Electricity Daily Standing Charge.

Steve2209

I have always understood, that the daily standing charge for electricity in the UK was to pay for the national grid and supply to our homes and this is collected via our respective energy suppliers. If my understanding is correct then I struggle to understand why, there are so many varying standing charges applied by different energy companies. My daily standing charge is about to double, yet looking around I will still be one of the cheapest, but I do struggle to understand why the cost of standing charges varies so greatly. 

Farway

Welcome Steve2209

There is a huge thread on standing charges, get your self a cuppa and start reading here

https://forums.moneysavingexpert.com/discussion/6457615/martin-lewis-why-are-energy-standing-charges-so-high-what-can-be-done#latest

[Deleted User]

The short version:

https://www.goodenergy.co.uk/blog/what-are-standing-charges-and-why-are-they-increasing/

Add to that the £13.6Bn being spent on smart meters and any other cost related to energy: for example, heat pump subsidies; ECO schemes etc. Will the charges go down anytime soon? I doubt it as National Grid needs to build 5 times the number of power lines in 7 years that it has in the last 30 years. MPs are already calling for these to be offshore or underground at somewhere between 4 and 10 times the cost of doing it overland.

CSI_Yorkshire

Steve2209 said:

 I struggle to understand why, there are so many varying standing charges applied by different energy companies. 

There aren't different standing charges applied by different companies really (a couple give a small discount by saving money elsewhere).

The main variation between standing charges is between different geographical regions - mostly due to the different cost per connection in each area.

Mstty

I think the Octopus standing charge discount can be up to 30% depending on the tariff.

Quite substantial

Chrysalis

Dolor said:

The short version:

https://www.goodenergy.co.uk/blog/what-are-standing-charges-and-why-are-they-increasing/

Add to that the £13.6Bn being spent on smart meters and any other cost related to energy: for example, heat pump subsidies; ECO schemes etc. Will the charges go down anytime soon? I doubt it as National Grid needs to build 5 times the number of power lines in 7 years that it has in the last 30 years. MPs are already calling for these to be offshore or underground at somewhere between 4 and 10 times the cost of doing it overland.

I probably shouldnt dive into this discussion as I am very anti SC and there is people on here who are very pro SC which is not a good combination, but from my perspective there is a number of issues here, one being that clearly utilisation has an impact on infrastructure costs, if we use less energy then less capacity needs to be built, yet we charge consumers infrastructure costs on a per property basis which takes no account of occupancy levels, income levels or usage. probably the least fair method possible but likely is supported as it lowers peak costs per household (which has political benefits) via cross subsidy from lower occupied households.  It wasnt always like this though, some of it was billed on units, Ofgem recently changed it.

https://www.nationalgrid.com/document/149561/download

Looking at the UK figures.

Distribution profits up 39%, however transmission profits down 4%, the investment costs vs the revenue do seem tied together, how much is their projected investment going to increase?  I guess we need to wait for future balance sheets if this new work hasnt started yet.

CSI_Yorkshire

Chrysalis said:
how much is their projected investment going to increase?  I guess we need to wait for future balance sheets if this new work hasnt started yet.

No need to wait, it's here:

https://www.ofgem.gov.uk/publications/riio-ed2-final-determinations

Chrysalis

CSI_Yorkshire said:

Chrysalis said:
how much is their projected investment going to increase?  I guess we need to wait for future balance sheets if this new work hasnt started yet.

No need to wait, it's here:

https://www.ofgem.gov.uk/publications/riio-ed2-final-determinations

Thanks for the link I assume this includes the actual cost to national grid in there somewhere?  Is a lot of pdf documents so dont know when I will have a read.

CSI_Yorkshire

Chrysalis said:

CSI_Yorkshire said:

Chrysalis said:
how much is their projected investment going to increase?  I guess we need to wait for future balance sheets if this new work hasnt started yet.

No need to wait, it's here:

https://www.ofgem.gov.uk/publications/riio-ed2-final-determinations

Thanks for the link I assume this includes the actual cost to national grid in there somewhere?  Is a lot of pdf documents so dont know when I will have a read.

They're almost impossible to read, unfortunately, but they show the amount of money requested (and the amount actually approved by OFGEM) per network company - split down by what type of project it is, when it is planned to be completed, why the project is needed...

They review in 5-year periods, so this one covers 2023 to 2028.

A couple of interesting snippets:

From UKPN - seems that they wanted money to expand the fuel poverty support payments, OFGEM refused and decided that they should expand the scheme without being allowed money for it.

National Grid Distribution (Midlands) wanted many to replace old cut out fuse holders with newer ones.  OFGEM told them they could only have part of the money they asked for because the data about how many needed replacing wasn't good enough.

Electricity North West requested an allowance for 49 projects, had 3 rejected and were told they could only recover partial spend for 24.

Chrysalis

Hard to read doesnt surprise me with Ofgem sadly.  I do appreciate the bits you shared.

molerat

Dolor said:

Will the charges go down anytime soon? I doubt it ........

There is a 7p increase in electric SC next April according to CI