Martin Lewis: Why are energy standing charges so high? What can be done

matt_drummer

PascalG said:

Sorry, late to the party, but these standing charges need to be scrapped for all and we need a cap on energy, I mean a serious cap.

When I was with Green they had 10p and 15p

When I was with Solarplicity these were my rates

Electric	0.14548
Electricity Standing	0
Gas	0.0348
Gas Standing	0

They did not survive because of the way OFGEM built this market

These energy companies already fooled the Government and OFGEM by getting them to give them between £10bn and £15bn for a project that failed on it's stated benefits from day 1. 

Then the energy companies dumped crappy SMET1 meters on people that stopped communicating if you changed supplier, they said on radio that six million homes have SMET1 meters and they will upgrade them only when the customer makes a big fuss (I am guessing an ombudsman referral).

Then because of mismanagement these energy companies want US to pay because they went bust and failed to keep adequate reserves, yet the shareholders do fine

British Gas profits soar by staggering 889% to record £969m as households struggle with huge bills

https://www.independent.co.uk/news/uk/home-news/british-gas-profits-centrica-energy-bills-b2382758.html

So the country has got into another half a trillion of DEBT bailing out Energy companies, it is that debt that is causing the BOE to increase interest rates and crippling our economy.  

Consider the logic, "we need growth"  and "we need to cool down this economy"

You can't do both at the same time, it will tear us apart by pulling us in two directions at the same time.

It should have been the energy company shareholders who bailed them out or else they should be allowed to go bust, the shareholders get nothing and the customers are moved into companies that can be sold off later (not my idea but that of one of the companies that went bust).

It is enough to make people vote Labour, all they need to do is announce that they are holding the companies responsible and putting a levy on dividends as well as a cap, then announce that any company that is not solvent will be nationalised.  The shareholders will sell their shares in a rush so nobody to payout when they nationalise it.

Honestly, we are such mugs in this country.

Complete and utter drivel!

Hardly a single word of it is true, maybe your previous energy rates but that is about it.

Do you know how many customers British Gas have?

Can you work out how much they made per customer?

It wasn't much.

What energy companies have been bailed out by our government?

Most energy companies have had to sell at a loss at times as a result of the price caps set by OFGEM.

Somebody else will be along to explain it in more detail than I have time for.

I just felt compelled to comment on a post that appears to be from one of the most ill informed people I have seen here.

Primraf

I have just bought an EV which I can trickle charge from the mains. I approach my electricity company about having a package that gave a cheap rate at night. They do provide one but the day. time rate is higher so there is no advantage.
What a racket!

Qyburn

Primraf said:

I have just bought an EV which I can trickle charge from the mains. I approach my electricity company about having a package that gave a cheap rate at night. They do provide one but the day. time rate is higher so there is no advantage.
What a racket!

Isn't that obvious? A flat rate covers use at both expensive and at cheap times. If you want a lower price for the cheap time, it's natural you pay more at other times. You need to consider how much of your use could be moved to the off peak times, and do the calculation. 

MattMattMattUK

Primraf said:

I have just bought an EV which I can trickle charge from the mains. I approach my electricity company about having a package that gave a cheap rate at night. They do provide one but the day. time rate is higher so there is no advantage.
What a racket!

It is not a racket, however I suspect you have probably ended up asking for/getting an E7 option as most EV tariffs offer a day rate only slightly above standard (2-3p per kWh higher), but a significantly reduced night rate (20p+ per kWh cheaper). 

MeteredOut

Primraf said:

I have just bought an EV which I can trickle charge from the mains. I approach my electricity company about having a package that gave a cheap rate at night. They do provide one but the day. time rate is higher so there is no advantage.
What a racket!

OVO do a 10p rate for EV charging, with their standard rate for all other times. Note this is not a time of use tariff, but an EV only tariff, and the cars/chargers it supports is limited:

https://www.ovoenergy.com/electric-cars/charge-anytime

gm0

Keep the standing charge.

But consider moving some distribution network unrelated levies across from daily charge to baked into supplier unit rate (with or without cap).  Timed for when international energy prices stabilise more as renewables move up and gas contingency generation cost falls as various wars impacting fossil prices end.

Ignore the home renewables crowd who want a free contingency grid connection at low or usually no usage but don't want to pay for it via standing charge.  They want it.  They pay for it like everyone else.  Or don't have it.  This would end up as a regressive subsidy from poorer and urban people to richer and rural consumers.

Don't make it complicated with bands of units recovering these costs via usage in order to make it look like the standing charge has gone.  Abolition as political stunt.  Additional pricing factors overlaid on the move to half hourly smart meter and demand related unit pricing.  Way too complex.  An utterly terrible idea operationally and for the consumer. A compromise which will please absolutely nobody in practice past the abolition stunt for the politician.  And make current billing complexity even worse than it is now. Terrible plan.

So face down the over simplistic media campaign around the standing charge being a bad thing.  It's not.  We have to pay for the network via daily charge. or unit rate.  The issue is the total cost of energy as a component  of cost of living. 

So social Action Tariffs can also be used again to address specific need and deprivation issues.  Learning from what recently happened with tariffs and cost spike to improve the mechanism.  Again targeted narrowly on those with additional needs and the poorest via welfare state eligibility criteria.

Politicians should reflect and resist the temptation to continue to load more categories of cost into it when fiddling with other aspects of the market.  The lesson is obvious.  Before earlier fiddling with tariff regulation such as on number of tariffs - commercial suppliers freely offered no standing charge, but high unit rate tariffs to those that wanted it.  And yes this was gamed by zero to low users for contingency or second supply outbuilding power. Not using much.  And paying next to nothing.  But it was a commercial risk taken by the suppliers to offer both products.   Access to this was lost by political and regulatory meddling.  So first do no more harm.

Chrysalis

If it hasnt been mentioned already on here, Ofgem are currently doing a consultation on this, they seem bitter about it already as if it has been forced upon them.

oliver1951

It has effectively been forced on them. It’s important to understand that ofcom made a choice to impose standing charges. Those costs could always have been rolled up in the unit rate. That’s how it used to be. 

Gerry1

oliver1951 said:

It has effectively been forced on them. It’s important to understand that ofcom made a choice to impose standing charges. Those costs could always have been rolled up in the unit rate. That’s how it used to be. 

Nope.  Ofcom has nothing to do with energy regulation.  Standing charges date back to the 1930s.

oliver1951

You’re right, ofgem, as far as standing charges are concerned I have never paid standing charges until 2017. I see on the web it does say introduced by British Gas in the 1930’s but that’s never been my experience. Perhaps different areas implemented it differently, but since 1970 I’ve lived in over 7 places and not paid standing charges, until, as I say, 2017.