Energy Standing Charges

Eldi_Dos

MattMattMattUK said:

They are not breaking the cap, the cap only applies to the Standard Variable Tariff, the default tariff that all suppliers must offer, if you agree a fix/tracker etc. with your supplier then they can make the standing charge whatever they want and you have the choice whether to choose those tariffs or not. 

I wonder if someone could explain, if the standing charges are not kept and they have no margin in them but they are passed on for the maintenance of system and to cover other responsibilities how can a supplier make a standing charge so variable.

Mstty

Conversely in this argument those least able to afford energy were more likely not on direct debits and were not the people that were affected by having "credit" with an energy supplier.

We benefitted from Symbio going bust and this protection so I can see the arguement both ways. We did take a risk with a smaller supplier because of their cheap electricity.

Conversely the tax we pay has and will in the future pay for the cost of living payments £901, the £400 EBSS and £200 AFP payments to name but a few.

weby72

matt_drummer said:

weby72 said:

A big proportion of the increased standing charges is to pay for the cost of bribing other suppliers to take on the customers of the failed suppliers.

Such is the nefarious 'limited liability' corporate system in this country, the owners of the failed suppliers pocketed their fat profits when the going was good (probably squirrelling them away into 'secrecy jurisdictions'), and let Joe Public pick up the pieces when it all went wrong.

Of course, in the Klondike kulture of pre-2022 electrical supply - encouraged by the spivs and shysters in government - was 'lite-touch' regulation. So, instead of OFGEM doing the obvious and sensible thing of forcing every supplier offering fixed-price tarrifs to hedge their supply prices for the terms of all fixed price deals )I've no love for the big suppliers, but they did at least do hedging), they let the bandits undercut established suppliers (by not having to pay hedging fees) to win market share.

In a fair and just world, the shysters who owned the failed energy supply companies would have every penny and asset they owned stripped from them to help fund the efforts to fix the mess they left in their wake.

But this is a capitalist world, where 'privatise the profit, socialise the risk' is the mantra.

You could also argue that some customers took a risk by moving to these companies to take advantage of cheap deals.

Except those customers took no risk at all as their money was protected, they took all of the rewards with none of the risks.

Those customers who stuck with the established suppliers probably gained less from cheap deals but end up paying some of the cost of protecting the balances of consumers who benefited the most.

Those suppliers were supposed to have been regulated by OFGEM and any reasonable person would have assumed they would have, you know, properly regulated them.

That they weren't forced to hedge their wholesale prices was a rank failure of regulation (but then, the culture in this country is increasingly toward lite-touch regulation, which is just a charter for shysters to have a 'cut & run' approach... see the banks)

MattMattMattUK

weby72 said:

A big proportion of the increased standing charges is to pay for the cost of bribing other suppliers to take on the customers of the failed suppliers.

The majority of the cost of SoLR was protected customer balances, not "bribes" for energy suppliers to take on the defunct suppliers customers. Where those companies were paid to take on customer of defunct suppliers that was because they would have been unable to hedge for customers they did not have at that point, so would need to buy energy on the short trading market and would be required to do so at a loss.

weby72 said:

Such is the nefarious 'limited liability' corporate system in this country, the owners of the failed suppliers pocketed their fat profits when the going was good (probably squirrelling them away into 'secrecy jurisdictions'), and let Joe Public pick up the pieces when it all went wrong.

You clearly do not understand limited liability.

weby72 said:

Of course, in the Klondike kulture of pre-2022 electrical supply - encouraged by the spivs and shysters in government - was 'lite-touch' regulation. So, instead of OFGEM doing the obvious and sensible thing of forcing every supplier offering fixed-price tarrifs to hedge their supply prices for the terms of all fixed price deals )I've no love for the big suppliers, but they did at least do hedging), they let the bandits undercut established suppliers (by not having to pay hedging fees) to win market share.

You misunderstand the energy market, although I suspect you are doing so deliberately in some kind of attempt at ideological or political point scoring. 

weby72 said:

In a fair and just world, the shysters who owned the failed energy supply companies would have every penny and asset they owned stripped from them to help fund the efforts to fix the mess they left in their wake.

Fair and just are subjective, not objective. If you attempt to destroy the lives of everyone who creates a business that fails then all you will end up with is a handful of mega-corporations so big that they cannot fail and that dominate both the economic but also the political space. They would still make losses which would be passed onto consumers, but the costs would be passed on across their entire product spread and they would be bloated, inefficient and with huge margins. 

weby72 said:

But this is a capitalist world, where 'privatise the profit, socialise the risk' is the mantra.

The profit was not privatised though, shareholders lost everything many people lost their jobs, suppliers, wholesalers, everyone from the customer support to the CEO staff lost their jobs. The part that was protected was customer's credit balances, which is something we had as a society, rightly or wrongly, chosen to do. That does not actually matter unless you are a net contributor though as in reality unless you are you are not one of the ones paying for it.

MattMattMattUK

Eldi_Dos said:

MattMattMattUK said:

They are not breaking the cap, the cap only applies to the Standard Variable Tariff, the default tariff that all suppliers must offer, if you agree a fix/tracker etc. with your supplier then they can make the standing charge whatever they want and you have the choice whether to choose those tariffs or not. 

I wonder if someone could explain, if the standing charges are not kept and they have no margin in them but they are passed on for the maintenance of system and to cover other responsibilities how can a supplier make a standing charge so variable.

If they were on a fixed tariff, tracker tariff etc. they they have to hand over the equivalent of the SVT standing charge, as well as social components that are added to unit prices etc. regardless of the customer's usage or billed standing charge. So if the SVT standing charge per customer for electricity is 50p per day, the supplier has to hand over the equivalent of 50p per day for every customer, regardless of if the customer pays 50p, 5p or £5 per day to the supplier. 

wolvoman

weby72 said:

A big proportion of the increased standing charges is to pay for the cost of bribing other suppliers to take on the customers of the failed suppliers.

