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

Gerry1

MattMattMattUK said:

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.

Did you miss the apart from Portugal bit?

MattMattMattUK said:

the current guilt rate is over 5%,

😄

MattMattMattUK

Gerry1 said:

MattMattMattUK said:

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.

Did you miss the apart from Portugal bit?

MattMattMattUK said:

the current guilt rate is over 5%,

😄

The way it was phrased, saying in bold, the only, then afterwards in brackets adding an exception, it was designed to try and over emphasise it.

The Gilt/guilt, ducking autocorrect strikes again!

LeesArt

I think that Standing Charges are obscene and should be banned but also a much lower cap should be put on Energy Companies.

I think that different rate for first X units per day, week or month should also be outlawed as they are effectively the same thing as a Standing charge.

Both of these affect the most vulnerable in our society the most but they also affect the "squeezed middle"

Consider that the £300+ that they are now charging us for the privilege of using energy could be spent on energy itself.

I have relatives who really struggle with finances, they have cut costs to the bone but still have to pay these obscene charges.

Imagine if Sky were able to charge you £300 a year just because they use satellites even if you did not use their service.

What other business not only gets this price but has had between able to force the cost of £10bn+ infrastructure upon us that did not need to be replaced, yes I am talking about so called Smart Meters.

What other business get's bailed out from public funds because their competitors went bust and they get their customers as new business?  I accept that some had a positive account balance that they had to honour but many had debt too so it all flattens out.

What other business is able to increase charges by around 5% because customers are struggling to pay when according to the BBC they have over £2.8bn of customers money in fixed direct debits and if you don't take direct debit they can hike the cost of both Tariff?  Oh and when the customer realises they have thousands racked up the Energy Companies are not only allowed 28 days to refund them but many of them procrastinate for months.

Is it any wonder that Energy companies are hated? 

I had a supplier for several years that charged zero standing charge but guaranteed prices lower than the big 6 and after that I was with a supplier that charged 15p and 10p for Electric and Gas respectively, with usage at 12.3p and 3.0p. At the time one of the big 6 charged 24p & 26p Standing with 20.87p and 4.05p respectively 

I don't know if it is fair to charge the squeezed middle more to allow the only the financially desperate to get zero standing charge, I think the Energy companies need to pay zero standing charges for ALL customers.

Can I start a company tomorrow, gamble on futures market and get bailed out by the tax payer, NO of course not, the shareholders have to pay.  I hear the arguments of too essential to fail but I think that at the very least all shareholder dividends should be paid to the Government until the Government support has been paid out.  

When I see headlines like this it really makes me sick!

British Gas has announced its profits for 2023 increased 10-fold to £750m.

"The supplier said the jump from £72m in 2022 was due to regulator Ofgem allowing it to recover losses of £500m it racked up in the aftermath of Russia's invasion of Ukraine."

https://www.bbc.co.uk/news/business-68303647

It does not matter which flavour of Government we get at the next election, our economy can't afford to keep bailing out the energy companies and they cannot be allowed to just whack it on customers.

I see this as a failure of the regulator Ofgem who seem to be totally biased towards the Energy Companies.

Spoonie_Turtle

MattMattMattUK said:

LeesArt said:

What other business not only gets this price but has had between able to force the cost of £10bn+ infrastructure upon us that did not need to be replaced, yes I am talking about so called Smart Meters.

What other business is required to maintain infrastructure connected directly to your home, to provide their service on demand? The smart metering was mandated by government and decided that the cost of that would be added to energy bills. 

Phone/home internet - which used to have line rental as a fixed price regardless of usage, not sure about now but the packages available all start at a minimum level, there is no 'pay as you use' as far as I'm aware so that minimum level is effectively a standing charge.

MattMattMattUK

Spoonie_Turtle said:

MattMattMattUK said:

LeesArt said:

What other business not only gets this price but has had between able to force the cost of £10bn+ infrastructure upon us that did not need to be replaced, yes I am talking about so called Smart Meters.

What other business is required to maintain infrastructure connected directly to your home, to provide their service on demand? The smart metering was mandated by government and decided that the cost of that would be added to energy bills. 

Phone/home internet - which used to have line rental as a fixed price regardless of usage, not sure about now but the packages available all start at a minimum level, there is no 'pay as you use' as far as I'm aware so that minimum level is effectively a standing charge.

