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

matt_drummer

MattMattMattUK said:

matt_drummer said:

born_again said:

Standing charge should just cover the power transmission infrastructure side. It should have nothing to do with failed companies etc. That should be funded by a levy paid by the energy firms.

How would the energy companies fund this levy? Wouldn't they just get the money from their customers?

It does also seem insane that one company should have to pay out and make no profit because some of it's competitors go bust.

I still think there are some people who think that the SoLR payments are to bail out the failed supplier. 

MattMattMattUK

matt_drummer said:

MattMattMattUK said:

matt_drummer said:

born_again said:

Standing charge should just cover the power transmission infrastructure side. It should have nothing to do with failed companies etc. That should be funded by a levy paid by the energy firms.

How would the energy companies fund this levy? Wouldn't they just get the money from their customers?

It does also seem insane that one company should have to pay out and make no profit because some of it's competitors go bust.

I still think there are some people who think that the SoLR payments are to bail out the failed supplier. 

That does unfortunately seem to be the starting position of many who rant about them, rather than realising that the company gets nothing out of the SoLR process. 

dunstonh

matt_drummer said:

born_again said:

Standing charge should just cover the power transmission infrastructure side. It should have nothing to do with failed companies etc. That should be funded by a levy paid by the energy firms.

How would the energy companies fund this levy? Wouldn't they just get the money from their customers?

Its just like the levies financial services companies pay.  Effectively the good paying for the bad.   The levies are our largest bill other than salaries.      The largest of the collective levies is the FSCS, which is for the liabilities of failed companies.     

One theory is that if we didn't have the levies each year we could afford to lower our charges.   However, another theory is that charges haven't increased as the levies increased  (levies are now over 4 times higher than they used to be).    So, I may say the first thing but in reality, the second is just as likely to apply.

matt_drummer

dunstonh said:

matt_drummer said:

born_again said:

Standing charge should just cover the power transmission infrastructure side. It should have nothing to do with failed companies etc. That should be funded by a levy paid by the energy firms.

How would the energy companies fund this levy? Wouldn't they just get the money from their customers?

Its just like the levies financial services companies pay.  Effectively the good paying for the bad.   The levies are our largest bill other than salaries.      The largest of the collective levies is the FSCS, which is for the liabilities of failed companies.     

One theory is that if we didn't have the levies each year we could afford to lower our charges.   However, another theory is that charges haven't increased as the levies increased  (levies are now over 4 times higher than they used to be).    So, I may say the first thing but in reality, the second is just as likely to apply.

My question was more rhetorical.

Financial service companies are free to make profits of their own choosing.

Energy retailers in this country are not and that means that additional costs placed upon them will need to be funded by their customers, just like they are now!

Scot_39

MikeJXE said:

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 ? 

Martin certainly does not get huge support for everything - he jumps on far too many - some virtue signalling bandwagons these days - like this one. 

Too often just like now - without ever providing the answer - who pays instead  ?

I am a low all electric user - and not in the most expensive SC areas - but at October rates the standing charge is now temporarily until Jan if CI correct -  over 20% of my annual forecast.

Would I love to save a large fraction of the now approx £200 - yes.

And if  CIAug 24 estimates correct about to jump by 8p in Apr 24 - another c£30 pa.

But then who would pay it instead ?

Would I save it if built into social tariffs -  probably not as not on any let alone means tested benefits.

If it moved to tax - would everyone pay the same - or richer tax payers pay more as per usual ?

Should I pay it - well I need aspects of the grid whether I want 1 kWh or 25-30 kWh a day.

So I think only right I should pay for at least some of it.

Is the balance right between green levies, taxes, flat SC and unit rate add ons - so actual grid and generation capacity costs - probably not exactly.

Is the balance between core benefits and core costs - food energy housing - correct - obviously not as there would be no need for the current or past rounds of £300 or last years additional £300WFP sticking plasters.

SoLR should never have been passed to everyone.  Those who benefitted from cheaper rates and the govt for Ofgems failure should have carried the costs (as in previous regulatory failures)

I have never voted explicitly for green levies - they have been a creeping form of taxation for decades.

If done via social tariff the rest of us will likely just pay more - as unlikely to be fully subsidised by state (if at all).  Nearly 8m households - over 1 in 4 - get the means tested £300 help - you willing to pick up say a third -  £100 of their duel fuel SC in your bill ?

Which is of course only a govt generated problem because  as above benefits do not track such core costs - in this case imposed effectively by the same govt (Ofgem is a govt controlled regulator). 

There is simply no one ideal solution fits all.

There will always be those who benefit from one method and others who will not.