Such is the nefarious 'limited liability' corporate system in this country, the owners of the failed suppliers pocketed their fat profits when the going was good (probably squirrelling them away into 'secrecy jurisdictions'), and let Joe Public pick up the pieces when it all went wrong.

Of course, in the Klondike kulture of pre-2022 electrical supply - encouraged by the spivs and shysters in government - was 'lite-touch' regulation. So, instead of OFGEM doing the obvious and sensible thing of forcing every supplier offering fixed-price tarrifs to hedge their supply prices for the terms of all fixed price deals )I've no love for the big suppliers, but they did at least do hedging), they let the bandits undercut established suppliers (by not having to pay hedging fees) to win market share.

In a fair and just world, the shysters who owned the failed energy supply companies would have every penny and asset they owned stripped from them to help fund the efforts to fix the mess they left in their wake.

But this is a capitalist world, where 'privatise the profit, socialise the risk' is the mantra.

Your last line is utter nonsense. Many of the energy companies made huge losses in 2020 - they didn't get tax breaks, they had to suck it up.
in 2022/23 when making vast profits, they're forced to pay extra tax via the windfall tax.

In other words, socialised profit, privatised risk - the exact opposite of what you claim.


Edited to add: your point on light regulation around energy suppliers and requirements for hedging is a good one though.
I was Symbio before it failed and, quite frankly, it was too good to be true.

wolvoman

Mstty said:

Conversely in this argument those least able to afford energy were more likely not on direct debits and were not the people that were affected by having "credit" with an energy supplier.

We benefitted from Symbio going bust and this protection so I can see the arguement both ways. We did take a risk with a smaller supplier because of their cheap electricity.

Conversely the tax we pay has and will in the future pay for the cost of living payments £901, the £400 EBSS and £200 AFP payments to name but a few.

I was Symbio too, but actually the risk didn't pay off. Yes I saved for a few months whilst on their ridiculously low tariffs, but I then lost access to a cheap(er) fix all the way through the rising price cap. Had I taken a longer, less discounted fix from a big supplier - I would have been better off in the long run.

EssexHebridean

wolvoman said:

Mstty said:

Conversely in this argument those least able to afford energy were more likely not on direct debits and were not the people that were affected by having "credit" with an energy supplier.

We benefitted from Symbio going bust and this protection so I can see the arguement both ways. We did take a risk with a smaller supplier because of their cheap electricity.

Conversely the tax we pay has and will in the future pay for the cost of living payments £901, the £400 EBSS and £200 AFP payments to name but a few.

I was Symbio too, but actually the risk didn't pay off. Yes I saved for a few months whilst on their ridiculously low tariffs, but I then lost access to a cheap(er) fix all the way through the rising price cap. Had I taken a longer, less discounted fix from a big supplier - I would have been better off in the long run.

Hindsight though - it's a marvellous thing, you know!  

BUFF

weby72 said:

. So, instead of OFGEM doing the obvious and sensible thing of forcing every supplier offering fixed-price tarrifs to hedge their supply prices for the terms of all fixed price deals )I've no love for the big suppliers, but they did at least do hedging), they let the bandits undercut established suppliers (by not having to pay hedging fees) to win market share.

Zog Energy (who were a decent company) sadly went bust despite having hedged.
The supplier (or the parent company thereof) of the shipper that they had hedged with withdrew from the market leaving them high & dry (& also the shipper presumably able to resell the same gas at considerably higher prices than the agreed hedges ... ).

pensionpawn

matt_drummer said:

MikeyPGT said:

Standing charges do unfairly impact low users - my gas standing charge is over 90% of my actual spend and for electricity around a third.  To my mind a fairer option would be to add a small percentage to the unit price so that higher users contribute more.  Also the madness of the National Grid (and the energy companies in general) being in private hands needs to be addressed

I pay an electricity standing charge.

I buy virtually no electricity as I have loads of solar panels and batteries.

I am not rich but had the the resources and the home to be able to do this.

If the standing charge was zero and added to unit rates I would contribute nothing to maintaining the network and you would be paying part of my share of the fixed costs.

Does that sound fair to you?

There are lots of people like me.

Moving standing charges onto unit rates will punish those that can least afford it, people in poorly insulated homes, people at home all day like pensioners, sick people who use more.

Your idea is fatally flawed!

I disagree. I also have panels. We both supply energy to the grid and the DNO factor that into their energy balancing calculations. Do I charge the grid a "standing charge" for the "maintenance" of my network? Before you mention the FiT and export tariff they are payments for generation, i.e. removing (most of) my requirement for import from the grid and hence reducing the need for future grid capacity and the export tariff is a (bargain) deemed payment for the amount, in my case around 2.75 Mwhrs pa, of energy I send to the grid for others to use. If my inverter or micro optimisers fail, it's just me picking up the tab to replace them to continue generating energy for myself and the grid.
A considerable proportion of the excessive increase in standing charge is to pay for failed energy companies who should never have been allowed to commence trading (an Ofgem failing), a levy on every consumer in the country to pay for "green" generation (including our FiT payments) projects and to cover the cost of the "smart" meter roll out, many of which simply do do work.
Please, give me a reason why all energy companies should not be mandated to offer at least one zero standing charge tariff. In my view this offers the consumer increased choice and additional competition in the market place.
I would also like to see net metering tariffs enter the market. Why should the unit value of exported micro generator energy be less than the cost of energy imported from the grid. 1 kWhr powers devices in exactly the same way regardless of where it comes from.