They are now effectively all standing charge though, with no usage charges, as there is little real cost in individual usage. 

Spoonie_Turtle

MattMattMattUK said:

Spoonie_Turtle said:

MattMattMattUK said:

LeesArt said:

What other business not only gets this price but has had between able to force the cost of £10bn+ infrastructure upon us that did not need to be replaced, yes I am talking about so called Smart Meters.

What other business is required to maintain infrastructure connected directly to your home, to provide their service on demand? The smart metering was mandated by government and decided that the cost of that would be added to energy bills. 

Phone/home internet - which used to have line rental as a fixed price regardless of usage, not sure about now but the packages available all start at a minimum level, there is no 'pay as you use' as far as I'm aware so that minimum level is effectively a standing charge.

They are now effectively all standing charge though, with no usage charges, as there is little real cost in individual usage. 

Exactly the point, yet we don't see outrage about it.

MattMattMattUK

Spoonie_Turtle said:

MattMattMattUK said:

Spoonie_Turtle said:

MattMattMattUK said:

LeesArt said:

What other business not only gets this price but has had between able to force the cost of £10bn+ infrastructure upon us that did not need to be replaced, yes I am talking about so called Smart Meters.

What other business is required to maintain infrastructure connected directly to your home, to provide their service on demand? The smart metering was mandated by government and decided that the cost of that would be added to energy bills. 

Phone/home internet - which used to have line rental as a fixed price regardless of usage, not sure about now but the packages available all start at a minimum level, there is no 'pay as you use' as far as I'm aware so that minimum level is effectively a standing charge.

They are now effectively all standing charge though, with no usage charges, as there is little real cost in individual usage. 

Exactly the point, yet we don't see outrage about it.

I think because for energy bills people have managed to wind themselves up into an irrational rage, a tantrum that the media have happily fanned, and even some reputable figures have jumped on the bandwagon. There are a lot of people who think that "someone else" should pay, that has become a wider problem in our society and carries over to energy billing. 

dealyboy

The Standing Charge is a composite of various charges, that we all pay or would pay even if they were raised differently, for example if they were included in unit rates or general taxation, but of course some don't pay income tax. Whether the SC is fair? ... well it's fairer than NI or road tax ... at least the money (apart from VAT) is all kept within the energy industry.

So on balance I am now of the view that the standing charge should be retained, having been persuaded by many contributors over the past couple of years.

Chris_b2z

According to Ofgem:
The standing charge is a daily charge that you pay your energy supplier each day to cover fixed costs of providing gas and electricity, regardless of how much energy you use.

That sounds perfectly clear. This is how much it costs to maintain the electric and gas connections to my home.

These are the standing charges rates I'm currently paying on the Scottish Power Standard Variable Rate -
Electricity - 50.684p per day
Gas         - 29.600p per day

Yet, the Scottish Power Flexi May 2025 TL1 tariff lists standing charges as -
Electricity - 43.281p per day (14.6% cheaper)
Gas          - 22.187p per day (25% cheaper)

Is it more expensive to deliver gas and electricity to my home while I'm on a Standard Variable Rate or could it imply that Ofgem rates are set too high?

molerat

Chris_b2z said:

According to Ofgem:
The standing charge is a daily charge that you pay your energy supplier each day to cover fixed costs of providing gas and electricity, regardless of how much energy you use.

That sounds perfectly clear. This is how much it costs to maintain the electric and gas connections to my home.

These are the standing charges rates I'm currently paying on the Scottish Power Standard Variable Rate -
Electricity - 50.684p per day
Gas         - 29.600p per day

Yet, the Scottish Power Flexi May 2025 TL1 tariff lists standing charges as -
Electricity - 43.281p per day (14.6% cheaper)
Gas          - 22.187p per day (25% cheaper)

Is it more expensive to deliver gas and electricity to my home while I'm on a Standard Variable Rate or could it imply that Ofgem rates are set too high?

On a standard variable tariff the energy supplier is constrained by the cap as to what they can charge.  On a fixed tariff they are free to charge whatever they wish.  Some of the standing charge is supplier costs so they are free to absorb that into the unit charge. They still have to make the same contribution to the grid per customer though.