Abolish standing charges

born_again

MattMattMattUK said:

sevenhills said:

MattMattMattUK said:

That would be onerous and bureaucratic to administer, just apply the carbon tax direct to the product or service if you want a carbon tax.

As I see it, we need to tax carbon, because higher prices dissuade its use. As can be seen from taxing smoking.

We need to significantly cut carbon year on year until we reach net zero, that is going to mean many changes for nearly everyone.

sevenhills said:

MattMattMattUK said:

That would be onerous and bureaucratic to administer, just apply the carbon tax direct to the product or service if you want a carbon tax.

So how do we make sure the poor are not disadvantaged?

That is not really important, "the poor" as you put it will have to consume lower carbon goods and services the same as the rest of us, we will all need to eat less meat, drive EVs, fly less and offset as well. The true cost of all items, which includes carbon, will have to be paid and that will sculpt consumption, if the only way to fly is with carbon offsetting and true biofuels and that doubles the cost then so be it, usage will be reduced. 

sevenhills said:

As can be seen from council tax, taxing houses is more straightforward than taxing people. We would then need to bring in allowances for how many people per house, but not overcomplicate it.

Or, just add the carbon cost to the product, no need to mess around with allowances, per person or per household, the more complicated a system is made the more loopholes exist and the easier it is to game. The carbon cost is then represented in the price, plain and simple for all to see.

City council did this during covid planting over a hundred thousands trees around their various parks.
Breaks my heart that in the local park where over a thousand was planted with no ongoing care & not being fenced off, till a year later when most had been destroyed by kids & dogs running in the area's. That now only less than 100 have survived. 

JSHarris

Netexporter said:

I did a rough calculation suggesting the cars would add 18% to UK total consumption. ASHP? I don't know what they use annually but 6,000kWh each adds another 43%

A car doing the national average of 8000 miles would use 2000kWh/annum. A heat pump replacing the average gas consumption of 12,000kWh would use about 4000kWh of electricity.

UK national average mileage is way lower than 8,000 miles p.a.  Last figures I saw were these:  https://www.fleetnews.co.uk/news/car-industry-news/2023/02/27/less-than-5-of-vehicles-are-driven-over-15-000-miles-a-year

5,506 miles p.a, in my car (does about 4.2 miles/kWh on average) would be a bit over 1,300kWh.  Not a lot in the overall scheme of things, when the average energy consumption of a UK home is over 14,000kWh (our home typically uses about 4,100kWh/year, including running the electric car).

JSHarris

MikeJXE said:

It's hard to believe the is a cost of living crises from what I see every day

 I am a pensioner and live on the state pension and a few savings in a rented flat and I'm not feeling the pinch 

I live in a small market town centre of England

The pubs are rammed so are the cafes and restaurants 

Last Friday i had never seen Tesco Extra car park so full, shoppers coming out with 2 trollies each 

Lots of Tesla cars about so someone has some money

It's all on borrowed money I suspect.  Borrowing has been so cheap for so long that there is a whole generation that don't believe in ownership they just rent everything, from phones to cars.  Virtually no one buys a Tesla, for example, almost all of them are rented in one way or another.  For years it's been cheaper to rent cars than own them, as there are almost no risks involved for the driver - if it goes wrong the owner (finance company) fixes it, if you lose your job and can't afford it you hand it back.  

I've never got my head around how it works, but about 15 years ago I bought a new car (never done this before).  The dealer really didn't want me to buy it, and tried really hard to get me to have it on finance (something I've never done in my life).  Turned out that the real price for the car was a heck of a lot lower than the apparent cash price, so "selling" cars on finance earned the dealer a big commission, as the finance company paid a lot less for the car from the manufacturer.  Now it seems that leasing dominates the car market, and that fits well with the "I want it now" mentality of those that can't afford stuff but don't see why that should stop them having it.

JSHarris

ArbitraryRandom said:

Apologies if this has been addressed in the 10 previous pages (I did try to read through but admit I got a little bored...). 

