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

badmemory

Well I am far from being rich & since being retired haven't long being paying much tax.  However, I would be quite happy to pay the extra £283 a year in tax if they took it off the energy bill.  I would consider it a lot better use of my money than paying MPs to sleep in the HOC & defending the indefensible by exPMs.

dunstonh

"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?

Taxes on income are one of the recognised ways of creating wealth distribution.    

Energy supply is not a recognised way of creating wealth distribution.  So, why should it be turned into that?
Especially as they are not talking about redistributing wealth from those with more but potentially taking it from those with less and giving it to those with more.

"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.

Isn't this what means tested benefits should be for?

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. 

That would make it more expensive for many poor people and penalise those who have moved away from direct fossil fuels to electric.

Low users would benefit from not paying as much, especially in terms of electric but this could be offset by high users paying more. 

So, the wealthy households who have installed solar will benefit whilst the poor households that cant afford it will suffer.   Those that have electrical heating will pay more than those that do not despite already paying more for using more units to begin with.

How does using say 5kWh per day more energy impact on the cost of maintaining the infrastructure?  Especially if next door is using barely any inwards but exports just as much outwards.  Both houses have virtually the same infrastructure cost but you are proposing that one house pays more to maintain the infrastructure.

Every solution proposed, along with the current standing charge method, has pros and cons.    Those looking for wealth distribution to be factored into energy supply need to consider who they are distributing wealth to.

born_again

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?

Where do you think it's going to come from?

Works for travel industry. Who do you think funds ABTA & them paying out when holiday co's go bust?

End of the day standing charge or not Customer is going to fund any shortfall.

Yes I know SC does not just cover companies going bust. But does have a element withing standing charge.
Which is about 6% of the standing charge cost

matt_drummer

born_again said:

Where do you think it's going to come from?

Works for travel industry. Who do you think funds ABTA & them paying out when holiday co's go bust?

End of the day standing charge or not Customer is going to fund any shortfall.

Yes I know SC does not just cover companies going bust. But does have a element withing standing charge.
Which is about 6% of the standing charge cost

From customers, just as it does now.

Imposing a levy on suppliers won't reduce the costs, the costs are what they are and need to be paid by customers.

The only discussion here is which customers pay, either directly or through more taxes.

The travel industries profits are not capped by a regulator.

The SC does not cover the costs of the company other than protecting the credit balances of customers and the costs of finding them a new supplier.

[Deleted User]

born_again 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?

Where do you think it's going to come from?

Works for travel industry. Who do you think funds ABTA & them paying out when holiday co's go bust?

End of the day standing charge or not Customer is going to fund any shortfall.

Yes I know SC does not just cover companies going bust. But does have a element withing standing charge.
Which is about 6% of the standing charge cost.

Ofgem decided to introduce consumer credit balance protection on a similar basis to Whole Life insurance. We all pay a small amount into the scheme and the scheme pays out when a supplier goes bust. Yes, a bonded scheme similar to the airlines would work with suppliers paying a contribution into a pot for every consumer, or Ofgem could insist that all consumer credits should be held in legal escrow. Ofgem, to date, has rejected escrow as it would lead to increased costs for consumers  - as indeed would bonding.

The alternative is that consumers become unsecured creditors of failed suppliers.

matt_drummer

Dolor said:

The alternative is that consumers become unsecured creditors of failed suppliers.

Suits me.

But, I suspect a significant number of customers would be quite unhappy when they lost their money!

Not very nice, but if you chose to go with certain suppliers to save money over established companies then I think you deserve to have reaped what you have sown.

Or maybe not, I see no basis for complaint, customers are free to go with any supplier they choose safe in the knowledge that they won't lose their money, it's got to be worth something?

How many of those complaining about the SoLR charges benefited from them when their `cheap' supplier went bust?

Scot_39

wild666 said:

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. 

What is high or low use is very subjective and not at all simplistic.

And whether you like it or not some costs are fixed and some are not. 

You have the same wire or pipe from the street to your house to use 1kWh as 30kWh.  It then gets more complex as then work out how many wires and at which voltage / current /  power capacity and transmission efficiency, how much generation capacity and of which type - you need to supply it.  And that also gets ave use dependent quickly. 
But you still need 1 generator source, one set of wires and interconnecting substations / transformers etc.  And these days thats often now 2 sets - one green renewables one traditional fossil for when the renewables generation regularly fails to deliver - so in parts now two sets of cables - some completely new) etc.

