Abolish standing charges

MikeJXE

I am a low user and I moved into a well insulated 1 bed flat in February 

My costs to date are duel fuel sanding charge £243.01 Total cost for usage is £405.45, Sc is over 50% of my costs

My electric is the worst SC is £154.64 and usage is £157.73

Do I like it ? No

Can I do anything about it ?  No 

Does it bother me ? NO 

Just suck it up and get on with life as it is, there are more important things than money 

JSHarris

Lest we forget, this is the view of the owner of this site:

https://blog.moneysavingexpert.com/2023/07/martin-lewis--why-are-energy-standing-charges-so-high--what-can-/

"High standing charges are a moral hazard…

Keeping the standing charge high means lower users can save proportionately less and less by reducing usage – that disempowers them – and is a disincentive to energy reduction generally, which is not great for the environment.

It also means that prepayment users can find themselves in energy debt in the summer, because they're not using energy but the meter is still ticking over because of the standing charge – a terrible, unnecessary situation for the payment type used by many of the most vulnerable.

I have long campaigned for lower standing charges. MSE has submitted our consultation response to a new Ofgem proposal on this about shifting some of the cost of the unit rates."

QrizB

JSHarris said:

Lest we forget, this is the view of the owner of this site:

The site is owned by https://www.moneysupermarket.com/

Martin Lewis is not infalliable, he has supported questionable causes in the past including the WASPI campaign.

housebuyer143

I liked what we used to have about a decade ago. Two tier tariffs or standing charge tariffs, pick which worked best. The two tier had a higher unit rate for the first say 2500kw and then a lower rate there after. 

Low users did much better on a two tier tariff than high users, who would instead opt for the standing charge tariff which had the lower rate for all usage. The day they removed the two tier tariff my bill went up £250 a year 😞 

I'm not sure what the issue was with having choice but ofgem apparently were instrumental in it's removal.

What we have now is basically minimum pricing (because everyone charges the cap price) and thus has completely destroyed any competition in the market.

MultiFuelBurner

housebuyer143 said:

I liked what we used to have about a decade ago. Two tier tariffs or standing charge tariffs, pick which worked best. The two tier had a higher unit rate for the first say 2500kw and then a lower rate there after. 

Low users did much better on a two tier tariff than high users, who would instead opt for the standing charge tariff which had the lower rate for all usage. The day they removed the two tier tariff my bill went up £250 a year 😞 

I'm not sure what the issue was with having choice but ofgem apparently were instrumental in it's removal.

What we have now is basically minimum pricing (because everyone charges the cap price) and thus has completely destroyed any competition in the market.

Sadly that will struggle to work with the push for all electric heating such as heat pumps to phase out as much polluting gas use as possible.

But in theory I liked the idea.

JSHarris

QrizB said:

JSHarris said:

Lest we forget, this is the view of the owner of this site:

The site is owned by https://www.moneysupermarket.com/

Martin Lewis is not infalliable, he has supported questionable causes in the past including the WASPI campaign.

I wasn't for one moment suggesting he was, I was simply highlighting that, as someone with a strong reputation for upholding consumer rights, he's supportive of the view that standing charges are now too high.

housebuyer143 said:

I liked what we used to have about a decade ago. Two tier tariffs or standing charge tariffs, pick which worked best. The two tier had a higher unit rate for the first say 2500kw and then a lower rate there after. 

Low users did much better on a two tier tariff than high users, who would instead opt for the standing charge tariff which had the lower rate for all usage. The day they removed the two tier tariff my bill went up £250 a year 😞 

I'm not sure what the issue was with having choice but ofgem apparently were instrumental in it's removal.

I agree, and Ofgem have been specific that the reason given in the TCR outcome for shifting more of the infrastructure cost from the unit price to the standing charge was because some consumers were reducing their consumption and therefore avoiding paying as much as they used to.  To be clear, this was specifically shifting more of the new development costs to consumers (the cost of providing infrastructure for new generators mostly, so reducing the cost to investors), not the cost of maintaining the supply network we already have.

"In 2019, Ofgem took the decision to move charging of certain types of network costs from a unit cost basis to afixed basis (known as the Targeted Charging Review or TCR), which came into effect in 2022 and 2023. The main reason for this change was that charging on a volumetric basis made it too easy for some users to avoid network costs."

To clarify this, when they say "some users" in that final sentence they are specifically referring to some business users - this was not something that domestic users were able to do.  Ofgem chose not to discriminate between business and domestic consumers for some odd reason.

double_dutchy

wrf12345 said:

It is a pure political opportunity for a party that can combine abolishing standing charges (punish the energy companies) and get rid of the dreadful council tax which is legalised theft (essential services would not disappear as most council money comes from central govn and councils would be forced to get rid of all the mini empires they like to build and loads of unnecessary overhead) - it would cost the government zero and brings in millions of voters for the next election.

So why do you think no mainstream political party advocates this approach?

MeteredOut

JSHarris said:

Just checked some numbers and the inflation element of the standing charge (i.e. the increase in the fixed costs of providing network infrastructure etc) is pretty small.  Simply because I have the numbers and because 2016 is the date I started paying the standing charge for this house, I've chosen to compare the change in the standing charge between then and now.

In 2016 my standing charge was 14.91p/day.  Inflation between then and now has been roughly 32%, so the standing charge should now be about 19.7p/day.  It's not, it's currently 49.98p/day.  Part of this is due to a decision Ofgem made to deliberately penalise low energy users (and they have been clear that this is why they made this change), by switching part of the new infrastructure development cost from the unit price to the standing charge.  Arguably this should have stayed with the unit price, as it's new, heavy, users that are partly driving the need for increased capacity (EV charging etc).  Far and away the largest element of the standing charge increase is the cost of bailing out the dozens of chancers that went bust, i.e. the costs associated with the SoLR.

The consequences of this are that there isn't now much incentive to continue reducing demand if all that's going to happen is that the standing charge keeps on rising at a meteoric rate.  When I started building this house I set out to economise on energy use as much as I possibly could, within a pretty limited budget.  If I were doing this again that arguably the balance between saving energy and the cost and work involved in doing that will have shifted - no point in going overboard with my two bedroom house if I'm paying the same standing charge as the ten bedroom mansion down the road with zero insulation.

What about those with solar panels? Don’t they too mean additional load onto the grid? Should there be an outbound SC for those exporting to account for that usage?

Netexporter

Perhaps people on TOU tariffs should pay less than people on fixed tariffs, as the latter are the ones that cause the peaks.

MikeJXE

Netexporter said:

Perhaps people on TOU tariffs should pay less than people on fixed tariffs, as the latter are the ones that cause the peaks.

People on TOU tariffs are paying less or they wouldn't be on them 

 I am a low user on a fix tariff but that doesn't encourage me to use more 

Perhaps low users whether smart or dumb should pay less because they don't put so much strain on the system, if there were more low users there might not be no need to expand the network