Abolish standing charges

MattMattMattUK

wrf12345 said:

It is a pure political opportunity for a party that can combine abolishing standing charges

Someone choosing how they vote based on standing charges would be idiotic and they have no business voting.

wrf12345 said:

(punish the energy companies)

Choosing to "punish" any sector is petulant and irrational. 

wrf12345 said:

and get rid of the dreadful council tax which is legalised theft 

The idea of "legalised theft" is an oxymoron, theft is illegal by the nature of property laws, laws allowing taxation mean that confiscation of property is not theft, it is also a childish statement. Council tax is a contribution towards local services by the people who live there. The community charge (poll tax) that lots of people had a tantrum about would have been a far better system, but lots of people threw their toys out of the pram because they thought "someone else" should pay rather than them. 

wrf12345 said:

(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)

Councils would need significantly more funding from central government (I am presuming that by "govn" you meant government), depending on the area Council Tax can make up to 60% of a council's/unitary authorities funding. The slack in councils/UAs is very small, most services are already underfunded, yes there is wastage and vanity projects, but they pale into insignificance compared to overall budgets. 

wrf12345 said:

it would cost the government zero 

You have just demonstrated you have zero understanding of economics or finance.

wrf12345 said:

and brings in millions of voters for the next election.

Abolishing Council tax might bring in a hundred thousand votes, abolishing standing charges is going to bring in double digit votes at most. Those voting to abolish council tax (and not replace it with something vaguely similar) would largely be voting for themselves to pay less and others pay more, an inherently selfish position. 

MultiFuelBurner

MeteredOut said:

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?

I definitely think those with no smart meter fitted should pay double? Maybe Triple....do I hear any more?

MattMattMattUK

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 problem is that if everyone pics what "worked best" (which I presume you mean cheapest) then the revenue drops, the revenue model then needs to change because it does not bring in the funds needed, the model collapses. If someone has solar, battery and heat pump then a higher initial rate, no standing charge tariff would mean that they paid nothing for their energy consumption or grid connection for most of the year. 

housebuyer143 said:

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.

The issue with the old choice was that based on the changing landscape of microgeneration, changing patterns of consumption and usage (solar, battery storage, heat pumps) means that it just would not work.

housebuyer143 said:

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

That is one of the issues with the price cap, the gap between the cap and break even is too small to allow competition in the market, when profit margins are capped within that system and the margin between the costs and the sale price are so slim competition has been destroyed. 

QrizB

MattMattMattUK said:

housebuyer143 said:

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

That is one of the issues with the price cap, the gap between the cap and break even is too small to allow competition in the market, when profit margins are capped within that system and the margin between the costs and the sale price are so slim competition has been destroyed. 

On the other hand, raising the cap by 25% just so that suppliers can advertise tariffs "20% cheaper than the cap" isn't going to fly.

MultiFuelBurner

The issue is if everyone was on the price cap the actual profit they can make it we all pay is circa £41 based on the average blah blah blah and only allowed 1.9% profit.

We are going to be asked to pay £16 per household for debt rectory each so that presumed the actual profit the energy companies made is £25 per person and that's if every suppliers debt is average.

What sane business people would enter a market for £25 profit per household (if you are lucky)

I am surprised more aren't leaving the market like Shell.

MattMattMattUK

QrizB said:

MattMattMattUK said:

housebuyer143 said:

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

That is one of the issues with the price cap, the gap between the cap and break even is too small to allow competition in the market, when profit margins are capped within that system and the margin between the costs and the sale price are so slim competition has been destroyed. 

On the other hand, raising the cap by 25% just so that suppliers can advertise tariffs "20% cheaper than the cap" isn't going to fly.

I agree, people would have a meltdown. It is going to be why ToU tariffs and smart tariffs (EV charging on demand), as well as smart export are going to be the areas where real savings can be made. 

Scot_39

They are now allowed 2.4% allowance on one measure of operating profit - EBIT.  Increased from c1.9% in Oct cap iirc.
At Jan 1st cap £1928, 2.4% = c£46.
And the forecast £300+ drop in cap by summer to sub £1600 - reduces to c£38.


EBIT excludes debt servicing costs.

The £16 charge is meant to help deal with £3bn in collective debt this year - c£100 per household on average.  At base rate - interest wipes out £5+ of that EBIT allowance.

Is it fair - no its not.  My EOn account isnt in debt.  But we already carry costs for others in cap due to govt policy costs.

£16 is not £100 - fear the "only for 1 year" might well be overly optimistic.

markin

Standing charge for 21k of external insulation and windows, £2 per day for 30 years! The window may not last 30 years.

New fancy kitchen same again, And £1 per day for a new updated fancy bathroom.

Qyburn

Put the price cap up by 25% and you'll see more creative tariffs as suppliers would be able to set higher unit rates and lower standing charges. The price cap wasn't intended to act as price control, it was a safety net to stop people on default or deemed tariff being ripped off too much.

I think I might be able to make a case for higher standing charges (lower unit rate of course) as I expect that a lot of the supplier, transmission and distribution costs aren't related to how many kWh are carried during a given period. 

bristolleedsfan

Qyburn said:

Put the price cap up by 25% and you'll see more creative tariffs as suppliers would be able to set higher unit rates and lower standing charges. The price cap wasn't intended to act as price control, it was a safety net to stop people on default or deemed tariff being ripped off too much.

Market Stabilisation Charge is due to end on 31 March, might lead to more competitive creative tariffs, suppliers can if they want to create both variable and fixed rate tariffs with lower standing charge/higher unit rates.( non price cap tariffs that consumers actively choose.)