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

MattMattMattUK

Chris_b2z said:

MattMattMattUK said:

Chris_b2z said:

MattMattMattUK said:

That link misses off various costs that are added to the energy costs, as an example it misses off the government social and environmental costs, often called the policy costs which are around 11% of bills, temporary adjustments, headroom costs, Profit (EBIT), subsidy for pre-payment customers, allowance for bad debt, VAT and probably other costs. 
https://www.ofgem.gov.uk/energy-price-cap

Thank you. Do Ofgem publish a 'full' detailed breakdown by region showing how they arrive at the standing charge cap value each quarter?

Ofgem publish lots of information, you will find that information somewhere on their site, though it will be in a rather technical document that will range from several hundred to thousands of pages long. This has all been covered ad infinitum, there are not huge margins in energy supply, the suppliers are not profiteering. You can also look at the published accounts of the energy suppliers, indeed Octopus as a group (though there are several wholly owned subsidiaries) make a far higher margin on software licensing than they do on domestic energy supplies. 

The topic of this discussion is 'Why are energy standing charges so high?'.

Surely, it's critical to understand how Ofgem calculate the standing charge within the SVT cap. How else can anyone decide whether it's set fairly or not? Why would Ofgem bury that in a thousand page technical document?

They publish the dumbed down version which I have already linked to for the consumption of the general public. The complicated technical documents go into granular detail, they cover technical reason for upgrades in specific area, details about replacement of old equipment, costs from adverse weather (there was a large increase in the NW due to storm damage and trees taking out thousands of remote power lines). In the reports for general consumption these are summarised as maintenance costs, weather related/exceptional maintenance costs, upgrades etc. because most people do not want or need the granular detail. 

Fairness is an entirely subjective concept, the majority of the public seem to think that it is unfair that they have to pay for the energy they use, let alone pay for the infrastructure used to supply it, so the concept of fairness is a very poor one to use and overall not really relevant, compared to the practicalities of funding the network and paying for energy. 

QrizB

Chris_b2z said:

Surely, it's critical to understand how Ofgem calculate the standing charge within the SVT cap.

You'll find the raw numbers in a set of spreadsheets, published by Ofgem at the same time as they announce the cap

Look here:

https://www.ofgem.gov.uk/master-publications-library

Interpretating.those.numbers.will require that you do a bit more.reading.

Chris_b2z

QrizB said:

Chris_b2z said:

Surely, it's critical to understand how Ofgem calculate the standing charge within the SVT cap.

You'll find the raw numbers in a set of spreadsheets, published by Ofgem at the same time as they announce the cap

Look here:

https://www.ofgem.gov.uk/master-publications-library

Interpretating.those.numbers.will require that you do a bit more.reading.

Thank you. I guess this confirms that Ofgem really don't want the general public to understand how they arrive at the SVT standing charge cap every 3 months.

MattMattMattUK

Chris_b2z said:

QrizB said:

Chris_b2z said:

Surely, it's critical to understand how Ofgem calculate the standing charge within the SVT cap.

You'll find the raw numbers in a set of spreadsheets, published by Ofgem at the same time as they announce the cap

Look here:

https://www.ofgem.gov.uk/master-publications-library

Interpretating.those.numbers.will require that you do a bit more.reading.

Thank you. I guess this confirms that Ofgem really don't want the general public to understand how they arrive at the SVT standing charge cap every 3 months.

They publish simplified information, as well as all the detailed and technical information, it is there for anyone with the will and capacity to digest it. I really cannot see how you can claim that is them not wanting the general public to understand. 

Chris_b2z

MattMattMattUK said:

Chris_b2z said:

QrizB said:

Chris_b2z said:

Surely, it's critical to understand how Ofgem calculate the standing charge within the SVT cap.

You'll find the raw numbers in a set of spreadsheets, published by Ofgem at the same time as they announce the cap

Look here:

https://www.ofgem.gov.uk/master-publications-library

Interpretating.those.numbers.will require that you do a bit more.reading.

Thank you. I guess this confirms that Ofgem really don't want the general public to understand how they arrive at the SVT standing charge cap every 3 months.

