers who use high amounts of energy and are least able to reduce their use, such as those with disabilities and the elderly, while resulting in minimal savings for those it would benefit – around just £1 a month."While this was specifically in relation to recovering supplier of last resort costs, we will continue to keep standing charges under review and consult widely on any possible future changes."
https://www.moneysavingexpert.com/news/2022/08/ofgem-rules-out-shifting-the-costs-of-supplier-failure-out-of-th/


Thanks

Hi

A bit more research re SC's

Though all are guessing, reading the link below 
is in my estimation pointing to them rising. It makes sense for suppliers I
guess as hard-pushed customers cut back usage, the standing charges continue
to earn the suppliers revenues.



Quote from link below

EDF told the Observer that the daily fee was influenced by factors outside its control, including differing costs in the 14 regional networks. “The standing charge is not there for suppliers to profit from, but to cover the fixed costs suppliers incur, which have risen by over 86% in the last year,” it says.

Energy regulator Ofgem says “average” standing charges are capped at 46p a day. In fact, suppliers are free to set their own sum, as long as it does not exceed the energy price cap when combined with the price per unit of energy.

https://www.theguardian.com/money/2023/feb/06/fixed-price-energy-customers-face-bill-shock-as-standing-charges-soar

As noted avove in responses to MikeJXE, energy suppliers do not and cannot earn revenues from standing charges - and as the EDF spokesperson quoted in your article also rightly points out.

Thank you for the name dropping 

I still maintain my answer to the question will SC increase ?

IMO yes 

Eventually when everyone who doesn't have a shed  load of money cuts their use even more a way will be found to get them to pay more for less

GingerTim

MikeJXE said:

GingerTim said:

diystarter7 said:

diystarter7 said:

Hi OP

I often search for MSE articles as they are often easier to read and very accurates

Quote from link below may give us an idea

How standing charges work

Standing charges are a fixed daily rate that you pay for having an electricity and/or gas connection to cover the cost of supplying energy. Under the energy price cap, Ofgem is using standing charges to recover the costs of the huge number of energy firms that went bust last year – a total of £1 billion this year.

About £68 of the typical £1,971 a year bill under the current price cap is for supplier failures, while other costs, such as increases in fixed network costs (the cost of maintaining energy networks) and policy costs (such as green levies and the rise in the warm home discount rebate) also contributed to higher standing charges.

Currently, electricity standing charges are 45.34p per day for electricity and 27.22p per day for gas.

What does Ofgem say?

An Ofgem spokesperson said: "We looked long and hard at whether moving the costs from standing charges to usage was the right thing to do, but the numbers just didn't stack up."Our analysis shows it would disproportionately negatively affect some of the most vulnerable consumers who use high amounts of energy and are least able to reduce their use, such as those with disabilities and the elderly, while resulting in minimal savings for those it would benefit – around just £1 a month."While this was specifically in relation to recovering supplier of last resort costs, we will continue to keep standing charges under review and consult widely on any possible future changes."
https://www.moneysavingexpert.com/news/2022/08/ofgem-rules-out-shifting-the-costs-of-supplier-failure-out-of-th/


Thanks

Hi

A bit more research re SC's

Though all are guessing, reading the link below 
is in my estimation pointing to them rising. It makes sense for suppliers I
guess as hard-pushed customers cut back usage, the standing charges continue
to earn the suppliers revenues.



Quote from link below

EDF told the Observer that the daily fee was influenced by factors outside its control, including differing costs in the 14 regional networks. “The standing charge is not there for suppliers to profit from, but to cover the fixed costs suppliers incur, which have risen by over 86% in the last year,” it says.

Energy regulator Ofgem says “average” standing charges are capped at 46p a day. In fact, suppliers are free to set their own sum, as long as it does not exceed the energy price cap when combined with the price per unit of energy.

https://www.theguardian.com/money/2023/feb/06/fixed-price-energy-customers-face-bill-shock-as-standing-charges-soar

As noted avove in responses to MikeJXE, energy suppliers do not and cannot earn revenues from standing charges - and as the EDF spokesperson quoted in your article also rightly points out.

