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Energy standing Charges - OFGEM's inability to address unfair standing charges on consumers

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  • the_lunatic_is_in_my_head
    the_lunatic_is_in_my_head Posts: 9,268 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    edited 26 August 2024 at 6:05PM

     And secondly, which might translate into this discussion, because why should one party pay for upgrades that anybody can later use.

    There is currently a bill in Parliament titled the Access to Telecommunications Networks Bill

    https://bills.parliament.uk/bills/3569

    Easier to copy & paste

    A Bill to require providers of electronic communications networks to grant other such providers access to their apparatus where that is necessary to ensure consistent network coverage; to prevent those providers from charging more than the standard market rate for such access; to require the regulator to impose penalties on providers who unreasonably fail to grant such access; to make provision for the purpose of incentivising providers to allow customers of other providers to use their networks where access cannot be granted to their apparatus; and for connected purpose

    There could be a debate about whether such requirements hinder investment in building infrastructure which is where regulation should step in to ensure the cost of not doing so outweighs the cost of doing so.

    The word "should" is an ethics debate really but the answer some may have is because the advancement of our society (I'll use that word too) "should" be there for the benefit of all rather than the few. 

    Either the government itself carries out such advancement or it imposes regulation on a private sector to balance profit against the interests of the people. 

    When you look at the state of the water companies it seems to suggest some of these regulators are useless, whether Ofgem is working in the right direction or not I guess could be another 10 page thread :) 
    In the game of chess you can never let your adversary see your pieces
  • Ildhund
    Ildhund Posts: 574 Forumite
    500 Posts Second Anniversary Name Dropper Photogenic
    Scot_39 said:
    Ideally I would rather the past and present govts had / would take an honest long term view at the true rate of inflation for ... poor pensioners ...

    I think pensioners have weathered inflation rather better than the rest of the population. What really needs looking at is the actual cost of living.

    I wasted a couple of hours yesterday checking the Minimum Income Standard, which I believe is widely used as a benchmark for the cost of living. I was astounded at the fanciful estimates of what a single, male pensioner needs as a minimum income. It looks to me to be a gross overestimate of need and merely a review of nice to have. 


    [OT some egregious examples:
    • 12.750 kg of solid food per week.
      I get through 2.500 - 3.000 kg. Any wonder we have an obesity crisis?
    • 2 toilet rolls per week.
      I get through 4 or 5 a year
    • New washing machine and microwave every 8 years.
    • 10 pairs of pants every year.
      What on earth happens to them? I'm still using pants bought last century!
    I would have thought that today's OAPs would have learnt something from their parent's frugality: make do and mend, waste not want not.]


    I'm not being lazy ...
    I'm just in energy-saving mode.

  • BarelySentientAI
    BarelySentientAI Posts: 2,448 Forumite
    1,000 Posts Name Dropper
    edited 26 August 2024 at 6:31PM

     And secondly, which might translate into this discussion, because why should one party pay for upgrades that anybody can later use.

    There is currently a bill in Parliament titled the Access to Telecommunications Networks Bill

    https://bills.parliament.uk/bills/3569

    Easier to copy & paste

    A Bill to require providers of electronic communications networks to grant other such providers access to their apparatus where that is necessary to ensure consistent network coverage; to prevent those providers from charging more than the standard market rate for such access; to require the regulator to impose penalties on providers who unreasonably fail to grant such access; to make provision for the purpose of incentivising providers to allow customers of other providers to use their networks where access cannot be granted to their apparatus; and for connected purpose

    There could be a debate about whether such requirements hinder investment in building infrastructure which is where regulation should step in to ensure the cost of not doing so outweighs the cost of doing so.

    The word "should" is an ethics debate really but the answer some may have is because the advancement of our society (I'll use that word too) "should" be there for the benefit of all rather than the few. 

    Either the government itself carries out such advancement or it imposes regulation on a private sector to balance profit against the interests of the people. 

    When you look at the state of the water companies it seems to suggest some of these regulators are useless, whether Ofgem is working in the right direction or not I guess could be another 10 page thread :) 
    Not quite the same thing - in telecoms it's one infrastructure operator allowing access to the customers of the others. 

