MSE News: Energy bills to fall by 7% as new Price Cap is announced

Bendo

Swipe said:

dealyboy said:

Mstty said:

Swipe said:

MSE_James said:

Our price cap calculator has now been updated with the new rates - enter your annual usage and it will work out what the October price cap will be for you in your region:

https://www.moneysavingexpert.com/utilities/what-are-the-price-cap-unit-rates-/#epgcalculator 

I wish these links would open in a new browser tab. Is that possible? I can't see any way to set this.

Right click or long hold on android

... even quicker ... ctrl left click

As I said, I do know how to do it manually but I don't see any way to set it as the default action in settings. I've raised it on the feedback forum.

Urgh. It isn't 1996, links should default to same window and users can simply choose to open them in a new tab if they so desire.  It's basic Web usability.

justwantedtosay

spot1034 said:

It doesn't follow that higher usage relates to wealth. A need to consume high amounts of energy might well reflect a medical need which can affect anyone, so a poorer consumer who happens to fall into this category will end up paying more than the average if their consumption happens to be above average. Conversely, a wealthier consumer might well spend much less time in their home and therefore have below average bills.

It would be easy enough to make arrangements for people with special needs and I think the idea that wealthy people have lower bills is unlikely to stand up - they probably have bigger houses to heat and won't have to keep the temperature low because they can't afford not to. 

justwantedtosay

MattMattMattUK said:

The problem with scrapping standing charges is that benefits low users and penalises average and higher users. In general low users are those with well insulated homes with solar and heat pumps, usually the better off in society. Where as those who would be penalised more are those who are at home a lot, need to sustain a heat level and have badly insulated homes without solar, usually retired people, the disabled etc. Scrapping standing charges would disproportionately benefit higher earners. 

I have little doubt that most low users are poor and use little energy simply because they can't afford to use more, and even if their homes are poorly insulated they are very likely to be smaller. I can't see how the idea that "Scrapping standing charges would disproportionately benefit higher earners" can be right. Higher earners are more likely to have higher usage and the higher the usage the more they benefit from high standing charges. I'm retired but not yet receiving my pension or any benefits, am at home nearly 24/7, especially in winter, rely on gas for all my heat and hot water in a very average small house but still paid more for my gas standing charge than for the gas itself last year. Those with health problems and the elderly are still getting help with their bills and this could easily continue.

I'd assume that rebalancing SCs v unit prices would mean that average users would see little change in their bills and higher users - those who use a lot because they don't have to worry about the cost - might be able to cut back a bit if they really thought they were being penalised.

If cutting or ending standing charges were as good for the poor as people here are making out, why is Martin and MSE in favour of doing so? I expect they know more than either of us.

[Deleted User]

I can't see how the idea that "Scrapping standing charges would disproportionately benefit higher earners" can be right

PV solar owners are off grid or low users from April through to September. I doubt that many of them are low earners. Greg Jackson CEO Octopus did say yesterday that some of the standing charge could be moved onto unit charges if Ofgem chose to do so. This forum would then be filled with outrage from those ending up paying more than they do today.

QrizB

justwantedtosay said:

I have little doubt that most low users are poor

That's an interesting belief that deserves some exploration.

There's a UK government study (link below) (from 2017, so a few years old) with this chart:

There are something like 25 million households in the UK, so each quintile is about 5 million.

This chart seems to show that, while 29% of the lowest-income households (almost 1.5 million) are low energy users, so are a significant proportion of other households. 12% of the highest-income households (600k) are still under-consuming energy.

And at the other end of the chart, 11% ((550k) of lowest-income households are high energy users.

If this chart is still accurate, it looks as though abolishing standing charges would only really help less than a third of the lowest-income households, and would penalize more than one in ten of them.

Link to report:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1018725/efus-Household-Energy-Consumption-Affordability.pdf

justwantedtosay

[Deleted User] said:

I can't see how the idea that "Scrapping standing charges would disproportionately benefit higher earners" can be right

PV solar owners are off grid or low users from April through to September. I doubt that many of them are low earners. Greg Jackson CEO Octopus did say yesterday that some of the standing charge could be moved onto unit charges if Ofgem chose to do so. This forum would then be filled with outrage from those ending up paying more than they do today.

I'd put up with a few wealthy PV solar owners benefitting if it also meant that many poor people were saved paying the standing charges. But would it not be easy enough to put some sort of charge onto the bill of people with solar panels to compensate? Not to make them any worse off than they are now but just so they don't get double the advantage.

QrizB

justwantedtosay said:

I'd put up with a few wealthy PV solar owners benefitting if it also meant that many poor people were saved paying the standing charges.

Or you could fit PV to low income homes. Just like is currently happening under the ECO scheme.

I can't imagine that the social tenants up the road from me would be very happy being asked to pay an additional charge because of an energy-saving measure that was fitted by their HA a few years ago.

justwantedtosay said:

But would it not be easy enough to put some sort of charge onto the bill of people with solar panels to compensate? Not to make them any worse off than they are now but just so they don't get double the advantage.

