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

QrizB

In addition, National Grid are a multinational company. They operate energy grids overseas. Their customer base is considerably larger than the population of the UK.

If they have 100 million customers, they've made an average of £46 from each of them.

stripling

matt_drummer said:

stripling said:

matt_drummer said:

stripling said:

MattMattMattUK said:

borderline said:

so basically those who try to save on electric are gonna be paying more because the sanding charge is going up a lot. Thieves

It is going up (or down) different amounts in different regions. It is in no way theft, libellous comments are unhelpful and ill advised.

I'll repeat what I said elsewhere:  National Grid's pre-tax profits in 2022 were increased by 107% to £3.4bn. Their dividend payments to shareholders went up by 3.7%.  And in 2023.... wait for it... profits were even higher at £4.6bn.   #JustSaying 

How many customers do they have?

How much do they make per customer?

How much of those profits do they intend to invest to make all of our lives better/

If they made nothing how much would it reduce your bill by?

Who are the shareholders who received the dividends? Any pension funds?

Just asking!

The top few:
Bank of America Corporation

Renaissance Technologies, LLC

FMR, LLC

Morgan Stanley

Goldman Sachs

JP Morgan Chase & Company

Royal Bank of Canada

Raymond James & Associates, Inc.

But it is the model that is the problem....
As for pension funds - most low paid workers have minimal access to decent pensions, so there's no circular reasoning to justify this. (And anyway, I left out the ceo bonuses and big $$ pay-offs). 

Standing charges penalise the poor and low users disproportionately. Many low users are low users because of poverty, not because they have a solar array and battery rig that they've ripped up hard cash for - that's out of their reach. Nice if you can afford it but renters and/or those with low incomes are excluded. 

Infrastructure as vital as our national grid should not be running such profits - it should not be a 'for profit' organisation. It's a stitch-up. It is (yet another) example of privatising the profits and socialising the costs. 

Far better and far more fair would be some kind of non profit - a regional community benefit society, with an asset lock - for example. Thus any operating profits could only be re-invested in the company and thus the infrastructure of the grid, or used to reduce charges.

We might have gone greener, faster too. 

So how much do they make per customer?

All workers are now entitled to automatic enrolment to a pension scheme.

CEO bonuses make no difference to you or me, they are peanuts divided by the amount of customers.

They make less than £100 a year from each connection and they do need some profits from their business.

Even if they made £0 per customer it would make very little difference and there would be nothing to invest in making things better.

You are a classic confused by big numbers kind of person.

They make big profits because the have a lot of customers, not because their charges are too high.

There are approx 20 million households in the UK not people AND very many of these will require no extra external infrastructure eg flats and apartment buildings. So that's considerably less for this discussion. Suddenly those numbers look a little different.... 

Pensions - irrelevant - so what? Because a pension fund *may* invest in National Grid? That's a circular argument.  Meanwhile, having a pension doesn't automatically = having a liveable pension and automatic enrolment is a recent requirement anyway. 
Zero hours and all the numerous other dodgy employment set-ups evade paying pensions too.  That's a lot of people not benefiting from this circular argument of yours - many of them at the bottom of the economic pile. 

I agree about the CEO bonuses EXCEPT it's a figure you can add to the rest of the billions of profit and why should I contribute even a penny towards it? 

"You are a classic confused by big numbers kind of person." -  Tut tut.... And on Womens Day.... 🤦🏻‍♀️ 

"They make big profits because they have a lot of customers, not because their charges are too high."
You can bend the logic all you like. It's still relative nonsense. See households comment above. 

Their profits could've gone into upgrading a long time ago (they've even been castigated by Parliament for this)  and we, as a nation, wouldn't be so in the dark ages of outdated and backward infrastructure.  
Instead it is 'added' to bills repeatedly as a justification for upping the standing charge. Along with energy company's debts etc.,  If we pay the debts why don't we get the profits btw? 

Like I said, it's a broken model both in terms of building a 21st century grid suitable for the needs of the population and addressing the problems of climate change AND in terms of cost for users who have no 'market choice' with their standing charge. 

You can hang on to these outdated 'market' ideas or you can be a little braver/wiser and look for better ways of doing things that may just result in a fairer deal than the currently rigged set up both for the nation's infrastructure needs and 'jo public's' pocket.  

Why does it bother you to see the National Grid be made to operate as a nonprofit organisation that is forced to reinvest in the infrastructure needed and/or keep customer's costs down as far as possible? I'm not calling for nationalisation here after all... We missed that boat. 