I tried to review the Ofgem consultation (as recommended on the first page) and wonder if someone can explain this graph?



I understand the supplier of last resort costs increasing as a result of the many number of companies which crashed - but I'm not sure I understand why there was a corresponding increase in the TNUoS or DuoS? 

If I'm understanding correctly, these costs have increased not because of 'world pressures', but because of UK political decisions re the future energy infrastructure? Therefore, if part of the standing charge were to be reduced or removed, the most sensible argument (to me) its that these should be paid for from (the already progressive) general taxation pot rather than the standing charge - thus allowing the charge to be halved? 

I made the point earlier that the cost of providing the infrastructure etc hadn't gone up much in years and that the increase in the standing charge was driven by changes made by Ofgem (I specifically mentioned that the changes in DUoS and TNUoS were mostly to blame for the current charge increase too)  but I was shot down in flames for it.  Your graph states the point I was making more eloquently.  Hard to argue against the obvious.

mmmmikey

What are DUoS and TNUoS? Sorry if I have missed this :-) Thanks 

JSHarris

mmmmikey said:

What are DUoS and TNUoS? Sorry if I have missed this :-) Thanks 

https://powercompare.co.uk/blog/duos-tnuos-charges/

"What is DUoS?

DUoS is an abbreviation for Distribution Use of System. This is a charge that it added to all business electricity bills to cover the costs of the electricity distribution network. The DUoS charge is based on the amount of electricity consumed by your business.

The DUoS charge covers the cost of maintaining the local electricity distribution network infrastructure including the cables, substations, poles, and transformers.

The distribution network is responsible for delivering the energy from the National Grid transmission network to homes and businesses.

These networks are locally operated within eight regions by six operators. If you want to find out who your local distribution network operator visit the Energy Networks Association website.

The DUoS charges vary by region as each distribution network operator sets their own charges within the price restrictions placed on them by Ofgem who regulate them.

These charges are time-banded for different times of the day depending on how much electricity is in demand in that period. These time-bands encourage energy usage at times when the network is under less pressure from demand and discourage use at high demand periods, such as between 4pm-7pm.

What is TNUoS?

TNUoS stands for Transmission Network Use of System. This is also an electricity charge that forms part of the business energy users’ electricity bill. The TNUoS is the charge for the electricity transmission network, also referred to as the National Grid, the charge applies to generators as well as business end users.

The charge pays for the cost of maintaining the electricity transmission network in England, Wales, Scotland, and offshore. This includes the cables, pylons, transformers, and other electricity infrastructure that transport the electricity at a high voltage between the electricity generators and the local distribution networks.

Recently the TNUoS charges have increased as the cost of the transmission network has risen due to the network requiring upgrades to replace its ageing infrastructure and to enable more renewable energy generation on the network.

The TNUoS charge is based on the share of demand on the transmission network during the triad periods.

The TNUoS charges are also banded like the DUoS but in triads which refer to periods of the year. The triad periods are between 1 November and 28 February when demand on the transmission network is at its highest. During triad periods the TNUoS charges are higher."

These were business costs but Ofegm changed the rules in 2019 and those changes came into force in 2020, so now those costs apply to domestic consumers as well.  Ofgem didn't foresee the combined impact of this change with the big hike in energy prices from 2020 onwards (not their fault) and so we've been hit with a double whammy.  There's a consultation now (closes in a couple of weeks) to see if these changes should be reversed.  Arguably this was a political decision, driven by a government desire to reduce costs to businesses I believe.  Read into that what you will.

ArbitraryRandom

mmmmikey said:

What are DUoS and TNUoS? Sorry if I have missed this :-) Thanks 

As far as I understand it, those two elements are paying for the new capacity/infrastructure that we need as a country as we shift away from carbon based energy generation/try to build domestic resilience... 