    The case of the electricity system is one end user paying for something that another end user does not need to pay for, solely due to the timing of when each party has the requirement.  Not a profit thing, not an advancement of society thing, not a relative merits of each's ability to pay thing, entirely timing.

    "You were the individual customer that caused the upgrade, so you pay for it all and everyone else can then benefit for free".

    I'm quite confident that even the outlier voices on this issue don't want standing charges to go that way - cuts for all apart from a massive uplift to be paid by the third person in the street to get an EV or the seventh person to fit solar panels.

    I accept your point that a plausible outcome would be for everything to be funded by central government - but the same argument could be made for almost any expenditure and it's not necessarily a good thing.

    Part of the problem with the regulators is that people misunderstand their role.  They are not there to make everything as cheap as possible for customers focusing only on the immediate term.  Your paraphrase is pretty accurate - to balance profit against the interests of the customers - or perhaps to balance the long term needs of the customers against the immediate costs.  We already have problems with short term thinking then requiring urgent and expensive actions, I wouldn't want to make it worse by turning the regulator into a customer advocacy group.
  • prowla
    prowla Posts: 13,984 Forumite
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    prowla said:
    The issue with Standing Charges comes up and again and again and it largely splits into two camps.

    First there are those who understand the system, that there are fixed costs maintaining a network and a connection to a dwelling and think that it is fair to apportion that to individual bills, so that people pay for their connection and the energy they use.

    Then there is the second group, who think that "someone else" should pay for their grid connection. 

    I am in the first group, because I am rational sensible and not selfish, as are many of the more learned members of this forum. Those who are reactionary and selfish normally fall into the second group, generally make a lot of noise and generally lack understanding. 
    Entirely reasonable for low users to object (if they are minded to do so ) to - 

    Biggest single reason for current level of electricity standing charges at least for my region -  costs shift from unit rate to SC that I think took effect from April 2022

    Taken from scot_39 post on previous page

    "But that was based in some part if not all on careful reflection in their view of actual costs / numbers  -  TCR (2019)  - before crisis. OFGEM essentially decided low users were underpaying for the fixed component of infrastructure and high users were paying too much"
    Entirely reasonable to object to paying their fair share?

    It's a view I suppose.
    A pointed use of "fair share", based on the premise of one positon being correct.
    Based on the fact that the previous arrangement (and the one being advocated for a return to) was discovered not to be fair and the present arrangement determined to be significantly fairer as its replacement.

    So if pointed means "based on the statistical analyses carried out to determine the relative merits of the two scenarios", then yes.
    Well, the concept of there being a standing charge is a premise: - You don't do it when you fill up your car. - You don't do it for your weekly shop. - You don't do it for your TV service. - You don't do it for eating at a restaurant. So why should it be there for supply of energy to your house? Even if you do accept it as a necessary, one of its stated elements is for "Maintaining the energy supply network that delivers gas and electricity to your home"; looking at that, the cost is not the same per household. - The idea that it costs the same to provide the infra for each house is flawed, because the infra has to be sized to suit the workload. - Therefore a house with multiple residents and high(er) use takes more of the capacity than a single occupancy house with frugal use. - Therefore making the same standing charge means that the low use customer is subsidising the infrastructure requirements to provide the service to the high-use household. Another element of the standing charge is to cover "Visiting homes to take meter readings". - But if a person has a smart meter then there is no need for visiting to take meter readings. Therefore, the assertion that the standing charge means that everybody pays a "fair share" is based on unfair assumptions and so cannot be a "fair share". The term "fair share" is basically baloney and is mostly used two somehow bolster an opinion and attribute it some sense of righteousness which it doesn't merit..
  • prowla said:
    prowla said:
    The issue with Standing Charges comes up and again and again and it largely splits into two camps.

    First there are those who understand the system, that there are fixed costs maintaining a network and a connection to a dwelling and think that it is fair to apportion that to individual bills, so that people pay for their connection and the energy they use.