Hoenir

stripling said:

matt_drummer said:

stripling said:

matt_drummer said:

stripling said:

MattMattMattUK said:

borderline said:

so basically those who try to save on electric are gonna be paying more because the sanding charge is going up a lot. Thieves

It is going up (or down) different amounts in different regions. It is in no way theft, libellous comments are unhelpful and ill advised.

I'll repeat what I said elsewhere:  National Grid's pre-tax profits in 2022 were increased by 107% to £3.4bn. Their dividend payments to shareholders went up by 3.7%.  And in 2023.... wait for it... profits were even higher at £4.6bn.   #JustSaying 

How many customers do they have?

How much do they make per customer?

How much of those profits do they intend to invest to make all of our lives better/

If they made nothing how much would it reduce your bill by?

Who are the shareholders who received the dividends? Any pension funds?

Just asking!

The top few:
Bank of America Corporation

Renaissance Technologies, LLC

FMR, LLC

Morgan Stanley

Goldman Sachs

JP Morgan Chase & Company

Royal Bank of Canada

Raymond James & Associates, Inc.

But it is the model that is the problem....
As for pension funds - most low paid workers have minimal access to decent pensions, so there's no circular reasoning to justify this. (And anyway, I left out the ceo bonuses and big $$ pay-offs). 

Standing charges penalise the poor and low users disproportionately. Many low users are low users because of poverty, not because they have a solar array and battery rig that they've ripped up hard cash for - that's out of their reach. Nice if you can afford it but renters and/or those with low incomes are excluded. 

Infrastructure as vital as our national grid should not be running such profits - it should not be a 'for profit' organisation. It's a stitch-up. It is (yet another) example of privatising the profits and socialising the costs. 

Far better and far more fair would be some kind of non profit - a regional community benefit society, with an asset lock - for example. Thus any operating profits could only be re-invested in the company and thus the infrastructure of the grid, or used to reduce charges.

We might have gone greener, faster too. 

So how much do they make per customer?

All workers are now entitled to automatic enrolment to a pension scheme.

CEO bonuses make no difference to you or me, they are peanuts divided by the amount of customers.

They make less than £100 a year from each connection and they do need some profits from their business.

Even if they made £0 per customer it would make very little difference and there would be nothing to invest in making things better.

You are a classic confused by big numbers kind of person.

They make big profits because the have a lot of customers, not because their charges are too high.

Their profits could've gone into upgrading a long time ago

Expansion in battery storage and solar parks is relatively new.  Until well into construction phase there's little point in committing both resources and money to the installation of infrastructure. In the financial year ended 31st May 2023. Capital expenditure was £7 billion. Specialist manpower resources are limited.  There's often a simplistic view as to what connection involves . 

stripling

QrizB said:

In addition, National Grid are a multinational company. They operate energy grids overseas. Their customer base is considerably larger than the population of the UK.

If they have 100 million customers, they've made an average of £46 from each of them.

 Yes, they operate in the US, for example, where interestingly they are also receiving similar criticism. However, the profits I quoted are for the UK National Grid not the US companies - New England, New York, and National Grid Ventures.  But I'd be grateful even for £46 off my bills... 

To be clear, our standing charge isn't all National Grid's fault but I'm using NG as an example of what I say is a broken model. I think that instead of sticking plasters over energy company and infrastructure measles, we need to redesign the entire model. 

It's not only about our outrageous charges but also about addressing our future needs in a rapidly changing environment.  We're a bit in the doo doo. To say the least.  

MattMattMattUK

stripling said:

matt_drummer said:

stripling said:

matt_drummer said:

stripling said:

MattMattMattUK said:

borderline said:

so basically those who try to save on electric are gonna be paying more because the sanding charge is going up a lot. Thieves

It is going up (or down) different amounts in different regions. It is in no way theft, libellous comments are unhelpful and ill advised.

I'll repeat what I said elsewhere:  National Grid's pre-tax profits in 2022 were increased by 107% to £3.4bn. Their dividend payments to shareholders went up by 3.7%.  And in 2023.... wait for it... profits were even higher at £4.6bn.   #JustSaying 

How many customers do they have?

How much do they make per customer?

How much of those profits do they intend to invest to make all of our lives better/

If they made nothing how much would it reduce your bill by?

Who are the shareholders who received the dividends? Any pension funds?

Just asking!

The top few:
Bank of America Corporation

Renaissance Technologies, LLC

FMR, LLC

Morgan Stanley

Goldman Sachs

JP Morgan Chase & Company

Royal Bank of Canada

Raymond James & Associates, Inc.

