Gas Standing Charges..

Notepad_Phil

Chris_b2z said:

pseudodox said:

Probably for the same reasons Council Tax, water, telephone, broadband, insurance, petrol, baked beans, coffee, train fares, cars, clothes, fish & chips, meals out, Easter eggs etc have all increased in price.  That's life.  

You haven't answered my question. The Ofgem SVT price cap is actually decreasing tomorrow.

The market price of gas in particular has fallen as supply, reserves, etc has improved and so consequently the price cap can fall. Unfortunately the price of gas that is bought to then sell onto customers has very little to do with what makes up the costs that standing charges are to cover - or would you suggest that if the price of gas miraculously fell to zero that standing charges should also fall dramatically towards zero?

Chris_b2z

Notepad_Phil said:

Chris_b2z said:

pseudodox said:

Probably for the same reasons Council Tax, water, telephone, broadband, insurance, petrol, baked beans, coffee, train fares, cars, clothes, fish & chips, meals out, Easter eggs etc have all increased in price.  That's life.  

You haven't answered my question. The Ofgem SVT price cap is actually decreasing tomorrow.

The market price of gas in particular has fallen as supply, reserves, etc has improved and so consequently the price cap can fall. Unfortunately the price of gas that is bought to then sell onto customers has very little to do with what makes up the costs that standing charges are to cover - or would you suggest that if the price of gas miraculously fell to zero that standing charges should also fall dramatically towards zero?

Thank you. Could you please expand on that. What are those costs within the standing charge and why are they increasing?

MattMattMattUK

Chris_b2z said:

Notepad_Phil said:

Chris_b2z said:

pseudodox said:

Probably for the same reasons Council Tax, water, telephone, broadband, insurance, petrol, baked beans, coffee, train fares, cars, clothes, fish & chips, meals out, Easter eggs etc have all increased in price.  That's life.  

You haven't answered my question. The Ofgem SVT price cap is actually decreasing tomorrow.

The market price of gas in particular has fallen as supply, reserves, etc has improved and so consequently the price cap can fall. Unfortunately the price of gas that is bought to then sell onto customers has very little to do with what makes up the costs that standing charges are to cover - or would you suggest that if the price of gas miraculously fell to zero that standing charges should also fall dramatically towards zero?

Thank you. Could you please expand on that. What are those costs within the standing charge and why are they increasing?

There is a whole 200+ post thread dedicated to that, as well as numerous other threads and ten the official breakdown from Ofgem.

In summary the standing charge covers operating the network, maintenance, upgrades and elements of social policy. Around 76% is operating costs and maintenance, replacing pipes, pumps, etc. Approximately 9% is for upgrades. 3.4% is subsidy for pre-payment meters, 7.5% is policy costs, things like the Warm Home Discount, Vulnerable Customer Levy,other social subsidies and some green costs. 1% is the "headroom", essentially a contingency for unforseen maintenance issues, 1.9% is the maximum profit, then 0.3% adjustment allowance, mostly bad debts which Ofgem blocks collection of. The difference between that and 100% is rounding.

The price of gas itself does not impact the standing charge.

MattMattMattUK

Chris_b2z said:

EssexHebridean said:

Also, just as a reminder, the suppliers do not set the basic standing charge, nor do they profit from it as such. 

Is that a fact that suppliers don't profit? Please provide your source of information. Do National Grid profit from the standing charge?

In theory the suppliers could make 1.9% profit on the standing charge, the last review showed that they made less, in most cases close to zero.

National Grid make a profit on their overall operation, they receive money from the standing charge and from transmission costs, how much they make from each is not directly attributable, though their maintenance costs exceed the revenue from the standing charge, so that would indicate that the standing charge is too low and maintenance is being subsidised from transmission charges.

Chris_b2z

Industries with the Highest Profit Margin in the UK in 2024

• 1. Electricity Distribution in the UK

  Profit Margin 2024: 45.7%

  Electricity distribution network operators (DNOs) operate regional monopolies, so pricing in the industry is heavily regulated by Ofgem in Great Britain and the Northern Ireland Authority for Utility Regulation (NIAUR) in Northern Ireland. In the United Kingdom, there are currently 15 different DNOs managed by seven operators and 16 independent distribution network operators (IDNOs) working primarily to connect new housing, commercial and industrial premises to existing networks.

