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

MattMattMattUK

schmorgs said:

I got a letter from British Gas today congratulating me on signing up to their standard variable tariff (I didn't but hey), and that energy prices are coming down in Oct.

The Gas and Electric unit price is down approximately 10%, but the Electricity standing charge is going up 40%.  

I don't pretend to understand all the mechanics of what this covers, but all they have done here is decreased energy cost (because they have to) and increased standing charge (because they can).

Shocking (pun intended)

The unit rate and the standing charge on the SVT are set by Ofgem under the price cap, the suppliers cannot increase the standing charge at will. The suppliers do not get to keep the standing charge.

QrizB

schmorgs said:

The Gas and Electric unit price is down approximately 10%, but the Electricity standing charge is going up 40%.

Looking at the July and October price cap tables, I don't think there's a region where the electricity standing charge has increased by 40%. For most regions, the increase was less than 1%.

@schmorgs was your previous tariff a fixed rate, or the standard variable? Which energy supply region are you in?

Lyncj01

E (Gas & Electricity) Ltd. also offer a no standing charge tariff for all smart meter prepayment customers - have done for years. They are often cheaper than Utilita and they answer the phone when you call them! 

cmm2009

Re. High Cost of Standing Charges.  SCs were raised to cover the cost to suppliers taking on the customers of those  ca.27 suppliers who went under, including the cost of their deluded trading on the energy markets.  Guardian article of 6th March 2022 quotes Andrew Enzor, managing consultant at Cornwall Insight (ML's go-to company): “Regulatory changes ordered by Ofgem were already set to add around £30 to each customer’s standing charge.  Since then, there have been a wave of company failures, with each one requiring a bailout, the cost of which is being shared by all consumers.  We calculate the cost will add a further £35 a year per household. Both of these are added to electricity bills, at a time when households can least afford it.”   I did my sums and reckoned I had paid my share of the cost of dealing with the transfer of customers by July of this year and yet my SCs have gone up again.  More strength to ML and his campaign to highlight this scandal.

ArbitraryRandom

cmm2009 said:

Re. High Cost of Standing Charges.  SCs were raised to cover the cost to suppliers taking on the customers of those  ca.27 suppliers who went under, including the cost of their deluded trading on the energy markets.  Guardian article of 6th March 2022 quotes Andrew Enzor, managing consultant at Cornwall Insight (ML's go-to company): “Regulatory changes ordered by Ofgem were already set to add around £30 to each customer’s standing charge.  Since then, there have been a wave of company failures, with each one requiring a bailout, the cost of which is being shared by all consumers.  We calculate the cost will add a further £35 a year per household. Both of these are added to electricity bills, at a time when households can least afford it.”   I did my sums and reckoned I had paid my share of the cost of dealing with the transfer of customers by July of this year and yet my SCs have gone up again.  More strength to ML and his campaign to highlight this scandal.

This is the breakdown of the 'average' cap rate, inc standing charge. I'm not sure what element specifically you think is a scandal? 

From 1 October the equivalent per unit level of the price cap to the nearest pence for a typical customer paying by direct debit will be 27.35p per kWh for electricity customers and a standing charge of 53.37p per day. The equivalent per unit level for a typical electricity muti-register customer is 26.26p per kWh and with a standing charge of 53.36p per day. The equivalent per unit level for a typical gas customer is 6.89p per kWh with a standing charge of 29.62p per day.     

https://www.ofgem.gov.uk/publications/energy-prices-fall-again-winter

michelleduer

I'm a low user yet pay almost double the standing charge on my electricity here in the North West compared to a customer in London. How is this fair? 

MattMattMattUK

michelleduer said:

I'm a low user yet pay almost double the standing charge on my electricity here in the North West compared to a customer in London. How is this fair? 

Network costs per dwelling higher in the North West than in London, there are a lot more miles of cable per dwelling and a lot fewer dwellings per transformer in the North West than in London. 

theDG

I have a small shop and the standing charge form Scottish power is 192p £1.92

MattMattMattUK

theDG said:

I have a small shop and the standing charge form Scottish power is 192p £1.92

Commercial tariffs are not subject to the price cap and can vary wildly, both in unit costs and standing charges. 

Gerry1

michelleduer said:

I'm a low user yet pay almost double the standing charge on my electricity here in the North West compared to a customer in London. How is this fair? 

Renting a property in London probably costs twice as much as in the North West, so it's just swings and roundabouts.