But it is the model that is the problem....
As for pension funds - most low paid workers have minimal access to decent pensions, so there's no circular reasoning to justify this. (And anyway, I left out the ceo bonuses and big $$ pay-offs). 

Standing charges penalise the poor and low users disproportionately. Many low users are low users because of poverty, not because they have a solar array and battery rig that they've ripped up hard cash for - that's out of their reach. Nice if you can afford it but renters and/or those with low incomes are excluded. 

Infrastructure as vital as our national grid should not be running such profits - it should not be a 'for profit' organisation. It's a stitch-up. It is (yet another) example of privatising the profits and socialising the costs. 

Far better and far more fair would be some kind of non profit - a regional community benefit society, with an asset lock - for example. Thus any operating profits could only be re-invested in the company and thus the infrastructure of the grid, or used to reduce charges.

We might have gone greener, faster too. 

So how much do they make per customer?

All workers are now entitled to automatic enrolment to a pension scheme.

CEO bonuses make no difference to you or me, they are peanuts divided by the amount of customers.

They make less than £100 a year from each connection and they do need some profits from their business.

Even if they made £0 per customer it would make very little difference and there would be nothing to invest in making things better.

You are a classic confused by big numbers kind of person.

They make big profits because the have a lot of customers, not because their charges are too high.

There are approx 20 million households in the UK not people AND very many of these will require no extra external infrastructure eg flats and apartment buildings. So that's considerably less for this discussion. Suddenly those numbers look a little different.... 

Pensions - irrelevant - so what? Because a pension fund *may* invest in National Grid? That's a circular argument.  Meanwhile, having a pension doesn't automatically = having a liveable pension and automatic enrolment is a recent requirement anyway. 
Zero hours and all the numerous other dodgy employment set-ups evade paying pensions too.  That's a lot of people not benefiting from this circular argument of yours - many of them at the bottom of the economic pile. 

I agree about the CEO bonuses EXCEPT it's a figure you can add to the rest of the billions of profit and why should I contribute even a penny towards it? 

"You are a classic confused by big numbers kind of person." -  Tut tut.... And on Womens Day.... 🤦🏻‍♀️ 

"They make big profits because they have a lot of customers, not because their charges are too high."
You can bend the logic all you like. It's still relative nonsense. See households comment above. 

Their profits could've gone into upgrading a long time ago (they've even been castigated by Parliament for this)  and we, as a nation, wouldn't be so in the dark ages of outdated and backward infrastructure.  
Instead it is 'added' to bills repeatedly as a justification for upping the standing charge. Along with energy company's debts etc.,  If we pay the debts why don't we get the profits btw? 

Like I said, it's a broken model both in terms of building a 21st century grid suitable for the needs of the population and addressing the problems of climate change AND in terms of cost for users who have no 'market choice' with their standing charge. 

You can hang on to these outdated 'market' ideas or you can be a little braver/wiser and look for better ways of doing things that may just result in a fairer deal than the currently rigged set up both for the nation's infrastructure needs and 'jo public's' pocket.  

Why does it bother you to see the National Grid be made to operate as a nonprofit organisation that is forced to reinvest in the infrastructure needed and/or keep customer's costs down as far as possible? I'm not calling for nationalisation here after all... We missed that boat. 

You very clearly lack understanding of the situation and you seem to refuse to accept any information that does not meet your preconceived opinions. You are demonstrating again and again, either an inability or an unwillingness to understand, I will leave others to make their own minds up as to which.

As for why they should not be forced to operate as a not-for-profit, firstly you seem to not understand (again) that a significant proportion of the profits are reinvested, secondly that a chunk of the profits come from international operations, not within the UK, and thirdly that forcing a business to operate as a not for profit when it is a shareholder owned business is tantamount to confiscation of private property, is illegal and would damage inward investment if it were to act in that way.

stripling

Some facts:

• The UK is the only country in Europe (apart from Portugal) which has a privatised electricity grid
• The current UK government has already decided to bring a part of National Grid into public ownership to lead the way on net zero - this involves legislation and compensation to shareholders, showing that it is all possible!
• Bringing the rest of the grid into public ownership would save us around £3.7 billion a year - buying it back would pay for itself in 7.5 years. £3.7 billion is enough to pay for around 222 wind turbines!
• In terms of buying back the energy grid - transmission and distribution - only 2% of it is owned by our pensions. 98% is owned by other investors around the world. For example, Northern Powergrid (distributor in the North East) is owned by US billionaire Warren Buffett while UK Power Networks (distributor in London) is owned by Hong Kong billionaire Li Ka Shing

"The UK government has been working for several years now on plans to create a new public body to oversee Britain’s energy system as it continues to transition away from fossil fuels, effectively renationalising critical responsibilities that have been held by National Grid since its privatisation in the 1990s. 