Thank you for the name dropping 

I still maintain my answer to the question will SC increase ?

IMO yes 

Eventually when everyone who doesn't have a shed  load of money cuts their use even more a way will be found to get them to pay more for less

It may well increase - but it won't be for the reason of energy suppliers making a profit.

diystarter7

MikeJXE said:

GingerTim said:

diystarter7 said:

diystarter7 said:

Hi OP

I often search for MSE articles as they are often easier to read and very accurates

Quote from link below may give us an idea

How standing charges work

Standing charges are a fixed daily rate that you pay for having an electricity and/or gas connection to cover the cost of supplying energy. Under the energy price cap, Ofgem is using standing charges to recover the costs of the huge number of energy firms that went bust last year – a total of £1 billion this year.

About £68 of the typical £1,971 a year bill under the current price cap is for supplier failures, while other costs, such as increases in fixed network costs (the cost of maintaining energy networks) and policy costs (such as green levies and the rise in the warm home discount rebate) also contributed to higher standing charges.

Currently, electricity standing charges are 45.34p per day for electricity and 27.22p per day for gas.

What does Ofgem say?

An Ofgem spokesperson said: "We looked long and hard at whether moving the costs from standing charges to usage was the right thing to do, but the numbers just didn't stack up."Our analysis shows it would disproportionately negatively affect some of the most vulnerable consumers who use high amounts of energy and are least able to reduce their use, such as those with disabilities and the elderly, while resulting in minimal savings for those it would benefit – around just £1 a month."While this was specifically in relation to recovering supplier of last resort costs, we will continue to keep standing charges under review and consult widely on any possible future changes."
https://www.moneysavingexpert.com/news/2022/08/ofgem-rules-out-shifting-the-costs-of-supplier-failure-out-of-th/


Thanks

Hi

A bit more research re SC's

Though all are guessing, reading the link below 
is in my estimation pointing to them rising. It makes sense for suppliers I
guess as hard-pushed customers cut back usage, the standing charges continue
to earn the suppliers revenues.



Quote from link below

EDF told the Observer that the daily fee was influenced by factors outside its control, including differing costs in the 14 regional networks. “The standing charge is not there for suppliers to profit from, but to cover the fixed costs suppliers incur, which have risen by over 86% in the last year,” it says.

Energy regulator Ofgem says “average” standing charges are capped at 46p a day. In fact, suppliers are free to set their own sum, as long as it does not exceed the energy price cap when combined with the price per unit of energy.

https://www.theguardian.com/money/2023/feb/06/fixed-price-energy-customers-face-bill-shock-as-standing-charges-soar

As noted avove in responses to MikeJXE, energy suppliers do not and cannot earn revenues from standing charges - and as the EDF spokesperson quoted in your article also rightly points out.

Thank you for the name dropping 

I still maintain my answer to the question will SC increase ?

IMO yes 

Eventually when everyone who doesn't have a shed  load of money cuts their use even more a way will be found to get them to pay more for less

Hi 
and

@GingerTim

And as I said, the SC's and EDF comments that the poster refers to, where is the evidence that SC's money is only used to support/build on infractursce. Also asked   if the money is for SC's is ring-fenced. 

If it is, then I will accept that but I'm pretty certain its not right-fenced.

However, I have had many questions thrown at me  and I answer them/respond but then get nothing back

Thanks

EssexHebridean

MikeJXE said:

GingerTim said:

diystarter7 said:

diystarter7 said:

Hi OP

I often search for MSE articles as they are often easier to read and very accurates

Quote from link below may give us an idea

How standing charges work

Standing charges are a fixed daily rate that you pay for having an electricity and/or gas connection to cover the cost of supplying energy. Under the energy price cap, Ofgem is using standing charges to recover the costs of the huge number of energy firms that went bust last year – a total of £1 billion this year.

