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

BarelySentientAI

wrf12345 said:

An interesting point about fuse size, though, as many countries offer two meter options with exactly that intention (pre smart meter so I guess can be done automatically?), and the smaller rated consumer unit comes with both lower s/c and unit rate or just simple unit rate. 
.

It effectively matches your argument - if you are actually using the system less (which means capacity, not usage, because that's how things have to be designed), you should pay a smaller portion of the reinforcement & maintenance.

At least in France, you declare what capacity you want and pay based on that.  If they find out that you went over, you get bumped up to the next size, pay a penalty charge, and are not eligible to move back to the smaller capacity for a certain period of time.

wrf12345 said:

Because you are making people plead/beg to councils/energy companies in a way that poor pensioners, for instance, would not countenance and welfare has all but bankrupted the country post-Brown govn. This is a case of the govn/ofgem putting the energy companies before the people who actually pay their salaries, and rather unacceptable. It is a deliberate complication of a simple solution (get rid of s/c) so that more people are employed to police yet another state system and energy companies get yet another helping of gov money for free.

So your point of view is as noted earlier.  Make all higher users, regardless of circumstances, subsidise the system for all lower users, regardless of their circumstances.  True, it's simple, but exactly the opposite of progressive.  At least you're open about it.

Are you also then in favour of removing the winter fuel payment because that's "making poor pensioners beg"?

I think many pensioners would perfectly countenance a system that said "once you start drawing state pension, you pay no standing charge".  I don't think that's a good option, because it includes many that don't need and excludes many that do, but it's not some weird scam to funnel money to corporations.

wrf12345

"most basic minimum income level when assessing pensiom age means-tested benefits is literally double that of working age benefits" only for those pensioners willing to reduce their savings down to a quite low level, lots of people having no interest in becoming a ward of the state or having social workers nosing around - this is the problem with this country, take huge chunks of money in fixed costs (s/c's. council tax etc) and then create bureaucracies to give some of it back, reducing people to a child-like state whilst bloating our councils and the state. 

the_lunatic_is_in_my_head

wrf12345 said:

"most basic minimum income level when assessing pensiom age means-tested benefits is literally double that of working age benefits" only for those pensioners willing to reduce their savings down to a quite low level, lots of people having no interest in becoming a ward of the state or having social workers nosing around - this is the problem with this country, take huge chunks of money in fixed costs (s/c's. council tax etc) and then create bureaucracies to give some of it back, reducing people to a child-like state whilst bloating our councils and the state. 

The primary purpose of government is to preserve the status quo, you are correct that this idea of making the majority dependant up the status quo itself leads to greater conformity which raises the question of whether that is beneficial. 

Our society currently affords far greater security than that of centuries past, something for which IMHO we should be very grateful for, but a greater dependency equally makes it's more difficult to address the aspects that serve the agenda of the minority at the expense of the majority. 

That leads to your other valid point about fixed costs, you can attempt to lean away from the "system" through lifestyle choices but those fixed costs are a shackle preventing you from total freedom. Some may say that freedom to be relieved from the obligation of contribution would be selfish as we should all contribute to society, others may say the requirement to be shackled is oppressive.

The whole ideal is a moral quandary and debate on such subjects is always positive, the question is whether the person you are debating is interested in two sides broadening their views or whether they merely take pleasure in shouting down others, which is why it's always wise to carefully pick who you choose to invest time in debating with. 

The forum here is very pro standing charge, and for most posters presumably because that is their genuine view, my personal view is that it's an academic point that distracts from the bigger picture of a handful of organisations generating vast profits from extraction whilst distancing themselves from the end consumer meaning they face less scrutiny.

However as I've said before such scrutiny may not benefit us directly, when you look at what Shall have been accused of in Nigeria should the vast extraction profits be lowering our bills or should they be invested in the devastated lives of impoverished people who aren't seeing the value of their country's natural resources bettering their society?

On a last point, here in Wales you can side step a lot of the shackles of our status quo as you my build without planning permission if you meet certain requirements to be self sufficient, it's obviously not that easy to achieve but possible, however doing so would require sacrificing many of the conveniences that we have become accustomed to in our daily lives which is something not many people wish to do, again raising the moral questions around our dependency on the status quo. 

BarelySentientAI

the_lunatic_is_in_my_head said:

That leads to your other valid point about fixed costs, you can attempt to lean away from the "system" through lifestyle choices but those fixed costs are a shackle preventing you from total freedom. Some may say that freedom to be relieved from the obligation of contribution would be selfish as we should all contribute to society, others may say the requirement to be shackled is oppressive.

In this particular case, that isn't accurate though.

Take yourself off the grid into "total freedom" and there are no socialised fixed costs for you to pay.

There is no "requirement to be shackled" - although there is, quite rightly, an expectation that if you use the system then you contribute.

The rest is FotL woo-woo.

xflare

Im kind of surprised to see this lighter tariff come from British Gas of all suppliers.   Would have thought someone like Octopus might have been the first to offer something like it as they offer very slightly lower SC on some of their tariffs.

the_lunatic_is_in_my_head

BarelySentientAI said:

In this particular case, that isn't accurate though.