They consulted on the plan to create a publicly owned “future system operator”  which will take on the main responsibilities for managing Britain’s electricity system currently carried out by National Grid, plus some of its work in overseeing the gas network. This system architect/planning role is needed in the public sector to get us to net zero. [Second consultation on additional roles Aug 2023]

Some of National Grid’s powers and responsibilities are being handed to this new publicly owned body. (National Grid will continue to own and maintain electricity and gas pipes and wires in Britain and has in recent years been developing a number of subsea cables to trade power with the rest of Europe.)

As part of the arrangements, the UK Treasury will compensate National Grid shareholders for the transfer of some of its powers, although a financial settlement has yet to be confirmed. Legislation and compensation arrangements are all happening, under the Conservative government, because it’s seen as necessary. "

If we have a change of government Labour also plans to create a publicly owned renewable generation company.  Whoever is in power, it is a relatively short step to bring our energy infrastructure into nonprofit forms of ownership. This doesn't necessarily have to mean state ownership, as I said before, it could be regional community share ownership, with an asset lock or whatever. The point is, there are several possible NON PROFIT models both for infrastructure (and if required, generation). 

Don't let anyone tell you these things can't be done. Where there's a will there's a way and this is evidence-backed by ownership models in other countries AND serious analysis and academic research around the world. 

matt_drummer

If the National Grid, whether privately or publicly owned, where does it get the money from to invest in infrastructure?

Operating profits are the excess of income over operating costs and depreciation of existing equipment.

Whoever owns and operates the system must make a profit to get the money to spend on new stuff.

If this is all publicly owned and doesn't make a profit then the investment in new stuff will have to come from taxation.

It has to be paid for however you look at it.

What you are rally saying is that some people shouldn't have to contribute as much as some others.

I would assume you think that the `rich' should pay for it through general taxation and those less well off can then benefit from lower energy bills?

Isn't this just the same argument we always get, some people don't want to pay but they're quite happy for others to?

stripling

matt_drummer said:

What you are rally saying is that some people shouldn't have to contribute as much as some others.

I would assume you think that the `rich' should pay for it through general taxation and those less well off can then benefit from lower energy bills?

Isn't this just the same argument we always get, some people don't want to pay but they're quite happy for others to?

Don't assume.... you are way off the mark.  🤦🏻‍♀️

"Operating profits are the excess of income over operating costs and depreciation of existing equipment.
Whoever owns and operates the system must make a profit to get the money to spend on new stuff.
If this is all publicly owned and doesn't make a profit then the investment in new stuff will have to come from taxation."

If you were really interested, you could read up a bit. It's a really interesting subject.
How do you think all those European countries (except Britain and Portugal) that have state owned grids, fund their infrastructure? Bearing in mind, many of them have far superior or at least more advanced grids? (And considerably cheaper energy - which not only helps households but helps business of course). 

Why do you think the Conservative government is bringing the management of the electricity system back into public - state that is - ownership and taking it away from National Grid?  Are those Tories really closet commies? 

I didn't suggest state ownership - but it is an option and most other countries take this option in combination with tight regulation and policy. Some countries say that state ownership of a national grid is a security issue.

My point was not to sell a specific idea but to say there is a range of possible ownership/management forms.  Models that recycle profits back into the infrastructure and into lowering costs - not profits that leave the business in dividend payments to hedge funds or whatever, many who have HQs in offshore locations and have no 'local' interest or tax bill.  But don't panic...

I'm outta here... 

Hoenir

stripling said:

(And considerably cheaper energy - which not only helps households but helps business of course). 

Germany's emergence from being the sick man of Europe in the late 90's. Was built on the supply of cheap abundant Russian oil and gas. Now German industry is in turmoil again. All those heavy industrial users of energy are having to rethink their operations. New plants are likely to be sited abroad. With existing ones potentially mothballed. 

MattMattMattUK

stripling said:

Some facts:

• The UK is the only country in Europe (apart from Portugal) which has a privatised electricity grid

So it is not "the only", it is one of two.

stripling said:

• The current UK government has already decided to bring a part of National Grid into public ownership to lead the way on net zero - this involves legislation and compensation to shareholders, showing that it is all possible!