    Then there is the second group, who think that "someone else" should pay for their grid connection. 

    I am in the first group, because I am rational sensible and not selfish, as are many of the more learned members of this forum. Those who are reactionary and selfish normally fall into the second group, generally make a lot of noise and generally lack understanding. 
    Entirely reasonable for low users to object (if they are minded to do so ) to - 

    Biggest single reason for current level of electricity standing charges at least for my region -  costs shift from unit rate to SC that I think took effect from April 2022

    Taken from scot_39 post on previous page

    "But that was based in some part if not all on careful reflection in their view of actual costs / numbers  -  TCR (2019)  - before crisis. OFGEM essentially decided low users were underpaying for the fixed component of infrastructure and high users were paying too much"
    Entirely reasonable to object to paying their fair share?

    It's a view I suppose.
    A pointed use of "fair share", based on the premise of one positon being correct.
    Based on the fact that the previous arrangement (and the one being advocated for a return to) was discovered not to be fair and the present arrangement determined to be significantly fairer as its replacement.

    So if pointed means "based on the statistical analyses carried out to determine the relative merits of the two scenarios", then yes.
    Well, the concept of there being a standing charge is a premise: - You don't do it when you fill up your car. - You don't do it for your weekly shop. - You don't do it for your TV service. - You don't do it for eating at a restaurant. So why should it be there for supply of energy to your house? Even if you do accept it as a necessary, one of its stated elements is for "Maintaining the energy supply network that delivers gas and electricity to your home"; looking at that, the cost is not the same per household. - The idea that it costs the same to provide the infra for each house is flawed, because the infra has to be sized to suit the workload. - Therefore a house with multiple residents and high(er) use takes more of the capacity than a single occupancy house with frugal use. - Therefore making the same standing charge means that the low use customer is subsidising the infrastructure requirements to provide the service to the high-use household. Another element of the standing charge is to cover "Visiting homes to take meter readings". - But if a person has a smart meter then there is no need for visiting to take meter readings. Therefore, the assertion that the standing charge means that everybody pays a "fair share" is based on unfair assumptions and so cannot be a "fair share". The term "fair share" is basically baloney and is mostly used two somehow bolster an opinion and attribute it some sense of righteousness which it doesn't merit..
    If you're going to use discredited analogies and factually incorrect statements to justify your stance that fairness is fictitious, then there's not really much discussion to have, is there?
  • EssexHebridean
    EssexHebridean Posts: 24,424 Forumite
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    Generally speaking, the infrastructure to the property is pretty similar regardless of occupancy. My incoming gas pipe is no smaller than the gas pipe serving the house of the family of 5 along the road, and no larger than the single lady opposite. Similarly on the electricity side, meters these days are largely the same regardless of home size they are installed in.
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  • Qyburn
    Qyburn Posts: 3,583 Forumite
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    prowla said:
    You don't do it for your TV service. 
    Isn't that the Television Licence? That costs the same irrespective of how much TV you watch. Or telephone line rental, or Internet.
  • TheBanker
    TheBanker Posts: 2,224 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    prowla said:
    prowla said:
    The issue with Standing Charges comes up and again and again and it largely splits into two camps.

    First there are those who understand the system, that there are fixed costs maintaining a network and a connection to a dwelling and think that it is fair to apportion that to individual bills, so that people pay for their connection and the energy they use.

    Then there is the second group, who think that "someone else" should pay for their grid connection. 

    I am in the first group, because I am rational sensible and not selfish, as are many of the more learned members of this forum. Those who are reactionary and selfish normally fall into the second group, generally make a lot of noise and generally lack understanding. 
    Entirely reasonable for low users to object (if they are minded to do so ) to - 

    Biggest single reason for current level of electricity standing charges at least for my region -  costs shift from unit rate to SC that I think took effect from April 2022

    Taken from scot_39 post on previous page

    "But that was based in some part if not all on careful reflection in their view of actual costs / numbers  -  TCR (2019)  - before crisis. OFGEM essentially decided low users were underpaying for the fixed component of infrastructure and high users were paying too much"
    Entirely reasonable to object to paying their fair share?