And to me it's not a SC or not debate  - it's whether the current 54p ave (38-60+ regionally) is fair or not for that fixed cost component, and fair regionally vs 29p fixed regionally for gas etc.

Not whether it should just be scrapped completely.

And over last few years - that series of 240V wires on my parents street - just linking homes to local final transformer substation -  on estate c90 years old - has needed repairing regularly.  Taking out their power or some of their neighbours on other phases. Some of the workers on faults have said the whole estate needs rewiring upto mains fuses on every house.  It definitely feels like been getting worse.

Take your scheme - sc/tdcv offset - and apply it to say someone who has installed solar - c1.3m and growing - and imports (consumes less from grid) than average - with battery maybe 0kWh all day on a summers day  - but often exports far more maybe 30-40kWh that day - what should they pay per unit to replace SC ?

Still pay on import only as current - so 0p ?

If so, are you willing to pay their 54p or should they pay sc/average daily tdcv on export as well ?

And as several posts above - some high users need to use more regardless of income or property type.  Parents, frail elderly / disabled etc.

Why is average electric standing charge nearly twice the price of gas ?
(And if CI forecasts true - twice the price come Apr24  - 60p vs 30p).

Supplier and network costs are costs.  Whether fixed per household or variable with unit demand. 
We should be given honest figures and then it's as much a political decision how best to split.
But given stealthy rises in green levies etc who trusts our politicians - past and prssent - or Ofgem - to do so anyway.

Fairness is inherently subjective.

And the 2 should not necessarily be confused or meddled with by politicians.

Getting a bit off topic for an energy forum and political.

Compared to other costs facing many poorer households - the even near doubling in standing charges to £300/£25pm duel fuel - so £12.50 pm extra  - £3 per week - is relatively a small component of total added costs.

It's therefor for many the wrong target - even if for the right reasons.

If your concern is genuinely for the poor - then the govt's benefits system should adequately reflect the costs - especially those imposed by it's own regulators.

The system should also not have hard cut offs to exclude those just not qualifying so net poorer (means tested benefits will have had £1550 tax free CofL help - those just above thresholds £0)

And the energy SC issue pails into almost insignificance compared to say the misery the freeze on housing benefit been causing amid double digit % rising rents - often in £100s per month -  for many poor in past 2 years - especially so as again due to landlords reacting to BofE rate policy - another govt appointed body.

matt_drummer

I honestly don't think that around 50p a day is much to pay for being able to turn on what you want when you want, knowing that your supply will be fixed at no additional cost and knowing that any credit balance with your supplier is safe.

Just because you didn't use much today doesn't mean you couldn't have if you wanted to and that is what you pay for.

What else do we get for 50p a day that we rely on so much?

So many of us are happy to pay more for other things but not the one thing that makes it all possible, our energy supply.

bristolleedsfan

MikeJXE said:

The_Green_Hornet said:

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

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 ? 

Plenty of support on Twitter, sadly every forum thread on this subject gets dominated by a few, the many just do not bother to say anything as they know same people will continue to post and post day and night for months on end the same thing supporting high standing charges.

matt_drummer

bristolleedsfan said:

MikeJXE said:

The_Green_Hornet said:

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

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 ? 

Plenty of support on Twitter, sadly every forum thread on this subject gets dominated by a few, the many just do not bother to say anything as they know same people will continue to post and post day and night for months on end the same thing supporting high standing charges.

Why do you think the charges are high?

They are the costs and those are costs are detailed in a breakdown.

How could this service be delivered for less?

Do you think it represents poor value for money?

I don't, I think it's a lot for around 50p a day for an electricity supply.

It's not supporting the charges so much as accepting that there are costs and they need to be paid for.

I suspect that a lot of the support on social media is from consumers who just don't understand the costs and would just like to pay less. Many of these people still think that energy retailers reduce energy unit costs as directed by OFGEM and then bump up the standing charge to recover their lost profits. You can read comments like these everywhere.


I think that `supporters' like me would be more inclined to take a different view if a viable alternative was proposed that didn't inflict additional costs on many of those most in need.