  Revenue is forecast to increase at a compound annual rate of 1% to reach £8.3 billion over the five years through 2023-24.
  

• 2. Venture Capital in the UK

  Profit Margin 2024: 43.3%

  The Venture Capital industry has seen healthy growth over the past decade, as investors increasingly turn to private markets, seeing the benefits of greater returns and portfolio diversification that a venture capitalist can offer. From being a niche area of finance consisting of old-school investors and investment bankers, venture capital has evolved to allow investors to capitalise on new technologies and innovations that could disrupt and shape the future. This phenomenon has become all too common in recent years, with the rapid pace of technological change giving rise to exciting advancements like generative AI.

• 3. Gas Distribution in the UK

  Profit Margin 2024: 40.4%

  The industry comprises eight Gas Distribution Networks (GDNs) across Great Britain, owned by four companies operating regional monopolies. Gas distributors are heavily regulated through price control frameworks set by Ofgem in the UK and NIAUR in Northern Ireland to protect consumers. The industry was restructured in 2005 when National Grid sold four of its eight regional distribution networks. Scotia Gas Networks acquired two GDNs, while Northern Gas Networks and Wales & West Utilities acquired one. Independent Gas Transporters have carried out approximately half of the new gas connections and modifications since 2005.
  

• 4. Private Equity in the UK

  Profit Margin 2024: 35.6%

  
  

• 5. Banks in the UK

  Profit Margin 2024: 35.2%

  
  

• 6. Audiobook Publishing in the UK

  Profit Margin 2024: 34.7%

  
  

• 7. Legal Activities in the UK

  Profit Margin 2024: 34.3%

  
  

• 8. Search Engines in the UK

  Profit Margin 2024: 34.0%

amanda1024

pseudodox said:

Chris_b2z said:

With all due respect, this question was raised because OP received an email stating that discounts were forthcoming from April only to discover that they were not going to benefit from them because of low usage.

So, can anyone please explain exactly why standing charges are increasing next week?

Probably for the same reasons Council Tax, water, telephone, broadband, insurance, petrol, baked beans, coffee, train fares, cars, clothes, fish & chips, meals out, Easter eggs etc have all increased in price.  That's life.  

But easter eggs, for example, have increased in price because of severe droughts in West Africa. Council tax has increased because councils are being required to do more on adult and child social care, with less money from central government, and many also made poor investment decisions. I can’t see how either of those would affect the gas standing charge, so it’s still a valid question

MattMattMattUK

Chris_b2z said:

Industries with the Highest Profit Margin in the UK in 2024

• 1. Electricity Distribution in the UK

  Profit Margin 2024: 45.7%

  Electricity distribution network operators (DNOs) operate regional monopolies, so pricing in the industry is heavily regulated by Ofgem in Great Britain and the Northern Ireland Authority for Utility Regulation (NIAUR) in Northern Ireland. In the United Kingdom, there are currently 15 different DNOs managed by seven operators and 16 independent distribution network operators (IDNOs) working primarily to connect new housing, commercial and industrial premises to existing networks.

  Revenue is forecast to increase at a compound annual rate of 1% to reach £8.3 billion over the five years through 2023-24.
  

• 2. Venture Capital in the UK

  Profit Margin 2024: 43.3%

  The Venture Capital industry has seen healthy growth over the past decade, as investors increasingly turn to private markets, seeing the benefits of greater returns and portfolio diversification that a venture capitalist can offer. From being a niche area of finance consisting of old-school investors and investment bankers, venture capital has evolved to allow investors to capitalise on new technologies and innovations that could disrupt and shape the future. This phenomenon has become all too common in recent years, with the rapid pace of technological change giving rise to exciting advancements like generative AI.

• 3. Gas Distribution in the UK

  Profit Margin 2024: 40.4%

  The industry comprises eight Gas Distribution Networks (GDNs) across Great Britain, owned by four companies operating regional monopolies. Gas distributors are heavily regulated through price control frameworks set by Ofgem in the UK and NIAUR in Northern Ireland to protect consumers. The industry was restructured in 2005 when National Grid sold four of its eight regional distribution networks. Scotia Gas Networks acquired two GDNs, while Northern Gas Networks and Wales & West Utilities acquired one. Independent Gas Transporters have carried out approximately half of the new gas connections and modifications since 2005.
  

