Standing Charges Ofgem review

QrizB

Chris_b2z said:

And at the same time the marketing department is spending £38 million each year on an Einstein 'Consumer Engagement Campaign'. Really?

I'm not sure that £1.30 per household is really going to make a big difference to bills.

MultiFuelBurner

Chris_b2z said:

Netexporter said:

Chris_b2z said:

Let's not forget that there's a £38 million annual marketing budget to promote smart meters with the main message being that they will save you money. Is there really any point in a low energy user switching off their standby devices at night to save 50p a year when they will be stung by a huge standing charge anyway?
There is no incentive for the low energy user to reduce usage.

You entirely miss the point of smart meters. It is the time of use that yields the biggest savings.

Sorry, but I think you entirely miss the point that high standing charge is having on low energy users trying to economise.

Sure, we've learnt that a spreadsheet guru can save a fortune with TOU tariffs. How about the average consumer that goes to work, supports a family or just someone that cannot change their life routine? How about granny next door without an internet connection? The high standing charge is having a major impact in many of those cases.

And at the same time the marketing department is spending £38 million each year on an Einstein 'Consumer Engagement Campaign'. Really?

The smart meter only tracker tariff from Octopus springs to mind. Same wholesale rates all day, no adjusting dinner time after a hard day's work.

Here's the prices for the Eastern region for the past 365 days. Not only that Octopus also give discounts on the standing charges.

Average price for gas for the past year is 5.42p kWh and electricity at 20.77p kWh

the_lunatic_is_in_my_head

Scot_39 said:

wild666 said:

believe the standing charges were introduced in the 70's as a short term measure but they have never being scrapped. Energy suppliers must be rubbing their hands with glee that most people are paying £300 for using no electric or gas, or £180 for those that just use electric. 
I would rather see a her higher kWh charge on both electric and gas worked out on average daily usage, that would be about 6p on the electric and 1p on the gas. Low users would benefit and high users would lose out. This could make users find ways of using less electric and gas.

Energy suppliers do not keep the standing charges.

Quick question, for electric its seems around 20p is for Operating Costs and other which are defined as:

Operating costs (such as billing, metering etc);
Other costs (such as administrative expenses)

Is that money not going to the suppliers? 

SOLR was making up a portion (but has dropped), again is this money not being fed back to suppliers? I thought it was (at least in part) covering their costs of taking on these customers and supplying them with energy below the regular prices at the time?

DUoS and TNUoS (local electricity distribution networks and grid balancing) are currently making up the largest portion of the increase since 2019 and I guess this is covering the upgrades to the network, which is fixed costs the supply companies have to pay towards. I'm not sure how it was funded before 2019?

Chris_b2z

QrizB said:

Chris_b2z said:

And at the same time the marketing department is spending £38 million each year on an Einstein 'Consumer Engagement Campaign'. Really?

I'm not sure that £1.30 per household is really going to make a big difference to bills.

The standing charge and marketing uplift won't make any difference to Lord Fonteroy in his 10 bedroom castle but it may be very significant to some other people that just want to stay warm in their single bed flat.

QrizB

Chris_b2z said:

QrizB said:

Chris_b2z said:

And at the same time the marketing department is spending £38 million each year on an Einstein 'Consumer Engagement Campaign'. Really?

I'm not sure that £1.30 per household is really going to make a big difference to bills.

The standing charge and marketing uplift won't make any difference to Lord Fonteroy in his 10 bedroom castle but it may be very significant to some other people that just want to stay warm in their single bed flat.

OK, so you consider that £1.30 - roughtly 4kWh of electricity, or 18kWh of gas - will be "very significant".

We'll have to agree to differ on that.

Scot_39

the_lunatic_is_in_my_head said:

Scot_39 said:

wild666 said:

believe the standing charges were introduced in the 70's as a short term measure but they have never being scrapped. Energy suppliers must be rubbing their hands with glee that most people are paying £300 for using no electric or gas, or £180 for those that just use electric. 
I would rather see a her higher kWh charge on both electric and gas worked out on average daily usage, that would be about 6p on the electric and 1p on the gas. Low users would benefit and high users would lose out. This could make users find ways of using less electric and gas.

Energy suppliers do not keep the standing charges.

Quick question, for electric its seems around 20p is for Operating Costs and other which are defined as:

Operating costs (such as billing, metering etc);
Other costs (such as administrative expenses)

Is that money not going to the suppliers? 

SOLR was making up a portion (but has dropped), again is this money not being fed back to suppliers? I thought it was (at least in part) covering their costs of taking on these customers and supplying them with energy below the regular prices at the time?

DUoS and TNUoS (local electricity distribution networks and grid balancing) are currently making up the largest portion of the increase since 2019 and I guess this is covering the upgrades to the network, which is fixed costs the supply companies have to pay towards. I'm not sure how it was funded before 2019?

Given your supplied detail for the c20p - surely you would agree it costs the same to fit and maintain a meter for a house or administer the account, support the customer and bill a house whether they use 0-1 kWh or 10-20+ kWh per day of energy on average.

It's a fixed cost - so one ideally suited to standing charge rather than per unit charging.

In fact - users who struggle to pay - who are able to call on special grants and payments / discounts etc - or need special debt arrangements etc - actually are the ones that are more likely to cost more to support. And those who have debt written off - cost the rest of us even more - that should arguably be covered by welfare system not other energy users.

It's obvious that anyone cutting back will end up with a lower bill, but it's a completely false expectation - that cutting use in half should cut the bills in half.