They publish simplified information, as well as all the detailed and technical information, it is there for anyone with the will and capacity to digest it. I really cannot see how you can claim that is them not wanting the general public to understand. 

Thank you for your help because I have been struggling to find this information. It's reassuring to know that industry experts are available to assist.

I'm aware that my single rate electricity SVT standing charge (East Midlands region) will be increasing to 56 pence per day from April but I 've seen no real explanation why. Unfortunately, the Ofgem link you provided lists the costs included when calculating the combined standing charge and usage rate within SVT price cap but doesn't explain why the standing charge is going up.

So far, I've discovered there are two costs set by Ofgem within this standing charge that cover the operation, maintenance and development of the electricity network to my home. These are -

13.50 pence per day - Distribution Use of System set by Distribution Network Operators
10.46 pence per day - Transmission Network Use of System set by National Grid

That accounts for 23.96p of my 56p daily standing charge. How can I find what other costs are bundled in there?

dealyboy

@Chris_b2z said:

MattMattMattUK said:

Chris_b2z said:

QrizB said:

Chris_b2z said:

Surely, it's critical to understand how Ofgem calculate the standing charge within the SVT cap.

You'll find the raw numbers in a set of spreadsheets, published by Ofgem at the same time as they announce the cap

Look here:

https://www.ofgem.gov.uk/master-publications-library

Interpretating.those.numbers.will require that you do a bit more.reading.

Thank you. I guess this confirms that Ofgem really don't want the general public to understand how they arrive at the SVT standing charge cap every 3 months.

They publish simplified information, as well as all the detailed and technical information, it is there for anyone with the will and capacity to digest it. I really cannot see how you can claim that is them not wanting the general public to understand. 

Thank you for your help because I have been struggling to find this information. It's reassuring to know that industry experts are available to assist.

I'm aware that my single rate electricity SVT standing charge (East Midlands region) will be increasing to 56 pence per day from April but I 've seen no real explanation why. Unfortunately, the Ofgem link you provided lists the costs included when calculating the combined standing charge and usage rate within SVT price cap but doesn't explain why the standing charge is going up.

So far, I've discovered there are two costs set by Ofgem within this standing charge that cover the operation, maintenance and development of the electricity network to my home. These are -

13.50 pence per day - Distribution Use of System set by Distribution Network Operators
10.46 pence per day - Transmission Network Use of System set by National Grid

That accounts for 23.96p of my 56p daily standing charge. How can I find what other costs are bundled in there?

Hi Chris ... I don't know if you've seen the background document for the November 2023 Ofgem review of the Standing Charge, but I found it very useful.

... https://www.ofgem.gov.uk/publications/standing-charges-call-input

Standing charges - call for input

gerbil61

Ofgem told me (30 October 2023) that "standing charges have increased over the last year or so, due to several factors, one of which is costs from the failure of several energy suppliers in 2021 and 2022. These costs would still exist if the standing charge were to be scrapped."

What they are not explaining is why the failure of energy suppliers has resulted in huge losses, and why these losses are being charged to consumers. Where has the money gone to? Money doesn't just disappear. 

molerat

gerbil61 said:

Ofgem told me (30 October 2023) that "standing charges have increased over the last year or so, due to several factors, one of which is costs from the failure of several energy suppliers in 2021 and 2022. These costs would still exist if the standing charge were to be scrapped."

What they are not explaining is why the failure of energy suppliers has resulted in huge losses, and why these losses are being charged to consumers. Where has the money gone to? Money doesn't just disappear. 

They are not losses but the costs of the suppliers failing such as the customer credit balances that supplier was holding and the costs involved in the SOLR taking over those accounts, often forced on them by the regulator.

Chrysalis

Dont want to get involved on the politics again just one question, have Ofgem made a decision yet based on the most recent consultation they carried out?

GingerTim

Chrysalis said:

Dont want to get involved on the politics again just one question, have Ofgem made a decision yet based on the most recent consultation they carried out?

I don't think anything has been released, and can't see anything on the site. I expect there will be quite a media blitz when they release their findings/recommendations, one way or the another.