• 4. Private Equity in the UK

  Profit Margin 2024: 35.6%

  
  

• 5. Banks in the UK

  Profit Margin 2024: 35.2%

  
  

• 6. Audiobook Publishing in the UK

  Profit Margin 2024: 34.7%

  
  

• 7. Legal Activities in the UK

  Profit Margin 2024: 34.3%

  
  

• 8. Search Engines in the UK

  Profit Margin 2024: 34.0%

Those are operating margins, not net profit.

Chris_b2z

National Grid

• Dividend Payments: Over the past decade (ending March 2023), National Grid plc has consistently rewarded its shareholders, paying out an average of £1.6 billion in dividends annually. This translates to a staggering total of nearly £28 billion in dividends since privatisation.
• Investment vs. Dividend Payouts: The company’s approach to financial management is reflected in its investment and dividend strategy. For every £1 National Grid UK Electricity Transmission (NGET) has invested over the past decade (gross capex), 40p has been returned to shareholders as dividends, totaling nearly £4.1 billion in dividends from the UK transmission business alone.
• Revenue to Shareholder Returns: Approximately 13% of NGET’s revenue, derived mainly from customer bills, has been directed towards shareholder dividends.

• Profit Allocation: The dividend payouts by NGET represent 62.3% of the segment’s post-tax profits.
• Future Commitments and Comparisons: National Grid plc has pledged to invest up to £9 billion in its UK electricity transmission business in the five years leading to 2026.
However, if the company continues its past trend of dividend payouts, nearly the same amount (£7.8 billion) could be paid in dividends as its maximum potential investment in UK transmission over this period.

MattMattMattUK

Chris_b2z said:

National Grid

• Dividend Payments: Over the past decade (ending March 2023), National Grid plc has consistently rewarded its shareholders, paying out an average of £1.6 billion in dividends annually. This translates to a staggering total of nearly £28 billion in dividends since privatisation.
• Investment vs. Dividend Payouts: The company’s approach to financial management is reflected in its investment and dividend strategy. For every £1 National Grid UK Electricity Transmission (NGET) has invested over the past decade (gross capex), 40p has been returned to shareholders as dividends, totaling nearly £4.1 billion in dividends from the UK transmission business alone.
• Revenue to Shareholder Returns: Approximately 13% of NGET’s revenue, derived mainly from customer bills, has been directed towards shareholder dividends.

• Profit Allocation: The dividend payouts by NGET represent 62.3% of the segment’s post-tax profits.
• Future Commitments and Comparisons: National Grid plc has pledged to invest up to £9 billion in its UK electricity transmission business in the five years leading to 2026.
However, if the company continues its past trend of dividend payouts, nearly the same amount (£7.8 billion) could be paid in dividends as its maximum potential investment in UK transmission over this period.

It is unclear why you think that is a reply?      

Hoenir

Chris_b2z said:

National Grid

• Dividend Payments: Over the past decade (ending March 2023), National Grid plc has consistently rewarded its shareholders, paying out an average of £1.6 billion in dividends annually. This translates to a staggering total of nearly £28 billion in dividends since privatisation.
• Investment vs. Dividend Payouts: The company’s approach to financial management is reflected in its investment and dividend strategy. For every £1 National Grid UK Electricity Transmission (NGET) has invested over the past decade (gross capex), 40p has been returned to shareholders as dividends, totaling nearly £4.1 billion in dividends from the UK transmission business alone.
• Revenue to Shareholder Returns: Approximately 13% of NGET’s revenue, derived mainly from customer bills, has been directed towards shareholder dividends.

• Profit Allocation: The dividend payouts by NGET represent 62.3% of the segment’s post-tax profits.
• Future Commitments and Comparisons: National Grid plc has pledged to invest up to £9 billion in its UK electricity transmission business in the five years leading to 2026.
However, if the company continues its past trend of dividend payouts, nearly the same amount (£7.8 billion) could be paid in dividends as its maximum potential investment in UK transmission over this period.

Does this exclude National Grid's US operation ?