About £68 of the typical £1,971 a year bill under the current price cap is for supplier failures, while other costs, such as increases in fixed network costs (the cost of maintaining energy networks) and policy costs (such as green levies and the rise in the warm home discount rebate) also contributed to higher standing charges.

Currently, electricity standing charges are 45.34p per day for electricity and 27.22p per day for gas.

What does Ofgem say?

An Ofgem spokesperson said: "We looked long and hard at whether moving the costs from standing charges to usage was the right thing to do, but the numbers just didn't stack up."Our analysis shows it would disproportionately negatively affect some of the most vulnerable consumers who use high amounts of energy and are least able to reduce their use, such as those with disabilities and the elderly, while resulting in minimal savings for those it would benefit – around just £1 a month."While this was specifically in relation to recovering supplier of last resort costs, we will continue to keep standing charges under review and consult widely on any possible future changes."
https://www.moneysavingexpert.com/news/2022/08/ofgem-rules-out-shifting-the-costs-of-supplier-failure-out-of-th/


Thanks

Hi

A bit more research re SC's

Though all are guessing, reading the link below 
is in my estimation pointing to them rising. It makes sense for suppliers I
guess as hard-pushed customers cut back usage, the standing charges continue
to earn the suppliers revenues.



Quote from link below

EDF told the Observer that the daily fee was influenced by factors outside its control, including differing costs in the 14 regional networks. “The standing charge is not there for suppliers to profit from, but to cover the fixed costs suppliers incur, which have risen by over 86% in the last year,” it says.

Energy regulator Ofgem says “average” standing charges are capped at 46p a day. In fact, suppliers are free to set their own sum, as long as it does not exceed the energy price cap when combined with the price per unit of energy.

https://www.theguardian.com/money/2023/feb/06/fixed-price-energy-customers-face-bill-shock-as-standing-charges-soar

As noted avove in responses to MikeJXE, energy suppliers do not and cannot earn revenues from standing charges - and as the EDF spokesperson quoted in your article also rightly points out.

Thank you for the name dropping 

I still maintain my answer to the question will SC increase ?

IMO yes 

Eventually when everyone who doesn't have a shed  load of money cuts their use even more a way will be found to get them to pay more for less

Nobody is saying that you are wrong that the SC is likely to rise - in fact most of us are in agreement that we think it likely, I believe! What we are trying to explain though is that it cannot rise to enable a profit to be made for the suppliers, as the SC doesn’t work in that way. If the cap/EPG was not in place then they would be able to increase the unit rates - where they CAN currently make up to 2% profit, but right now that would lose them an awful lot of customers, too! 

The suppliers are not responsible for setting the SC - they have  no say in what it will be. 

ariarnia

pensionpawn said:

Dolor said:

MikeJXE said:

Mstty said:

MikeJXE said:

IMO yes as it's the only way energy companies can get more out of you when you are using less. 

It's.not set by the energy companies.

As far as I can remember I have always paid a standing charge, I keep being told it's for the infrastructure 

So are you saying thats not true the government takes it all. ? 

What is a standing charge?

The standing charge is a fixed amount that you pay on your energy bill every day, regardless of your usage. 

The charge covers those ‘non-energy’ costs that suppliers have to pay on behalf of customers. These include but are not limited to: the costs of using and maintenance of the energy networks (the infrastructure that gets electricity and gas to your home), costs of government support schemes and the costs of carrying out meter readings.

Standing charges are applied to both electricity and gas tariffs. They can also vary slightly by the region of the country you live in.

The energy regulator Ofgem’s rationale for why these costs should be included in the standing charges is to distribute the amounts evenly across everyone. If they were added to the kWh usage costs, it could lead to vulnerable households with high energy costs paying proportionally larger sums.

Source: Good Energy (and many others)

The problem that the Government is having with getting a Hydrogen Levy through Parliament is that it does not benefit any consumer directly. It is a levy to raise money for Hydrogen research and projects.

