Standing Charge up - unit prices down (the logic?)

Netexporter

I agree with Jackson that it long past time for the SC to be at a universal rate. The regional pricing dates back to when the grid essentially radiated out from the coal-fields, where the vast majority of electricity was generated. Now electricity comes (and goes) from all directions, so the cost of transmission should be levelised. Whilst it does cost more to maintain rural, mainly overhead, distribution, electrification is a common good that makes for a civilised society, so the cost should be the same everywhere in the country.

booneruk

Netexporter said:

I agree with Jackson that it long past time for the SC to be at a universal rate. The regional pricing dates back to when the grid essentially radiated out from the coal-fields, where the vast majority of electricity was generated. Now electricity comes (and goes) from all directions, so the cost of transmission should be levelised. Whilst it does cost more to maintain rural, mainly overhead, distribution, electrification is a common good that makes for a civilised society, so the cost should be the same everywhere in the country.

Let's have that kind of talk about the price of pints! (Londoner here).

Back to the topic though, I'm not sure that is as fair/civilised as you might think. There are still economies of scale in play that mean it's more efficient to provide service to densely populated cities. Should we make the poorer population of London pay more?

Chrysalis

Netexporter said:

I agree with Jackson that it long past time for the SC to be at a universal rate. The regional pricing dates back to when the grid essentially radiated out from the coal-fields, where the vast majority of electricity was generated. Now electricity comes (and goes) from all directions, so the cost of transmission should be levelised. Whilst it does cost more to maintain rural, mainly overhead, distribution, electrification is a common good that makes for a civilised society, so the cost should be the same everywhere in the country.

I agree on the equalisation (and this is coming from someone in a low SC area), although looking at the costs, some of the cheaper regions are mostly rural so I dont think density is necessarily the prime factor, perhaps proximity to infrastructure?

Qyburn

Chrysalis said:

I dont think anyone is proposing SC is scrapped, but rather it resembles some form of common sense, some trivial changes would be to move policy costs to general taxation as after all they are political costs, and move variable costs to unit rate.

I agree on the first point, I think that was a political decision - increasing taxation to cover policy and welfare charges would reflect on the government. Add them to standing charges and people rail against the industry instead.

On variable costs, which elements actually scale up and down depending on how many kWh a customer uses? I'm not sure I can see any.

Chrysalis

Qyburn said:

Chrysalis said:

I dont think anyone is proposing SC is scrapped, but rather it resembles some form of common sense, some trivial changes would be to move policy costs to general taxation as after all they are political costs, and move variable costs to unit rate.

I agree on the first point, I think that was a political decision - increasing taxation to cover policy and welfare charges would reflect on the government. Add them to standing charges and people rail against the industry instead.

On variable costs, which elements actually scale up and down depending on how many kWh a customer uses? I'm not sure I can see any.

They didnt get classified separately by ofgem a bit crafty, but transmission costs are variable.

Qyburn

In that case yes transmission costs could and should be charged on the unit price. I presume at moment high users aren't paying their fair share and low users paying more than their share. 

It's stilla bit artificial. I can't imagine something like a 275kV line costs twice as much to maintain if it carries twice as much current. So I guess this is more about sharing costs among suppliers based on the benefit they receive, and doing so based on quantity of electricity carried rather than peak use, or number of customers etc.

Chrysalis

Qyburn said:

In that case yes transmission costs could and should be charged on the unit price. I presume at moment high users aren't paying their fair share and low users paying more than their share. 

It's stilla bit artificial. I can't imagine something like a 275kV line costs twice as much to maintain if it carries twice as much current. So I guess this is more about sharing costs among suppliers based on the benefit they receive, and doing so based on quantity of electricity carried rather than peak use, or number of customers etc.

A point., but if it feels artificial this is how it used to be, Ofgem actually moved these variable costs to SC within the past couple of years, its their tinkering that did it, historically they were on the unit rate.