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

CSI_Yorkshire

wrf12345 said:

moving s/c into the unit cost will not affect anyone paying less than the average cost, 

Utilita? have moved the SC into the unit costs.  It affects everyone using more than 2 units a day.  You might wish to rethink your understanding of average cost.

bbungay

When prices sky rocketed in 2021/22 I reduced gas and electricity kwh usage by 34% and 8%. I suspect most people did the same (or better), so no surprise the standing charges were hiked to cushion 'their' potential profit loss.

MattMattMattUK

bbungay said:

When prices sky rocketed in 2021/22 I reduced gas and electricity kwh usage by 34% and 8%. I suspect most people did the same (or better), so no surprise the standing charges were hiked to cushion 'their' potential profit loss.

Or, back in the real world, standing charges were raised to cover the increased costs that they are designed to cover. 

CSI_Yorkshire

bbungay said:

When prices sky rocketed in 2021/22 I reduced gas and electricity kwh usage by 34% and 8%. I suspect most people did the same (or better), so no surprise the standing charges were hiked to cushion 'their' potential profit loss.

Who are "they"?

OFGEM, who set the standing charge?

The government, that set the policies that have to be funded through the standing charge?

The 31 energy suppliers that went bankrupt and closed in 2021/22?

Not sure there was a lot of profit going any of those directions.

The_Green_Hornet

Personally I would like to see standing charges revert back to their original purpose of covering the fixed cost of supplying energy to the home before consecutive governments decided to put ever increasing social and environmental levies on top of them but I doubt this will happen.

gadetman

Abolish the Standing Charge.   The SCis not only bad for DD accounts but also Pre-pay accounts. 

Pre-pay meter ‘top-ups’ are gobbled up by the pernicious Standing Charge … which includes any days when the supply has been completely cut off!   

For all accounts,  I suggest abolishing the Standing Charge; making the first few units each day FREE (yes Free!) (enough perhaps to power a fridge and a router for 24 hours), followed by a pricing structure whereby the unit price INCREASES with the amount used (as is common in some other European countries).  The current large Standing Charge and fixed rates mean the unit price is effectively reduced the more you use … little incentive to save.   Abolishing the Standing Charge and introducing tariffs which increase with use would provide the right incentive and help everyone. The idea of re-couping the Standing Charge by having first use units more expensive is completely wrong.

rufford155

This is exactly the same for car road tax.
Have a car - pay £180 or more thank you - even if you only drive 5 miles once a week.
Should all be on the fuel price - drive more, so pay more.

CSI_Yorkshire

rufford155 said:

This is exactly the same for car road tax.
Have a car - pay £180 or more thank you - even if you only drive 5 miles once a week.
Should all be on the fuel price - drive more, so pay more.

Depends what it's to pay for though, doesn't it?

To use a ridiculous example - if you wanted a builder to put up an extension, would you expect the price to be different if you used it eight hours a day or one day a month?

So, if you want wires and pipes to your house - why should they have a different price if you used them a lot or a little?

justwantedtosay

For those against doing away with standing charges because they will pay more and why should they subsidise low users; many low users are the poorest members of society and are low users because they can't afford not to be. Putting the costs onto unit charges would make an enormous positive difference to them and their health and wellbeing, while the average user would see no or very little change in their bill and a high user would only see a relatively small increase. I actually paid more for my gas and water standing charges last year than the gas or water itself - that can't be right! (Not because I have an alternative energy source, gas did all my heating and hot water.)

Briskly

I always wonder how the UK standing charges compare to those in other countries. When I last checked I found that in most states in the US there is no standing charge at all. How can they do this? Their unit rates are also very much lower - presumably because of the cheap gas. In California it seems there is no standing charge and a 3 tiered unit rate for electricity, low for low users and increasing for high users. It all sounds very progressive, encouraging low use and helping the poorest.