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

the_lunatic_is_in_my_head

MattMattMattUK said:

Most data centres already pay a premium, they have dedicated supplies, often redundancy in supply as well (multiple lines on different routes, from different parts of the network), they will be paying a 20-50% premium on all their energy for a guaranteed supply. 

That sounds as if they are paying for a service (guaranteed supply) rather than a levy that contributes towards the cost of upgrading the grid?

MattMattMattUK said:

That cost would be passed onto consumers, though it already is as whilst not paid by taxation data centres do pay in their increased energy costs. 

You could say that about any tax really, the government placed a couple of % tax on the turnover of digital service providers, which ends up on the consumer. Amazon put that tax on top of their seller fees, personally I think Amazon is an expensive place to shop but they have plenty of customers it seems. 

Energy aside a bit, when we left the EU the way VAT was calculated on goods was at the place of purchase with requirements on marketplaces to collect the VAT (for which some are now adding a small % fee on to every order to pay for the cost of their obligations), currently if you watch a video on Youtube the ad revenue is reported in Ireland, would be interesting to see if this kind of activity could be taxed in the country of consumption. 

I understand data centres cover a wide aspect of our lives and I assume the government would be careful in hindering their expansion but it's a growing industry tied to some of the largest companies in the world using large volumes of energy, it does seem like a prime target for taxation to support the infrastructure IMHO. 

MattMattMattUK said:

Funding the system, or even just the infrastructure from central taxation would require taxes to rise to fund that. The UK electorate, despite having low taxes by European standards is still very averse to paying for what we currently need, let alone further increases in taxes. 

I read an article that said if the government purchased the national grid it would pay for itself within 7 years (as I've  said above neutral info is hard to find so I can't say if the statement sacks up on not), it's not really a question of paying from taxation, it's a question of it being funded via the income it generates and the profit element being invested back into the system (obviously there is the cost of either purchasing or setting up from scratch to consider). 

MattMattMattUK said:

Whilst I generally take the view that more education is good, people have to be both willing to learn and able to understand the information. People would rather get angry and rant than taking the time to understand as many of those who think that the energy suppliers are making huge margins etc, they are unable to understand gross and net, they are unable to understand that there is more to energy costs than just the price of buying it from a power station, they are unwilling to invest time and (albeit minimal) effort in understanding. 

Perhaps if the media spent more time highlighting the actions of the oil industry people would focus their attention towards the area of the market that generates a profit instead.

We live in an age where there is more information available to the average person than ever but there is so much of it it's hard to focus on everything and when info is wrong by the time it's highlighted it's old hat and people are talking about something else.

Information has basically become another throw away product of consumption in the same way as goods have, the system is the problem rather than the people who are merely a product of the system. 

MattMattMattUK said:

To meet that requirement they have to pay for the upgraded power lines and the maintenance of those lines, they have to pay for the four onsite substations, they also have a disconnect clause so that they can be cut off at certain times (three of the four substations). Many other high use businesses have the same or similar, they will pay a significant premium for three phase etc. There was also a data centre recently built where I live, they had to pay for all the infrastructure to be installed, power lines, fibre optics, water for cooling, it cost tens of millions to have it all put in and none of the cost of that fell on other energy users. 

I would assume paying for infrastructure like this is common place, unless a company can persuade the government to fund it.

MattMattMattUK

the_lunatic_is_in_my_head said:

MattMattMattUK said:

Most data centres already pay a premium, they have dedicated supplies, often redundancy in supply as well (multiple lines on different routes, from different parts of the network), they will be paying a 20-50% premium on all their energy for a guaranteed supply. 

That sounds as if they are paying for a service (guaranteed supply) rather than a levy that contributes towards the cost of upgrading the grid?

They pay for all those lines to be installed, they pay for substation upgrades where needed.

the_lunatic_is_in_my_head said:

MattMattMattUK said:

That cost would be passed onto consumers, though it already is as whilst not paid by taxation data centres do pay in their increased energy costs. 

You could say that about any tax really, the government placed a couple of % tax on the turnover of digital service providers, which ends up on the consumer. Amazon put that tax on top of their seller fees, personally I think Amazon is an expensive place to shop but they have plenty of customers it seems. 

Energy aside a bit, when we left the EU the way VAT was calculated on goods was at the place of purchase with requirements on marketplaces to collect the VAT (for which some are now adding a small % fee on to every order to pay for the cost of their obligations), currently if you watch a video on Youtube the ad revenue is reported in Ireland, would be interesting to see if this kind of activity could be taxed in the country of consumption. 

