Electricity Daily Standing Charge.

Qyburn

bristolleedsfan said:

Centrica, Octopus and Ovo Chiefs are on record saying Standing Charges should be abolished, just need one supplier to put words into action and launch 12 month domestic fixed rate tariff with Zero standing charge 

Isn't the problem that suppliers aren't allowed to charge over the Price Cap on their unit rates? So they'd be free to offer a tariff with no standing charge, making a loss on that element, but could not increase unit prices to compensate.

matt_drummer

Qyburn said:

bristolleedsfan said:

Centrica, Octopus and Ovo Chiefs are on record saying Standing Charges should be abolished, just need one supplier to put words into action and launch 12 month domestic fixed rate tariff with Zero standing charge 

Isn't the problem that suppliers aren't allowed to charge over the Price Cap on their unit rates? So they'd be free to offer a tariff with no standing charge, making a loss on that element, but could not increase unit prices to compensate.

You are missing their point

What they want is to pay the same unit rate and just not pay the standing charge so they pay less. They want all the rich people to pay more to compensate

QrizB

Qyburn said:

bristolleedsfan said:

Centrica, Octopus and Ovo Chiefs are on record saying Standing Charges should be abolished, just need one supplier to put words into action and launch 12 month domestic fixed rate tariff with Zero standing charge 

Isn't the problem that suppliers aren't allowed to charge over the Price Cap on their unit rates? So they'd be free to offer a tariff with no standing charge, making a loss on that element, but could not increase unit prices to compensate.

That isn't quite right. Only the SVT is capped, so a supplier is free to offer an alternative (fixed or variable) tariff with zero standing charge and a higher unit price.

The challenge is that the supplier is liable for the costs of supplying the customer (costs normally paid via the standing charge) regardless. So they will still need to pay these costs even though the customer isn't.

It seems there isn't currently a big enough profit margin on energy retail to cover this.

bristolleedsfan

Qyburn said:

bristolleedsfan said:

Centrica, Octopus and Ovo Chiefs are on record saying Standing Charges should be abolished, just need one supplier to put words into action and launch 12 month domestic fixed rate tariff with Zero standing charge 

Isn't the problem that suppliers aren't allowed to charge over the Price Cap on their unit rates? So they'd be free to offer a tariff with no standing charge, making a loss on that element, but could not increase unit prices to compensate.

Price Cap does not apply to fixed rate tariffs, suppliers are free to set unit rate/SC combination however they wish in the same way as Octopus are doing with Business fixed rate tariffs.

matt_drummer

bristolleedsfan said:

Price Cap does not apply to fixed rate tariffs, suppliers are free to set unit rate/SC combination however they wish in the same way as Octopus are doing with Business fixed rate tariffs.

The supplier still has to hand over the equivalent of the standing charge.

Where do they get this from if the customer is no longer paying it?

mmmmikey

matt_drummer said:

bristolleedsfan said:

Price Cap does not apply to fixed rate tariffs, suppliers are free to set unit rate/SC combination however they wish in the same way as Octopus are doing with Business fixed rate tariffs.

The supplier still has to hand over the equivalent of the standing charge.

Where do they get this from if the customer is no longer paying it?

The magic money tree, I think.....

Scot_39

Qyburn said:

bristolleedsfan said:

Centrica, Octopus and Ovo Chiefs are on record saying Standing Charges should be abolished, just need one supplier to put words into action and launch 12 month domestic fixed rate tariff with Zero standing charge 

Isn't the problem that suppliers aren't allowed to charge over the Price Cap on their unit rates? So they'd be free to offer a tariff with no standing charge, making a loss on that element, but could not increase unit prices to compensate.

The Ofgem cap only applies to the default tariff - not fixes.

Fixes have regularly exsited at prices more expensive than the SVT rates at the time of opening.

The last 2 year fix my sibling took out with SP in Feb 2021 - about 5-10% higher in fact - despite at the time c2% inflation -  classic example of how the big 6 used to do it.

Chrysalis

matt_drummer said:

bristolleedsfan said:

NorfolkCanary said:

bristolleedsfan said:

snip

No thanks. Using my current usage and Octopus' current flexible rates,  +£0.025p on each unit (day/night/gas) it would save me the sum total of £55. I can't see suppliers sticking with 2.5p over non SC charges to compensate, nor should they, based on that it's a no from me

Flexible can keep current charging method, how about others being given a choice ?  

"just need one supplier to put words into action and launch 12 month domestic fixed rate tariff with Zero standing charge as Octopus have done with a couple of Business 12 month fixed tariffs"

How will the network guarantee to generate all of the funds necessary to cover the fixed costs?

Surely if some customers start paying less towards standing charges others will need to pay more?

With the fixed costs spread equally over all of the customers the costs are guaranteed to be covered, once you introduce the opportunity for some customers to pay less then the guaranteed income is no longer guaranteed, there could be a shortfall.

And there is still the problem that many of the heaviest users of electricity are the poorest, the sick and the elderly and these people will be hit the hardest.

The costs would still be paid out of revenues, it just would be in a different way.

The problem now is that SC isnt just covering the network costs, and isnt just network fixed costs either.  Ofgem keep moving more and more things to it, so its fast becoming a generic revenue increaser.

There is an argument to be made that costs for essential network work, should not be collected via the suppliers.  Or it can be separated from SC into its own specific itemised option.  Personally I think the best way is general taxation, its after all national infrastructure which the country needs, otherwise make it as a % of the bill or something on its own itemised option.

There could be a fixed charge per house hold for "fixed" costs.  Then a % charge per bill for utilisation based network costs.  However the way it should be working is the suppliers need the network to deliver energy to customers, so they should simply be paying the grid for that, and its part of the unit rate charged to customers.

Chrysalis

Qyburn said:

bristolleedsfan said:

Centrica, Octopus and Ovo Chiefs are on record saying Standing Charges should be abolished, just need one supplier to put words into action and launch 12 month domestic fixed rate tariff with Zero standing charge 

Isn't the problem that suppliers aren't allowed to charge over the Price Cap on their unit rates? So they'd be free to offer a tariff with no standing charge, making a loss on that element, but could not increase unit prices to compensate.

That only applies to SVR.  All other tariffs are not covered by the cap, for either SC or Unit rates.

Chrysalis

matt_drummer said:

bristolleedsfan said:

Price Cap does not apply to fixed rate tariffs, suppliers are free to set unit rate/SC combination however they wish in the same way as Octopus are doing with Business fixed rate tariffs.

The supplier still has to hand over the equivalent of the standing charge.

Where do they get this from if the customer is no longer paying it?

They dont hand over the SC, only a portion of the SC is for the network.