    It's a view I suppose.
    A pointed use of "fair share", based on the premise of one positon being correct.
    Based on the fact that the previous arrangement (and the one being advocated for a return to) was discovered not to be fair and the present arrangement determined to be significantly fairer as its replacement.

    So if pointed means "based on the statistical analyses carried out to determine the relative merits of the two scenarios", then yes.
    Well, the concept of there being a standing charge is a premise: - You don't do it when you fill up your car. - You don't do it for your weekly shop. - You don't do it for your TV service. - You don't do it for eating at a restaurant. So why should it be there for supply of energy to your house? Even if you do accept it as a necessary, one of its stated elements is for "Maintaining the energy supply network that delivers gas and electricity to your home"; looking at that, the cost is not the same per household. - The idea that it costs the same to provide the infra for each house is flawed, because the infra has to be sized to suit the workload. - Therefore a house with multiple residents and high(er) use takes more of the capacity than a single occupancy house with frugal use. - Therefore making the same standing charge means that the low use customer is subsidising the infrastructure requirements to provide the service to the high-use household. Another element of the standing charge is to cover "Visiting homes to take meter readings". - But if a person has a smart meter then there is no need for visiting to take meter readings. Therefore, the assertion that the standing charge means that everybody pays a "fair share" is based on unfair assumptions and so cannot be a "fair share". The term "fair share" is basically baloney and is mostly used two somehow bolster an opinion and attribute it some sense of righteousness which it doesn't merit..
    There is a big difference. Taking your example of a petrol station:

    There is no obligation on the petrol station company to build and operate a petrol station in every street, or even every town. If they don't think they'll get enough custom, they don't have to operate. If an existing petrol station is not selling enough petrol, the company can close it down. If an existing petrol station needs its tanks or pumps replacing, the company could decide to close rather than invest the money. On the other hand the electricity network has to maintain a connection to every property regardless of how much energy they're using. And they are obliged to repair faults to make sure everyone can get as much electricity as they need, 24/7.

    There is no obligation on a petrol station to make sure petrol is always available 24/7, sometimes they run out of fuel. And when this happens customers just have to either wait for the next delivery or (more likely) go somewhere else. You can't do that with electricity.

    The same applies to supermarkets and restaurants - they choose where to offer their services based on how many customers they think they can attract, and how much they think those customers will spend. And if they get it wrong, they close down. People might be upset that a restaurant has closed, but it's not the same as the electricity supplier saying 'sorry, we're not supplying your street any more, because the cables need replacing and you're not using enough power to make it worthwhile spending the money'.
  • MP1995
    MP1995 Posts: 495 Forumite
    100 Posts Name Dropper
    edited 27 August 2024 at 7:37AM
    @prowla looking at current gas bottle charges if you had to go and collect your own gas it's 15p kwh 

    And unless you are going to invest in quick charge batteries to pop along to your nearest electricity charging point they are circ 60-100p kwh.

    Of course that's not realistic but just a point back to why distribution costs to the Property are important and the upkeep.


  • the_lunatic_is_in_my_head
    the_lunatic_is_in_my_head Posts: 9,268 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    edited 27 August 2024 at 9:37AM
    Generally speaking, the infrastructure to the property is pretty similar regardless of occupancy. My incoming gas pipe is no smaller than the gas pipe serving the house of the family of 5 along the road, and no larger than the single lady opposite. Similarly on the electricity side, meters these days are largely the same regardless of home size they are installed in.
    We have a high pressured gas main near us, it snakes it's way through valleys, across rivers, over hills climbing hundreds of metres, I can't imagine what it cost to install. It was putting in many years ago but they still fly helicopters up and down the route of the main to ensure no one is carrying out excavation work near the pipe.

    The pipe going into the house is probably one of the cheaper and easier aspects of the system, when these threads talk about access to the supply I think that's more to do with the vastly complex network that we don't really see or think off in day to day life :) 
    In the game of chess you can never let your adversary see your pieces
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