Someone up thread said they have no problems with the cost of covid payments being recouped via the standing charge because 'they're not trying to hide what they're doing...' but if you look at that breakdown, according to ofgem, the massive increase from a couple of years ago isn't the SoLR costs (which have now been repaid), nor the energy support scheme costs - not even the 'one off' payment for debt, which would be added from next year and isn't in that graph - which is why I say the current way of doing things is deceptive. 

I have no issue with those things happening or being paid for, I just think it should be government policy, funded by central government, via government set tax policy - which is already progressive and has democratic scrutiny. 

MattMattMattUK

JSHarris said:

MikeJXE said:

It's hard to believe the is a cost of living crises from what I see every day

 I am a pensioner and live on the state pension and a few savings in a rented flat and I'm not feeling the pinch 

I live in a small market town centre of England

The pubs are rammed so are the cafes and restaurants 

Last Friday i had never seen Tesco Extra car park so full, shoppers coming out with 2 trollies each 

Lots of Tesla cars about so someone has some money

It's all on borrowed money I suspect.  Borrowing has been so cheap for so long that there is a whole generation that don't believe in ownership they just rent everything, from phones to cars.  Virtually no one buys a Tesla, for example, almost all of them are rented in one way or another.  For years it's been cheaper to rent cars than own them, as there are almost no risks involved for the driver - if it goes wrong the owner (finance company) fixes it, if you lose your job and can't afford it you hand it back.  

I've never got my head around how it works, but about 15 years ago I bought a new car (never done this before).  The dealer really didn't want me to buy it, and tried really hard to get me to have it on finance (something I've never done in my life).  Turned out that the real price for the car was a heck of a lot lower than the apparent cash price, so "selling" cars on finance earned the dealer a big commission, as the finance company paid a lot less for the car from the manufacturer.  Now it seems that leasing dominates the car market, and that fits well with the "I want it now" mentality of those that can't afford stuff but don't see why that should stop them having it.

Some people have a very different attitude to debt than those of us who are sensible with our money. I have a friend who generally only sees debt in monthly payment terms, the underlying £15-25k of unsecured debt he has carried most of his adult life when the monthly repayments become unmanageable. He has historically managed that by remortgaging and adding the unsecured debt to his mortgage at low rates and he has been doing this for twenty five years, but this time it became a bit of a crisis as adding it to his mortgage would have meant a much higher rate as no mainstream lender would let him borrow an additional £30k (already maxed out on mortgage and rate went up to 5.2%) so his only option was a secured loan at 14% and combined with his mortgage has come as a bit of a shock to the system, but not enough of a shock that he is willing to cut spending, the cycle of running up unsecured debt began immediately after the cards and overdraft were paid off and the additional £5k borrowed was splurged in two months.

Twenty years ago his car crash attitude to debt was an outlier, there were some people who were reckless with their finances but they were very much the minority, however over the last decade especially, but beginning around the 2007 financial crisis we have seen the monthly cost view of debt become far more mainstream. People seem unable to understand that paying huge amounts of interest over the term of the debt means that they have far less money overall.

JSHarris

MattMattMattUK said:

JSHarris said:

MikeJXE said:

It's hard to believe the is a cost of living crises from what I see every day

 I am a pensioner and live on the state pension and a few savings in a rented flat and I'm not feeling the pinch 

I live in a small market town centre of England

The pubs are rammed so are the cafes and restaurants 

Last Friday i had never seen Tesco Extra car park so full, shoppers coming out with 2 trollies each 

Lots of Tesla cars about so someone has some money

It's all on borrowed money I suspect.  Borrowing has been so cheap for so long that there is a whole generation that don't believe in ownership they just rent everything, from phones to cars.  Virtually no one buys a Tesla, for example, almost all of them are rented in one way or another.  For years it's been cheaper to rent cars than own them, as there are almost no risks involved for the driver - if it goes wrong the owner (finance company) fixes it, if you lose your job and can't afford it you hand it back.  

