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

Gerry1

oliver1951 said:

since 1970 I’ve lived in over 7 places and not paid standing charges, until, as I say, 2017.

A few providers claimed to offer No Standing Charge tariffs, but in most cases this amounted to sleight of hand.  The first few units each day were surcharged so the standing charge was effectively clawed back unless the supply was for a garage or an empty property.

Unfortunately there's no such thing as a free lunch.

MeteredOut

I've just checked my records which go back to 2014, and I had a standing charge in the second half of that year.

For the first half, I was on a no standing charge tariff, but as stated above, it had the first 900 elec kWh at 11p and then 20p thereafter, and gas at 3p for the first 2680kWh and then 7p.

xxxxxxxx

Standing charges should be banned, they confuse the market, all profits should come from setting a tariff rate. and switchers can just look for the best unit cost without having to include the standing charge.  

MattMattMattUK

xxxxxxxx said:

Standing charges should be banned

No they should not be, that would be irrational.

xxxxxxxx said:

they confuse the market

They do not, they are clear and simple, my six year old niece could understand them.

xxxxxxxx said:

all profits should come from setting a tariff rate. 

Standing charges are part of a tariff rate, the tariff is made up of two components, a standing charge and a unit cost. Standing charges also do only contain a tiny profit element for the National Grid, the energy supplier hands nearly all of them over either to National Grid, to Ofgem, or to the various recipients of the schemes that they fund. 

xxxxxxxx said:

and switchers can just look for the best unit cost without having to include the standing charge.  

Switchers could look at the best cost including the standing charger, we are not talking rocket science or brain surgery, we are talking primary school level maths. As all standing charges are pretty much the same comparison is easy, it is even easier still because outside of E7 and some experimental tariffs unit costs are the almost entirely the same as well. 

JSHarris

The underlying question is whether it is fair to fund all the non-operating cost related elements of the standing charge on to every customer, at a flat rate, irrespective of usage.  I will freely admit to a strong personal interest, the standing charges this year make up about 25% of my total bill.  My neighbour is not so bothered about them when we were chatting, but then it transpired that standing charges only made up about 8% of his bill.

The main problem with the "one size fits all" approach to funding things is that it creates unfairness.  To give a silly example, about 5% of the standing charge is paying for smart meters.  Great if they work in your area, not great, or fair, if, like me, there is no chance of me ever being able to get one.  The principle that costs should be fairly attributed to those that receive the benefit should be applied.  It's as annoying as hell to constantly read about Octopus customers reaping cost savings from smart metering, when I'm paying for that functionality but cannot make use of it.

Spoonie_Turtle

JSHarris said:

To give a silly example, about 5% of the standing charge is paying for smart meters.  Great if they work in your area, not great, or fair, if, like me, there is no chance of me ever being able to get one.  The principle that costs should be fairly attributed to those that receive the benefit should be applied.  

Are you sure it's 'never'?  They're developing tech to overcome common and more niche problems.  (I don't know if those development costs are included in what we're all paying for though.)

JSHarris

Spoonie_Turtle said:

JSHarris said:

To give a silly example, about 5% of the standing charge is paying for smart meters.  Great if they work in your area, not great, or fair, if, like me, there is no chance of me ever being able to get one.  The principle that costs should be fairly attributed to those that receive the benefit should be applied.  

Are you sure it's 'never'?  They're developing tech to overcome common and more niche problems.  (I don't know if those development costs are included in what we're all paying for though.)

I suppose it might not be never, but will most likely not be in my remaining lifetime.  The problem is that there's no signal, so the meter cannot communicate, and try as they might they've not been able to find a solution (other than taking the meter out and replacing it with an Economy 7 one, which they did).

Mobile phones don't work here either, and I've been told there's very little hope that they ever will, as there aren't enough people living in our valley to justify building a new mast here.  I can understand this, after all the companies have to be able to make a profit and it can't be cheap putting a new mast up.  With only a handful of houses and no main roads nearby the mobile operators are unlikely to ever recover the cost of their investment.

QrizB

JSHarris said:

Spoonie_Turtle said:

JSHarris said:

To give a silly example, about 5% of the standing charge is paying for smart meters.  Great if they work in your area, not great, or fair, if, like me, there is no chance of me ever being able to get one.  The principle that costs should be fairly attributed to those that receive the benefit should be applied.  

Are you sure it's 'never'?  They're developing tech to overcome common and more niche problems.  (I don't know if those development costs are included in what we're all paying for though.)

I suppose it might not be never, but will most likely not be in my remaining lifetime.

Admittedly you could be hit by a meteorite tomorrow, but the plan is to extend the smart meter network to 99% of the UK population by 2027 or so, IIRC.

JSHarris

QrizB said:

JSHarris said:

Spoonie_Turtle said:

JSHarris said:

To give a silly example, about 5% of the standing charge is paying for smart meters.  Great if they work in your area, not great, or fair, if, like me, there is no chance of me ever being able to get one.  The principle that costs should be fairly attributed to those that receive the benefit should be applied.  

Are you sure it's 'never'?  They're developing tech to overcome common and more niche problems.  (I don't know if those development costs are included in what we're all paying for though.)

I suppose it might not be never, but will most likely not be in my remaining lifetime.

Admittedly you could be hit by a meteorite tomorrow, but the plan is to extend the smart meter network to 99% of the UK population by 2027 or so, IIRC.

To do that they first need to install phone masts so we can get a signal, though.  Smart meters need a mobile phone connection to communicate to the DCC,  They don't need much bandwidth, so will work with a pretty poor signal, but they do still need that signal, or be close enough to another smart meter so that it can connect using the mesh.  In many cases this isn't going to work unless the mobile operators install more masts, especially in rural areas.

The_Green_Hornet

Energy bills could rise by £16 to cover customers' debts

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Ofgem is proposing lifting the energy price cap by £16 between April next year and March 2025

Energy bills could rise by £16 to cover customers' debts - BBC News