Standing Charge

Scot_39

trainedsoldier said:

I understand that ofgem fix the rates but surely it costs no more to supply me with power than it does my neighbour 

Athough many on standard credit are now paying more regularly - others still get 3m - so run their accounts in arrears / debit - so if you like interest on that debit factors into cost to

You have removed your suppliers ability to control recovery of funds for energy used.  You give them access when sign or enter into the DD mandate (with consumer protections built in)

Standard credit therefore has a higher credit and credit risk cost to their mind.

They also have to if you like process and administer - for some thats still paper bills - given BT charge £3 for those - maybe a non trivial cost.

The latest Ofgem cap annoncement says average credit SC - dual fuel - £369 vs £334 - so £35 - £3/pm - 9.6p/day

badmemory

Are your sure one isn't with VAT & one without.  They always seem to quote it including VAT but then the bill itself adds the VAT on afterwards.  Which seems a bit daft as it also says this in not a VAT invoice.

MattMattMattUK

trainedsoldier said:

I used to pay by variable direct debit but when they changed their system they said they no longer do variable direct debit, i dont see why they dont when i spoke to british gas they said that it would be available in 14 days that was months ago. i like to pay what i owe each month as i have a caravan and i am away most of the summer months as i am retired so i do not want ££££ going out of my bank account every month when i am not using Power.

You have changed to pay on receipt of bill, that version of the SVT is higher due to the additional costs involved, you will be paying both a higher standing charge and a higher unit rate because of tat choice.

Spoonie_Turtle

Is there any reason you're still with British Gas?  You could change to a supplier who does offer Variable DD.  Note though that in the months you don't use anything you will still be charged the standing charge, because that's the price we pay for being connected to the supply - it's not up to the supplier whether we actually make use of that supply every month or not.

wrf12345

BG have a relatively low s/c fixed tariff for existing customers, may be worth a look...

TheElectricCow

trainedsoldier said:

I understand that ofgem fix the rates but surely it costs no more to supply me with power than it does my neighbour 

At a very basic level, it’s for the same reason a Waitrose might sell a loaf of bread for a higher price than a loaf from Aldi. 

Both loaves may cost a similar amount to produce and the basic ingredients could have even come from the same producer for both, but the two stores may choose to sell that bread at different prices. If you’d like to pay the lower price for the bread you’d either need to choose a different kind of bread or start shopping in a new store who sells their bread cheaper. 

With energy, you’d either need to switch to a cheaper tariff with your current supplier or change your supplier to a cheaper one altogether.

wrf12345

The retail energy companies can't make enough dosh from selling energy at three to four times wholesale so s/c's are very important in keeping them afloat and the system is set up to make new entrants comply with the norm.

spot1034

wrf12345 said:

The retail energy companies can't make enough dosh from selling energy at three to four times wholesale so s/c's are very important in keeping them afloat and the system is set up to make new entrants comply with the norm.

I don't think retailers make any profit at all on the standing charge, do they? It is set at a particular level by Ofgem and has to be passed on in full, even if the customer is paying less on a fixed rate. Others will doubtless correct me if I've got this wrong.

MattMattMattUK

wrf12345 said:

The retail energy companies can't make enough dosh from selling energy at three to four times wholesale so s/c's are very important in keeping them afloat and the system is set up to make new entrants comply with the norm.

This post is factually inaccurate. Nearly all of the Standing Charge is handed over to third parties such as network operators, Warm Home Discount recipients etc. or used for the costs of operating the network. In theory there is a tiny allowance for profit within the makeup of thr Standing charge, but it is a fraction of a penny.

Energy suppliers are not having problems "keeping them afloat", but equally their profit margin on the SVT is capped at 3%, so it is hardly a high profit sector.

There is no system created to "make new entrants comply with the norm", suppliers can offer whatever non-SVT tariff they want, however the reason many do not offer a tariff sans standing charge is because it would end up being loss making. The costs that the energy supplier is required to pay would still have to be paid, in theory by higher unit rates, but they would have an influx of users who periodically use no energy so they would loose money.

mmmmikey

wrf12345 said:

The retail energy companies can't make enough dosh from selling energy at three to four times wholesale so s/c's are very important in keeping them afloat and the system is set up to make new entrants comply with the norm.

There are some good arguments against the current level of standing charges and some ill informed opinion with little basis in fact. This post comes into the latter category and does nothing to advance the debate.

One of the challenges about forums like this is that anyone can say anything. Posting things like on this online don't make them true.