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

Gerry1

@debitcardmayhem You mistyped the search term but Google corrected it for you.  You were nearly there !

https://octopus.energy/smart/flux/

Just ignore the Sign Me Up bit, scroll down to where it says Check Your Rates and enter your postcode.

debitcardmayhem

@gerry1 Yeah I had just checked my octoplus points and I got disappointed since they still haven't worked it out.

My bad really , but unless you know the foibles of 2^3 one why would you scroll on a small screen.

Anyway thanks for reminding of my idiocy

Edit Oh and seasons greetings

QrizB

debitcardmayhem said:

MattMattMattUK said:

Octopus are very good at making them clearly displayed,

Where exactly then?

At https://octopus.energy/tariffs/ if you want to see them all.

Again, you'll need to ignore the purple "get a quote" button and then type your postcode.

Spoonie_Turtle

QrizB said:

debitcardmayhem said:

MattMattMattUK said:

Octopus are very good at making them clearly displayed,

Where exactly then?

At https://octopus.energy/tariffs/ if you want to see them all.

Again, you'll need to ignore the purple "get a quote" button and then type your postcode.

Which is, to fair, not the most intuitive workaround, as demonstrated by the fact we have to tell people to do that.

born_again

bereavementfather said:

Privatisation of the energy market is simply not working. Switching appears to be a thing of the past, and "good" deals have disappeared.

Well it was the new starters that jumped in with cheap pricing that went bust, leaving us customers to pick up the tab for their failings. 
As they failed to have the funding or planning for what happened in the energy market. Thankfully the big players did...

There is no way that our system could go back into public ownership. It would cost billions to buy/compensate the current owners. Which would mean guess who is going to pay for it? 
Yep you & me in either extra taxation of higher prices.

I have switched this year & made big savings on my bills. Even though I now have a EV meaning higher electric use.

MattMattMattUK

I do not think nationalisation would be a sensible idea, as you rightly point out it would be very expensive and would offer little if any overall benefit to the taxpayer. Where the government could and should get involved is in a large scale nuclear power plant building plan, 100+ reactors over the next twenty years. The government could then sell that energy on the markets and generate a profit which would go to the exchequer, providing a positive ROI for taxpayersi whilst still allowing the private sector to build and operate renewables which do not require the same level of upfront capital investment. 

JSHarris

MattMattMattUK said:

I do not think nationalisation would be a sensible idea, as you rightly point out it would be very expensive and would offer little if any overall benefit to the taxpayer. Where the government could and should get involved is in a large scale nuclear power plant building plan, 100+ reactors over the next twenty years. The government could then sell that energy on the markets and generate a profit which would go to the exchequer, providing a positive ROI for taxpayersi whilst still allowing the private sector to build and operate renewables which do not require the same level of upfront capital investment. 

Some governments can see this as a good plan which is why the People's Republic of China wanted to fund nuclear stations here under potentially very lucrative CfD contracts.  Their recent pull-out demonstrates the risk of relying on funding from a potentially hostile state, due to any sudden change in the political climate.  Might cause some to have a think about how wise it was to rely on funding from China.

I really think more needs to be done with the Small Modular Reactor programme.  The UK has a wealth of expertise in small reactors (thanks to defence uses), plus smaller power stations are far, far less likely to get wound up in decades of public consultation, protests, public enquiries and all the other things that create massive delays for conventional nuclear stations.  SMRs can be built relatively quickly in factories, transported by road or rail to where they are needed and are a really good match to the grid's North-heavy generating problem, as they could be distributed around the areas with the greatest demand.  Just needs someone in government to pull their finger out and commit to backing them.

BPauseMSE

If there were no energy standing charges how could networks would be maintained?  If there were only useage charges, and useage dropped, how would underground and overhead pipes and cables be maintained- they deteriorate regardless of useage.  Standing charges are a good thing to ensure maintenance, although standardisation or regulation of them might be useful.

