'Unfair' standing charges need to go: MPs back Martin's and MSE's calls for energy bill overhaul

MSE_Molly_G

Energy standing charges unfairly penalise households on lower incomes and those looking to cut their usage, a cross-party group of MPs have said in a new report published today.

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'Unfair' standing charges need to go: MPs back Martin's and MSE's calls for energy bill overhaul

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Xbigman

I completely disagree with the whole idea.

The biggest beneficiaries will be people with solar panels, second homes, good insulation and low users like myself. 
The biggest losers will be people with families and the elderly who don't fit in the groups above. As the low paid with children seem to end up in poor quality housing because that's where housing benefit tends to push them this will hurt them the most.

For myself, I could save a lot. But my smart meter wasn't cheaper because I'm a low user, nor were the cables to my house. Why should I not pay my fair share?

If you want to make changes then move the green levies from electric to gas (you can take vat off electric and increase vat on gas too). Lets try and balance up the electric/gas costs a bit.


Darren

dunstonh

Some of the proposed alternatives are also "unfair". 
1) the rising block tariff  (increasing cost if you use more) penalises those that have moved their energy from direct fossil fuels to electricity-backed methods.  (e.g. EVs, heat pumps etc).   
2) The old method of a higher unit cost for the first x units gives a similar outcome to a standing charge for most people but would mean many with significant solar installations would be exempt despite still utilising the infrastructure.
3) reducing the standing charge and letting suppliers set a unit rate after their costs.  That may allow some suppliers, who are efficient to reduce the overall charge but it could see the inefficient ones pass higher costs on to their consumers.  Perhaps the most market friendly option and may generate efficiencies at corporate level rather than the consumer.

The standing charge isn't really unfair.   Just be honest about what the cost covers and remove some things from it that shouldn't be included - even if those lead to an increase in the rate.

Ultimately, if you introduce a system that penalises higher users, you are more likely to see the wealthy ones move to solar etc to avoid it and that means the cost needs to be spread amongst a smaller number of users having to pay more.  And that is likely to be those that cannot afford to self-generate which puts them back in the same situation.

Maybe the green levies, which equate to 25% of electricity bills or 7.8% for combined gas/electric would be a better place to start looking for reducing costs.

The_Green_Hornet

It does seem that this campaign is starting to gather some momentum to the annoyance of some posters.

Personally, I would like to see the standing charges go back to their original purpose and all the government levies  moved to the tax/benefits system, but I can't see that happening as it would be a major U-turn for Ofgem.

Gerry1

The best way to help would be scrap VAT on enegy bills as frequently promised by Gove before the Brexit referendum.

MikeJXE

The_Green_Hornet said:

It does seem that this campaign is starting to gather some momentum to the annoyance of some posters.

Very true but there has always been a few who support energy companies and the standing charge on the energy forum

Makes me wonder how come Martin gets huge support on almost everything he does except when it comes to the standing charge

Has he got it all wrong ? 

MattMattMattUK

The_Green_Hornet said:

It does seem that this campaign is starting to gather some momentum to the annoyance of some posters.

I think the annoyance is because those of us look at things rationally see the standing charge as a sensible proposition and many people (not all) come on with emotional rants about why standing charges need to be cut "think of the poor, think of the children" style complaints, ignoring that moving the costs to the unit rate would likely cost those people more.

The_Green_Hornet said:

Personally, I would like to see the standing charges go back to their original purpose and all the government levies  moved to the tax/benefits system, but I can't see that happening as it would be a major U-turn for Ofgem.

I agree that there is an argument to move the benefits components back to general taxation, but that does not follow through that the standing charge should be abolished. It would not be down to Ofgem, it was the government who forced Ofgem to apply policy costs directly to energy bills rather than paid for through taxation.

Gerry1 said:

The best way to help would be scrap VAT on enegy bills as frequently promised by Gove before the Brexit referendum.

Scrapping VAT on energy would be a bad idea, it would make little use to individuals as it is only 5%, but on the scale that it applies it would cost a huge amount to the exchequer and that would either create a bigger deficit, or have to be made up elsewhere. 

mmmmikey

Whilst I applaud the idea of supporting those who are struggling with energy bills, I believe that removing or reducing standing charges is a little more than populist window-dressing that will just move the underlying issue from one pocket to another. 

Specifically, as @Xbigman points out above, groups with high energy requirements such as pensioners, those with large families, those living in poor quality rented accommodation and those with disabilities and illnesses will all potentially pay more under these proposals.

And among the higher income groups, those with second and holiday homes will benefit. Those who are financially secure enough to have invested in technologies such as solar panels and batteries will also benefit as they have lower usage - and there are already subsidies in place to help these people.

I agree there is a need to provide extra support to some vulnerable groups, but expecting other vulnerable groups to foot the bill (whilst at the same time paying to heat others' holiday cottages) is not the way forward. I know I am not alone in this view and would urge anybody who supports it to lobby their MP and/or cast their vote at the next election accordingly.

Martin Lewis has had a huge, positive impact on the lives of the less well off, I am a huge fan and long may he prosper. But he does not have a monopoly on concern for those in need. I believe he has got this one badly wrong and, however worthy his aims are the unintended consequences will overshadow the benefits.

the_lunatic_is_in_my_head

Gerry1 said:

The best way to help would be scrap VAT on enegy bills as frequently promised by Gove before the Brexit referendum.

Some of the best help would be for the supply companies to stop wasting money.

We've lived in our current house for 10 years, for the first 5 or so SSE supplied, they took what they took as payment, came to read the meter whenever and I didn't even look at the bills.

When prices started to rise I paid a bit more attention.

Green Energy Network wanted to put our DD up far higher than needed, a 1 hour phone debate resulting in them agreeing to what I asked for at the start, which turned out to cover our usage perfectly. 

At some point we were transferred to EON, I switched straight away and sent an email to ask a general question about the supply, they told me the switch would happen before they started supply. 8 months later I get a bill which I questioned, they waived it as they'd incorrectly told me they wouldn't supply and then set a cheque for £60 for the late final bill.

Was transferred to British Gas at some point who stated prices were guaranteed until July but in April they wanted to put them up, final bill was reduced and compensation paid.

Octopus wasted the most amount of resources by installing a smart meter when we had no DCC coverage and completely ignored the point that they earned a customer by misleading us to believe we'd be able to access a very competitive tariff. Eventually they paid compensation. 

So apart from a single 2 second question, all other contact with the suppliers has been down to their incompetence, fine for me I guess as we got a few hundred pounds of free money but scale that up and we must all be paying a fortune for these companies to run their businesses poorly, given the low margins you'd think they'd be on the ball and extremely efficient.

dunstonh

Makes me wonder how come Martin gets huge support on almost everything he does except when it comes to the standing charge
Has he got it all wrong ? 

Logically, a consumer champion will support anything that makes their brand look good.     Martin also supported WASPI despite that being a flawed campaign and the majority of posters in the pension forum being against it.

The problem is the solutions talk about getting rid of the standing charge but not the about where the costs will be shifted to and who will pay for it.

The_Green_Hornet

MattMattMattUK said:

I think the annoyance is because those of us look at things rationally see the standing charge as a sensible proposition and many people (not all) come on with emotional rants about why standing charges need to be cut "think of the poor, think of the children" style complaints, ignoring that moving the costs to the unit rate would likely cost those people more.

I think I understand. As you only regard your view as being the rational/sensible one you get annoyed when others have a different view.

You must get annoyed a lot.