I've never got my head around how it works, but about 15 years ago I bought a new car (never done this before).  The dealer really didn't want me to buy it, and tried really hard to get me to have it on finance (something I've never done in my life).  Turned out that the real price for the car was a heck of a lot lower than the apparent cash price, so "selling" cars on finance earned the dealer a big commission, as the finance company paid a lot less for the car from the manufacturer.  Now it seems that leasing dominates the car market, and that fits well with the "I want it now" mentality of those that can't afford stuff but don't see why that should stop them having it.

Some people have a very different attitude to debt than those of us who are sensible with our money. I have a friend who generally only sees debt in monthly payment terms, the underlying £15-25k of unsecured debt he has carried most of his adult life when the monthly repayments become unmanageable. He has historically managed that by remortgaging and adding the unsecured debt to his mortgage at low rates and he has been doing this for twenty five years, but this time it became a bit of a crisis as adding it to his mortgage would have meant a much higher rate as no mainstream lender would let him borrow an additional £30k (already maxed out on mortgage and rate went up to 5.2%) so his only option was a secured loan at 14% and combined with his mortgage has come as a bit of a shock to the system, but not enough of a shock that he is willing to cut spending, the cycle of running up unsecured debt began immediately after the cards and overdraft were paid off and the additional £5k borrowed was splurged in two months.

Twenty years ago his car crash attitude to debt was an outlier, there were some people who were reckless with their finances but they were very much the minority, however over the last decade especially, but beginning around the 2007 financial crisis we have seen the monthly cost view of debt become far more mainstream. People seem unable to understand that paying huge amounts of interest over the term of the debt means that they have far less money overall.

Your mention of mortgage interest rates made me think back to the time when I was paying a bit over 15% on my mortgage.  All those years of what many would see now as insanely high interest rates (but which were completely normal in the 80's and 90's) very definitely shaped my views on borrowing.  Perhaps I'd feel differently had I not had that experience.  It wasn't great looking back.  I really scrimped and saved for many years to both make the massive payments every month and try and put some by to pay the debt off early.  Meant I never borrowed money for things like cars or anything else, too.

Thanks to the rates coming down in the late 90's this became a realistic goal.  The building society tried to reduce my monthly payments but I told them to keep them as they were, as I was used to paying that much by then.  Meant my mortgage got paid off 5 years early overall, which was a massive boon when my job got axed by Cameron's austerity measures 6 years before I was due to retire.

wild666

JSHarris said:

MikeJXE said:

It's hard to believe the is a cost of living crises from what I see every day

 I am a pensioner and live on the state pension and a few savings in a rented flat and I'm not feeling the pinch 

I live in a small market town centre of England

The pubs are rammed so are the cafes and restaurants 

Last Friday i had never seen Tesco Extra car park so full, shoppers coming out with 2 trollies each 

Lots of Tesla cars about so someone has some money

It's all on borrowed money I suspect.  Borrowing has been so cheap for so long that there is a whole generation that don't believe in ownership they just rent everything, from phones to cars.  Virtually no one buys a Tesla, for example, almost all of them are rented in one way or another.  For years it's been cheaper to rent cars than own them, as there are almost no risks involved for the driver - if it goes wrong the owner (finance company) fixes it, if you lose your job and can't afford it you hand it back.  

I've never got my head around how it works, but about 15 years ago I bought a new car (never done this before).  The dealer really didn't want me to buy it, and tried really hard to get me to have it on finance (something I've never done in my life).  Turned out that the real price for the car was a heck of a lot lower than the apparent cash price, so "selling" cars on finance earned the dealer a big commission, as the finance company paid a lot less for the car from the manufacturer.  Now it seems that leasing dominates the car market, and that fits well with the "I want it now" mentality of those that can't afford stuff but don't see why that should stop them having it.

I have only ever had two items on finance and they are a vacuum cleaner and the PS4 on a buy now pay later interest free option I paid both off before they added any interest to the price, one I paid off a full month early just because I didn't want to forget about it and the other I paid a week early. Finance companies don't like me because if I use the BNPL option I always pay the full amount by the time the first payment is due.