I cannot - over decades - ever remember paying an energy bill that didn't have a mix of standing charge and unit costs - although such schemes were available (still in fact are).

Or take another utility bill - the phoneline.  say paid a BT phone bill that didn't have a fixed line rental and call costs - my call costs are regularly in fact £0 - but the line still costs me £26.35 pm - whether I use 0 minutes or 1000 minutes.

I'd love to pay zero because I'm not making calls - but then would it be fair for someone else to pay £52.70 to cover my line rental ?

£26.35 = 87p per day - on that basis - the electricity standing charge - ave c 53p for DD - is a bargain by comparison - given what it provides.

Letting Ofgem off for their crass mismanagement - and those who benefited greatly from cheaper than in the end market prices in part causing their suppliers to fail (business customers would have been charged in all likelihood regardless via contract pass through charge clauses etc) - off the hook at the 30 failed suppliers - by applying the SoLR levy to all users was wrong.

Ever since then SCs have become far more controversial and politicized.

You can argue standing charges shouldn't be as high - and I'd agree - but their are clearly fixed costs involved.

But then I don't support the continued rush to unreliable (or as another here tried to greenwash it - intermittent) output generation sources and with it increasingly significant potential generation overcapacity.  Only likely to further increase the already £100s millions in curtailment / standby etc charges paid last year.

And that capacity installed at often very remote renewables sites - with no suitable infrastructure - that sees need for new grid transport links over 100s of miles in some cases at costs of £billions that add to our ongoing costs.

Chris_b2z

QrizB said:

Chris_b2z said:

And at the same time the marketing department is spending £38 million each year on an Einstein 'Consumer Engagement Campaign'. Really?

I'm not sure that £1.30 per household is really going to make a big difference to bills.

I do appreciate the positive approach. £1.30  per household does not sound like much. According to my calculations, £13 million spent each year since smart meters were introduced equates to around £0.5 Billion just in marketing. How many hospitals would that build?

born_again

Chrysalis said:

dunstonh said:

wild666 said:

believe the standing charges were introduced in the 70's as a short term measure but they have never being scrapped. Energy suppliers must be rubbing their hands with glee that most people are paying £300 for using no electric or gas, or £180 for those that just use electric. 
I would rather see a her higher kWh charge on both electric and gas worked out on average daily usage, that would be about 6p on the electric and 1p on the gas. Low users would benefit and high users would lose out. This could make users find ways of using less electric and gas.

That is quite a regressive policy.

It would favour those that have installed solar panels.  Generally more wealthy people who, ironically have increased costs to the infrastructure to allow small scale generation and supply.

It would harm poorer people, many of whom are on electrical heating and economy 7 heating systems who draw a lot of energy when the grid has excess supply.

People already pay for the energy they use in the unit price.  Use less and you pay less.      How is getting those people to pay for lower users a fair way to do it?

Maybe, but I have the opinion standing charges hurt poorer people more as they are the ones more likely to be light users as a whole, we are seeing the extreme measures people are going to like reading with a torch or candle light.  Also bear in mind it does take some time for these solar panel install to start paying off (assuming they not been installed via a grant).

I think those stuck with inefficient heating, lack of ability to install panels etc. perhaps need some help outside of this scope, but with the government current drive to take everything possible from the poorest in the country right now, that's not forthcoming.  So what is perhaps(?) within Ofgem's scope is potentially on top of reduced SC to also add a social tariff, or to tell suppliers to offer a a high SC option for people who think they will benefit from the existing system.

My reply on the Ofgem consultation is to keep SC for fixed costs as well as social schemes, move variable costs to unit rate, and remove certain things entirely such as SOLR (move to isolation), debt recovery (we have a court system for this, and can prevent as bad debt build up by sorting out all the fixed DD issues), inefficiency margin, supplier costs.

I also suggested they use council tax data to apply a single person discount when the household is registered for a single adult on council tax records to make the unfairness a little less unfair.

My reply also has a lot in there about the current amount of waste such as deploying smart meters currently that will need to have modems replaced within a few years due to the 3G turn off. If they get their house in order a certain amount ca be cut without any repercussions to anyone.

1 or 2  in our house will not use any more electricity or gas. 
Central heating is on as required to heat house, so no change to gas usage. 
Same with electric. Washer still has to go on as often, cooking takes the same length of time. Just because more than one person, does not mean more will be used.

MultiFuelBurner

Chris_b2z said:

QrizB said:

Chris_b2z said:

And at the same time the marketing department is spending £38 million each year on an Einstein 'Consumer Engagement Campaign'. Really?

I'm not sure that £1.30 per household is really going to make a big difference to bills.

I do appreciate the positive approach. £1.30  per household does not sound like much. According to my calculations, £13 million spent each year since smart meters were introduced equates to around £0.5 Billion just in marketing. How many hospitals would that build?

Half a hospital going by recent costs in Herts (and climbing)

However shifting any argument from energy and its future to the national healthcare system doesn't really work.

Shall we go further

How many wells does that drill in Africa?

debitcardmayhem

Chrysalis said:

…….snipped

I also suggested they use council tax data to apply a single person discount when the household is registered for a single adult on council tax records to make the unfairness a little less unfair.
"……. Snipped

Dear me can you remember the “Poll Tax” shenigans, four adults in one household were asked to pay more than those with just one, also same 4 people could also use as much water as they like and pay the same then based on rateable value(before meters levelled the playing field for smaller households). I understand the need to address the pain for those of us less “fortunate”, but the costs of be borne out of central government spending. There is no such thing as fair and equitable in this country, but here at least it’s a decromacy democracy , where did the auto correct get that from?