And don't forget one of the biggest drivers of these new network infrastructure costs - new renewables - often being built at scale - 100s of miles from consumers demand - needing £billions in new grid infrastructure.  As uk rushes to massive installed overcapacity, so likely massive growth in balancing costs like curtailment costs, due to unreliable nature of those renewables.  The failure of auction round 5 should be taken as an opportunity to rethink - I suspect given past govts (plural) failures it will not.

dealyboy

Excellent article @MSE_Molly_G ...

"the current model is "unfair" and "regressive", having a disproportionate impact on the lowest income households" the Energy Security and Net Zero Committee.

The poorest pay the same as the richest, now should we all pay flat rate 'income' tax?

"Replace the current standing charge model with a so-called 'rising block' tariff."

I'm not sure, in fact I disagree. I don't think that effectively exempting low users from the cost of supply is fair to other users and, as has been said, some high users can be quite hard up for various reasons.

Should the person who buys a 4-pint bottle of milk pay proportionately more than he/she/they who buy a 1-pint bottle? What about eggs?   

"Be transparent with consumers about what their standing charges are paying for."

Like the Council Tax. It looks as though they have taken up my suggestion.

"Reduce standing charges by removing energy firms' day-to-day costs from them."

I agree. Although I have to admit fixed administrative charges are widespread in various sectors.

"Extending the Warm Home Discount to low-income and fuel-poor households."

That would include me then. What do you expect me to say? 

"Introducing an energy 'social tariff' to protect vulnerable households from being cut off from their energy supplies."

How can I disagree with such a noble aim, but I do. It's all in the implementation. The unofficial poor and needy subsidising the official ones.

"Improving customer service so that customers get more time and better attention from their supplier."

Wouldn't we all like this, but I don't know how this could be enforced. Market forces!

"... we continue to keep the issue and how costs are passed on to customers under review." Ofgem.

... but some of these costs are not part of the purview of Ofgem.

wild666

I agree the SC's on gas and electric should go but they should it onto the price per kWh. On the average usage it would add about 6p per kWh to the price per kWh for electric and for gas about 0.83p per kWh. 
In summer most homes would be paying significantly less on the SC added to the kWh price but in winter they would pay more so over 12 months the price would even itself out. 

Low users would benefit from not paying as much, especially in terms of electric but this could be offset by high users paying more. 
In my situation I use anything from 2.8 kWh to 9.5 kWh of electric per day depending on what I'm doing. With gas my summer usage is only 2.3 kWh to 3.5 kWh per week and in winter it can be up to 150 kWh per week depending on the weather. 
If I decide to use a games console then my daily usage is around 5 kWh but if I don't and I have the PC off it can be as low as 2.8 kWh. I even swapped my dryer for an heated airer that uses about 1.5 kWh per load compared to the 4.5 kWh of the dryer. Then there's the grandkids who want the games consoles on and the second PC that bumps up the usage meaning that one day per week my usage is around 8.5 kWh to 9.7 kWh. 

the_lunatic_is_in_my_head

MattMattMattUK said:

It does also seem insane that one company should have to pay out and make no profit because some of it's competitors go bust.

Perhaps we could abandon this idea of paying ahead and just get a monthly bill for what you've actually used then if one goes bust there won't be any lost credit balances. 

It works for phone, water, broadband, council tax and anything else I can think of. 

The truly vulnerable who might suffer from such billing methods no doubt already get a lot of support in general (as they should) and could even be the exception and still pay by a fixed monthly DD. 
 
The problem is we all paid a lot of money because, apparently, the average person can't figure out their bills are higher in the winter and as such won't be able to afford them, a great example of how far our society has evolved....

Or easier, ring fence the money but I believe Ofgem abandoned the idea of doing this completely and instead the suppliers might have to have certain capital reserves. 

rp1974

When is the "Fair" standing charges need to stay thread being started?,I wonder.

Whilst pros and cons exist with the current system ,I dont see any realistic alternative.
A thought occurred to me last time I was pondering this,largely being that what's defined as "Fair",or "Unfair" as the case may be,boils down to each individuals what suits "ME" best criteria.
Even if standing charges went away all that'd happen would be increased unit costs the sum total being the same,dont see that's achieving anything worthwhile,tbh.

No standing charges for off gridders,are there?,perhaps I'll look into generating and distributing my own gas and electricy supplies instead of paying 60p per day to have someone else do that on my behalf,almost certain to be money saving,I don't think so somehow.

wild666

The_Green_Hornet said:

mmmmikey said:

The_Green_Hornet said:

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.

Both - let's not personalise this.....

I think that ship sailed a long time ago. Far too many posters have an "I'm right you are wrong" attitude on here.

Maybe we should just all embrace the fact that people have different views?

No one is right or wrong it's just some people will call out others who think that their version is not what they are claiming.