However in times of old zero standing charge tariffs were available and there is no reason why they shouldn't be available now, co-existing alongside the traditional tariffs, increasing customer choice. No one would be forced onto a tariff that isn't right for them, however some may consider a zero standing charge tariff better for them.

To directly answer the OPs question I only see the SC rising as the continued push for net zero continues and more energy companies go belly up. Who's paying for all the additional infrastructure (not home chargers etc) to migrate all UK vehicles to EVs?

they used to be better for us as we are very low users so the break even point on one of our old tarrifs was 4kwh a day (we average about 3.5 per day over the year). 

i hope that we will see more (by that i mean SOME other than e7) meaningful fixed tarrif choice available if not this year then early next year. 

ariarnia

EssexHebridean said:

Dolor said:

EssexHebridean said:

Dolor said:

MikeJXE said:

macman said:

MikeJXE said:

Mstty said:

MikeJXE said:

IMO yes as it's the only way energy companies can get more out of you when you are using less. 

It's.not set by the energy companies.

As far as I can remember I have always paid a standing charge, I keep being told it's for the infrastructure 

So are you saying thats not true the government takes it all. ? 

The energy companies (by which in this instance I assume you mean the retail suppliers) neither own nor maintain the supply network. That is done by National Grid, and the regional DNO's. SSE and SP also have some share in the ownership of the electricity grid.
You need to distinguish between the wholesale suppliers, distributors, and retail suppliers, as they are totally separate companies doing totally separate functions.
Just referring to 'energy companies' as one amorphous profiteering mass is extremely misleading.
He didn't say 'the gov't takes it all'. He said that the s/c level is determined by the regulator.

It seems to me only I answered the question from the OP

will standing charges increase from their current levels ?

I do know what the standing charge is I have been told many many times  but thats irrelevant to the question. 

Everyone else seems to have got sidetracked by my answer explaining what the standing charge is instead of sticking to the post. 

Perhaps it should be renamed Government levy or tax or whatever is appropriate so that users are not confused and will know exactly what they are paying for.

Does this government want to be more transparent ? I think not 

It is not a Government tax per se. The standing charge covers the cost of getting energy to your home AND the cost of Government energy support schemes PLUS the cost of failed suppliers.

The Government could have chosen to bin the Consumer Levy which would have left millions of consumers out of pocket as their credit balances would have realised pennies for every pound.

The ongoing argument about adding a hydrogen levy to the standing charge is that it would be a hidden Net Zero tax.

There are already aspects of the current SC that are related to Net Zero, no? Is the Hydrogen thing going to be buried in with those, or a specific item on its own? (Apologies if this has been mentioned and I missed it!) 

Make of this what you will.

Why do we need a levy and what will be the impact on consumer bills?

The purpose of the levy is to provide long-term funding for the hydrogen business model, which will enable hydrogen producers to overcome the operating cost gap between low carbon hydrogen and fossil fuels.

The levy is not expected to be implemented until 2025 (subject to legislation being in place) and so we do not expect it to have impacts on consumer bills before then. Once introduced, we expect its impacts will ramp up as we look to deliver our 2030 hydrogen ambitions to improve energy security. As policy development on the levy is ongoing, with a number of key decisions still pending, there is uncertainty regarding the precise impact of the levy on consumer bills.

Source: Gov.uk

So what do we think. Finish clearing the SOLR debt, the Bulb situation then leaves the SC with an uplift, and when that finishes the Hydrogen levy means we STILL have the uplifted charge?

Come to think of it - heaven help us when we have to start explaining that one to people as well, as seemingly there aren’t enough words of one syllable to make clear that the SC is NOT a revenue earlier for suppliers! 

once something has gone up then its easier to keep it at that level (to pay for 'other' things) than to reduce it and pay for taxes. 

people (wrongly) blame energy companies for the standing charge but blame the goverment for tax rates. 

if you were the chanceller which would you prefer

EssexHebridean

I’d love to see the return of zero standing charge tariffs available for gas for sure. Not convinced that ship hasn’t sailed, though.