Some sort of standing charge, you mean? It would be easy to add a charge for anyone with an export MPAN, but some people would give up their export payments rather than pay the charge. They'd still benefit from their own generation.

A very rough calculation suggests that you could scrap the standing charge for domestic accounts and simply increase VAT on those from 5% to the usual 20%. It would balance out at the current cap.

How would people take it? I imagine low users would be happy, high users less so, and the red tops would be full of stories from pensioners who feel hard done by.

Pensioners who vote.

[Deleted User]

justwantedtosay said:

[Deleted User] said:

I can't see how the idea that "Scrapping standing charges would disproportionately benefit higher earners" can be right

PV solar owners are off grid or low users from April through to September. I doubt that many of them are low earners. Greg Jackson CEO Octopus did say yesterday that some of the standing charge could be moved onto unit charges if Ofgem chose to do so. This forum would then be filled with outrage from those ending up paying more than they do today.

I'd put up with a few wealthy PV solar owners benefitting if it also meant that many poor people were saved paying the standing charges. But would it not be easy enough to put some sort of charge onto the bill of people with solar panels to compensate? Not to make them any worse off than they are now but just so they don't get double the advantage.

I am not sure that I understand. Solar PV owners pay the normal standing charge. They have invested in panels and reasonably they need some form of payback from energy costs saved. The Grid needs more solar power and the it needs massive infrastructure improvements. Improvements have to be paid for: at the moment, by all energy consumers.

 As various commentators said yesterday, there are millions of families in the country who do not meet the criteria for benefits who are struggling to pay their energy bills; pay for food etc. Should they be asked to pay more to support those that the Government-led welfare system defines as being poor?

The only fair way of dealing with this problem in my opinion is through income tax and increased welfare benefits but that isn’t how Governments deal with energy costs.

mmmmikey

QrizB said:

justwantedtosay said:

I have little doubt that most low users are poor

That's an interesting belief that deserves some exploration.

There's a UK government study (link below) (from 2017, so a few years old) with this chart:

There are something like 25 million households in the UK, so each quintile is about 5 million.

This chart seems to show that, while 29% of the lowest-income households (almost 1.5 million) are low energy users, so are a significant proportion of other households. 12% of the highest-income households (600k) are still under-consuming energy.

And at the other end of the chart, 11% ((550k) of lowest-income households are high energy users.

If this chart is still accurate, it looks as though abolishing standing charges would only really help less than a third of the lowest-income households, and would penalize more than one in ten of them.

Link to report:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1018725/efus-Household-Energy-Consumption-Affordability.pdf

It's my understanding that Citizen's Advice do not favour scrapping standing charges in favour of higher unit rates because of the negative effect that would have on other less well off and vulnerable groups.

Although there's a wide spectrum of views on this forum about how the financially poorer groups in society are best identified and helped I can't bring to mind a single post where someone has argued they shouldn't be helped at all.

Anecdotally, if I walk across to a friend's house on the other side of the village, I pass a number of expensive privately owned houses with solar panels who's owners would undoubtedly benefit if the balance changed from lower standing charges to higher unit rates (I'm in that group myself). I then pass a number of aging 3 bed semi detached council houses with large families and it's clear, for example, from the lack of cars or age of the cars that are there that this is not a prosperous area. This families would probably be disadvantaged because the homes are of an age where they will be energy inefficient and heating bills would be large. I then walk past a small development of sheltered housing for the elderly, who probably have higher than average usage by virtue of being at home and needing more heat than younger folk.

So although I don't doubt for a moment that there are large numbers of the less well off that would benefit from lower standing charges / higher unit rates there are also a large number who would be disadvantaged. So it's my own clear view that as much as I support supporting people who are having problems paying their energy bills, all that lowering standing charges and loading unit costs would do is shift the problem to another group.

Reducing standing charges simply won't work for the groups that I know that need support, and as much as I'd welcome the bit of extra cash that reducing my own bill would generate I'd hate to do that at the expense of some of the most vulnerable in society. The answer, in my view, is reviewing the wider benefits system to ensure that support is appropriately tapered and targeted to those who need it.

justwantedtosay

QrizB said:

justwantedtosay said:

I have little doubt that most low users are poor

That's an interesting belief that deserves some exploration.

I think your chart proves me to be right in my belief. If, and I admit it's a guess, you imagine there's a straight line and that the five consumption quintiles for the lowest income quintile are 29, 24.5, 20, 15.5 and 11% then 53.5% of the lowest two consumption quintiles are in the bottom 40% of the income range. If 11% of the poorest are in the high user bracket then there's a good chance it's because they have extra needs which they could easily be compensated for - as they are already. The extraordinary increase in energy prices since that data must mean it doesn't reflect the current situation very well anyway; there are far more people in fuel poverty now who have had to cut their consumption. On the other hand, there are doubtless more people with solar panels too.