Sceptical123

To fairly eliminate standing charges and incorporate their cost into the unit rates for the first 10% of energy use, the proposal redistributes the annual standing charges for gas and electricity across the first 10% of average usage. Here's a detailed summary and accurate calculations:

Proposal Summary:

• Objective: Incorporate the standing charges into the unit cost of gas and electricity for the first 10% of annual usage, thereby eliminating separate standing charges.
• Method: Calculate the additional cost per kWh for the first 10% of average annual gas and electricity usage by dividing the respective standing charges by the first 10% volume of consumption. Add this additional cost to the existing unit rates for only the first 10% of usage, leaving the rates for the remaining 90% of usage unchanged.

Detailed Calculations:

Gas:

• Average Annual Use: 11,500 kWh
• First 10%: 1,150 kWh
• Standing Charge: £120 per year
• Additional Cost for First 10%: £120 / 1,150 kWh = 1.043 pence per kWh
• Adjusted Unit Rate for First 10%: 7.5 pence/kWh (existing) + 1.043 pence/kWh (additional) = 8.543 pence/kWh

Electricity:

• Average Annual Use: 2,700 kWh
• First 10%: 270 kWh
• Standing Charge: £170 per year
• Additional Cost for First 10%: £170 / 270 kWh = 62.96 pence per kWh
• Adjusted Unit Rate for First 10%: 30.11 pence/kWh (existing) + 62.96 pence/kWh (additional) = 93.07 pence/kWh

Conclusion:

The proposal effectively redistributes the standing charges over the first 10% of gas and electricity consumption, significantly increasing the unit rate for this initial portion of usage. For gas, the first 1,150 kWh would be charged at 8.543 pence per kWh, incorporating the standing charge into the rate. For electricity, the first 270 kWh would be charged at an adjusted rate of 93.07 pence per kWh. This approach eliminates the need for a separate standing charge, making the first portion of energy use more expensive but simplifying the overall billing structure.

MeteredOut

Sceptical123 said:

To fairly eliminate standing charges and incorporate their cost into the unit rates for the first 10% of energy use, the proposal redistributes the annual standing charges for gas and electricity across the first 10% of average usage. Here's a detailed summary and accurate calculations:

Proposal Summary:

• Objective: Incorporate the standing charges into the unit cost of gas and electricity for the first 10% of annual usage, thereby eliminating separate standing charges.
• Method: Calculate the additional cost per kWh for the first 10% of average annual gas and electricity usage by dividing the respective standing charges by the first 10% volume of consumption. Add this additional cost to the existing unit rates for only the first 10% of usage, leaving the rates for the remaining 90% of usage unchanged.

Detailed Calculations:

Gas:

• Average Annual Use: 11,500 kWh
• First 10%: 1,150 kWh
• Standing Charge: £120 per year
• Additional Cost for First 10%: £120 / 1,150 kWh = 1.043 pence per kWh
• Adjusted Unit Rate for First 10%: 7.5 pence/kWh (existing) + 1.043 pence/kWh (additional) = 8.543 pence/kWh

Electricity:

• Average Annual Use: 2,700 kWh
• First 10%: 270 kWh
• Standing Charge: £170 per year
• Additional Cost for First 10%: £170 / 270 kWh = 62.96 pence per kWh
• Adjusted Unit Rate for First 10%: 30.11 pence/kWh (existing) + 62.96 pence/kWh (additional) = 93.07 pence/kWh

Conclusion:

The proposal effectively redistributes the standing charges over the first 10% of gas and electricity consumption, significantly increasing the unit rate for this initial portion of usage. For gas, the first 1,150 kWh would be charged at 8.543 pence per kWh, incorporating the standing charge into the rate. For electricity, the first 270 kWh would be charged at an adjusted rate of 93.07 pence per kWh. This approach eliminates the need for a separate standing charge, making the first portion of energy use more expensive but simplifying the overall billing structure.

Is this your proposal? 

Since those that use less than average will be paying lower bills overall, surely the unit price beyond the first 10% will then go up, otherwise this will reduce suppliers income.

Would be interesting to see this modelled in a spreadsheet (if you've not already done so).