Take yourself off the grid into "total freedom" and there are no socialised fixed costs for you to pay.

There is no "requirement to be shackled" - although there is, quite rightly, an expectation that if you use the system then you contribute.

Off grid was touched on in the last paragraph, what was omitted was a given, those most impacted by standing charges will be lower income without the financial resources to invest leaving them to be shackled to the current system. 

BarelySentientAI said:

The rest is FotL woo-woo.

Thank you for demonstrating my other point so aptly  

BarelySentientAI

the_lunatic_is_in_my_head said:

BarelySentientAI said:

In this particular case, that isn't accurate though.

Take yourself off the grid into "total freedom" and there are no socialised fixed costs for you to pay.

There is no "requirement to be shackled" - although there is, quite rightly, an expectation that if you use the system then you contribute.

Off grid was touched on in the last paragraph, what was omitted was a given, those most impacted by standing charges will be lower income without the financial resources to invest leaving them to be shackled to the current system. 

The same people that would also be most impacted by placing the cost into other parts of the tariff structure - the usually suggested "fix" for a high standing charge.

the_lunatic_is_in_my_head said:

BarelySentientAI said:

The rest is FotL woo-woo.

Thank you for demonstrating my other point so aptly  

My pleasure.  Did you have anything to propose beyond "corporations are evil and anyone who disagrees with my points is just doing it to shout me down"?

I'm not sure the MSE forum is a great place to debate geo-political issues of international economics, but I'm always happy to hear actual suggestions whose merits or otherwise can be discussed.

I think the majority of the forum is "pro standing charge" as you describe it because at the moment it's the least worst of the options.  Unfortunately, in real life that's the sort of position that you end up having to hold on a lot of issues.

the_lunatic_is_in_my_head

BarelySentientAI said:

Did you have anything to propose 

20-25p of the standing charge covers billing, admin, meter reading, etc, basic business overheads, a government run entity to provide supply could fund such costs via taxation, it could also eliminate the (rather small) profit element or alternatively return profit back into the interests of the people.

The ideals of contribution should be formed via taxation. 

The cost of upgrading the grid is another factor and the £4 billion profit National Grid generate is also a point of debate (for which there are both pros and cons). 

As I say the standing charge is a small element of the problem, very easy for people to focus on to distract them from raising more valid questions around the larger issues. 

IMO the other poster, to whom I was responding, makes two valid points, welfare is not necessarily the answer to assist those who struggle to survive and fixed costs via all types of bills are not necessarily the answer to addressing the balance of contribution when it comes to aspects of life that are, to our current standards, genuinely essential. 

BarelySentientAI

the_lunatic_is_in_my_head said:

BarelySentientAI said:

Did you have anything to propose 

20-25p of the standing charge covers billing, admin, meter reading, etc, basic business overheads, a government run entity to provide supply could fund such costs via taxation, it could also eliminate the (rather small) profit element or alternatively return profit back into the interests of the people.

The ideals of contribution should be formed via taxation. 

The cost of upgrading the grid is another factor and the £4 billion profit National Grid generate is also a point of debate (for which there are both pros and cons). 

As I say the standing charge is a small element of the problem, very easy for people to focus on to distract them from raising more valid questions around the larger issues. 

IMO the other poster, to whom I was responding, makes two valid points, welfare is not necessarily the answer to assist those who struggle to survive and fixed costs via all types of bills are not necessarily the answer to addressing the balance of contribution when it comes to aspects of life that are, to our current standards, genuinely essential. 

Moving the whole thing (or the part that is green schemes, admin, etc) into general taxation is certainly valid as an idea.  Although then there is either hypothecation necessary (which never happens) or it's relying on government bureaucracy to get the money where it needs to be for the schemes (which isn't exactly reliable).  I think there's significant resistance from both the politicians and the electorate to anything moving into taxation that isn't already there.

Several local government run entities started to supply energy to either eliminate the profit or do something more useful with it.  All made massive losses and failed.  The last time central government was involved in the energy system, a similar thing was on its way to happening.
 
Governments haven't historically been particularly good at dealing with systems that need ongoing maintenance, upgrade and expansion.  They're pretty good at establishing something out of nothing, but then once it exists then the need for votes outweighs long-term development.

the_lunatic_is_in_my_head

BarelySentientAI said:

Several local government run entities started to supply energy to either eliminate the profit or do something more useful with it.  All made massive losses and failed.  The last time central government was involved in the energy system, a similar thing was on its way to happening.
 
Governments haven't historically been particularly good at dealing with systems that need ongoing maintenance, upgrade and expansion.  They're pretty good at establishing something out of nothing, but then once it exists then the need for votes outweighs long-term development.

Therein lies the rub.... 

It would seem more prudent for people to begin asking questions that look towards causes rather than symptoms and also not raising those question only when it bothers them but all the time.