Lots of things are possible, but governments do not do them, because they have an economic and policy cost, as well as there being only a finite amount of money the government can spend, so it needs to spend it where it can be most effective. 

stripling said:

• Bringing the rest of the grid into public ownership would save us around £3.7 billion a year - buying it back would pay for itself in 7.5 years. £3.7 billion is enough to pay for around 222 wind turbines!

It would not save £3.7 billion per year, you are citing a document from nearly five years ago that assumes a government borrowing rate of 1.81%, the current gilt rate is over 5%, that wipes out all those "savings" and then some. The way you seem to think this would work is just some random discount on energy bills, which is frankly fanciful and further demonstrates a lack of understanding in how government owned entities operate in a commercial space. This fictitious saving would not lead to more wind turbines being built and if the aim was to build more wind turbines then it would make sense for the government to commission those directly, separate from National Grid.

stripling said:

If we have a change of government Labour also plans to create a publicly owned renewable generation company. 

This is potentially a sensible thing to do, it should also include nuclear and tidal.

stripling said:

Whoever is in power, it is a relatively short step to bring our energy infrastructure into nonprofit forms of ownership. This doesn't necessarily have to mean state ownership, as I said before, it could be regional community share ownership, with an asset lock or whatever. The point is, there are several possible NON PROFIT models both for infrastructure (and if required, generation). 

No one has said making it non-profit would not be possible, what people have said is that it would not be sensible, either from a fiscal or policy perspective. There is no fundamental issue with National Grid making a profit, although you seem to have an objection to this. You seem to be starting from an irrational position, one that energy distribution must be either state owned or non-profit, you are then drawing further incorrect conclusions based on that position. 

stripling said:

Don't let anyone tell you these things can't be done.

Again, no one is saying that they cannot be done, just that what you want does not make sense.

stripling said:

Where there's a will there's a way and this is evidence-backed by ownership models in other countries AND serious analysis and academic research around the world. 

The "evidence" from around the world is that public or private ownership makes little difference. The academic research you cite is nearly five years out of date an no longer applicable due to the large increase in government borrowing costs, as well as overall government borrowing and the wider fiscal climate. 

You seem to want public ownership or non-profit for some ideological reasons, that is your prerogative, but throwing around or misinterpreting facts to fit your world view will not advance your position, nor make anyone rational agree with you. 

stripling said:

If you were really interested, you could read up a bit. It's a really interesting subject.
How do you think all those European countries (except Britain and Portugal) that have state owned grids, fund their infrastructure? Bearing in mind, many of them have far superior or at least more advanced grids? (And considerably cheaper energy - which not only helps households but helps business of course). 

They fund them from a combination of fees levied on energy bills and general taxation, which is exactly the same way the UK funds them. The majority of grids in other countries are roughly similar to ours, they are not "far superior" or "more advanced". The modernisation that the UK grid requires is largely because of the amount of distributed and micro generation now adding energy to the grid, an issue that all grids are grappling with at the moment. Energy in most of Europe is not cheaper than ours, electricity is cheaper in France by some way, but that is largely the legacy of a huge historical investment in nuclear and so not needing to be reliant on fossil fuels, in Germany, the Netherlands, Belgium, Spain, etc. it is more expensive, other countries directly subsidise their energy, some, such as Norway have significant fossil fuel reserves.

stripling said:

Why do you think the Conservative government is bringing the management of the electricity system back into public - state that is - ownership and taking it away from National Grid?  Are those Tories really closet commies? 

They are doing so because they believe that government should set policy direction, with private enterprise left to do the work, they are not "taking ownership" of National Grid, they are effectively just creating a new policy regulator.

stripling said:

I didn't suggest state ownership - but it is an option and most other countries take this option in combination with tight regulation and policy. Some countries say that state ownership of a national grid is a security issue.

You suggested both state ownership and forcing private companies to operate as non-profit organisations.

stripling said:

My point was not to sell a specific idea but to say there is a range of possible ownership/management forms.  Models that recycle profits back into the infrastructure and into lowering costs - not profits that leave the business in dividend payments to hedge funds or whatever, many who have HQs in offshore locations and have no 'local' interest or tax bill.  But don't panic...

You seem to disagree with profit, that is your prerogative, but it is not a rational position. Investors will not invest for zero return, so taxpayers would be required to fund investment. The profits, whoever they have been distributed to have already been taxed, dividend can only be distributed from post-tax retained profit. 

stripling said:

I'm outta here... 

Ok, bye!