I understand data centres cover a wide aspect of our lives and I assume the government would be careful in hindering their expansion but it's a growing industry tied to some of the largest companies in the world using large volumes of energy, it does seem like a prime target for taxation to support the infrastructure IMHO. 

Governments do have to be careful, but there are also geographic and bandwidth considerations that limit position for some data centres. I am not sure about the taxation, but we do need to deal with the tax haven situation. 

the_lunatic_is_in_my_head said:

MattMattMattUK said:

Funding the system, or even just the infrastructure from central taxation would require taxes to rise to fund that. The UK electorate, despite having low taxes by European standards is still very averse to paying for what we currently need, let alone further increases in taxes. 

I read an article that said if the government purchased the national grid it would pay for itself within 7 years (as I've  said above neutral info is hard to find so I can't say if the statement sacks up on not), it's not really a question of paying from taxation, it's a question of it being funded via the income it generates and the profit element being invested back into the system (obviously there is the cost of either purchasing or setting up from scratch to consider). 

The figures I have seen range from 7-18 years depending on how the cost of finance is accounted for, thought that does also factor in keeping consumer prices at the current levels and rising with inflation, not reducing that cost, which would likely mean that it never paid for itself. 

the_lunatic_is_in_my_head said:

MattMattMattUK said:

Whilst I generally take the view that more education is good, people have to be both willing to learn and able to understand the information. People would rather get angry and rant than taking the time to understand as many of those who think that the energy suppliers are making huge margins etc, they are unable to understand gross and net, they are unable to understand that there is more to energy costs than just the price of buying it from a power station, they are unwilling to invest time and (albeit minimal) effort in understanding. 

Perhaps if the media spent more time highlighting the actions of the oil industry people would focus their attention towards the area of the market that generates a profit instead.

We live in an age where there is more information available to the average person than ever but there is so much of it it's hard to focus on everything and when info is wrong by the time it's highlighted it's old hat and people are talking about something else.

Information has basically become another throw away product of consumption in the same way as goods have, the system is the problem rather than the people who are merely a product of the system. 

I think a huge part of the issue is that profit has become a dirty word in the minds of many. They are also either unwilling or unable to understand more complex issues (or in some cases relatively simple ones) and have also become very selfish, with the idea that "someone else" should pay for things for them and that they should not have to make a contribution, or fund themselves (I am talking about those who should be able to fund their own lifestyles).

There was some research that misinformation spreads faster than facts because the misinformation is what people want to hear, where as the facts contradict their preconceived ideas. 

the_lunatic_is_in_my_head said:

MattMattMattUK said:

To meet that requirement they have to pay for the upgraded power lines and the maintenance of those lines, they have to pay for the four onsite substations, they also have a disconnect clause so that they can be cut off at certain times (three of the four substations). Many other high use businesses have the same or similar, they will pay a significant premium for three phase etc. There was also a data centre recently built where I live, they had to pay for all the infrastructure to be installed, power lines, fibre optics, water for cooling, it cost tens of millions to have it all put in and none of the cost of that fell on other energy users. 

I would assume paying for infrastructure like this is common place, unless a company can persuade the government to fund it.

It depends somewhat on the sector, but often where in the country the site is being built, the same regional grants, regional tax incentives, enterprise zones with zero business rates, the free port concept etc. On top of huge differences in the cost of land there are often very large amounts of taxpayer money thrown around to try and get businesses to build facilities in parts of the country where they do not want to be. 

Eldi_Dos

MattMattMattUK said:

Most data centres already pay a premium, they have dedicated supplies, often redundancy in supply as well (multiple lines on different routes, from different parts of the network), they will be paying a 20-50% premium on all their energy for a guaranteed supply. 

If continuity of supply is so important to a business I would have thought battery backup until  generators kick in would be the way to go, paying to upgrade someone elses plant and such a premium on one of your main costs seems odd to me.

MattMattMattUK

Eldi_Dos said:

MattMattMattUK said:

Most data centres already pay a premium, they have dedicated supplies, often redundancy in supply as well (multiple lines on different routes, from different parts of the network), they will be paying a 20-50% premium on all their energy for a guaranteed supply. 

If continuity of supply is so important to a business I would have thought battery backup until  generators kick in would be the way to go, paying to upgrade someone elses plant and such a premium on one of your main costs seems odd to me.

They often have those as well, but battery backup and generators have limited runtimes, especially at the power draw of a data centre. Once HVAC is factored in data centres can draw huge amounts of power and even large battery storage and backup generators would be depleted fairly quickly. I have also seen in industrial settings companies with full on site generation from gas turbines powered by mains gas. 

When downtime is very expensive it makes sense to have multiple redundant supplies, so two independent grid supplies, plus battery backup outside, plus UPS inside, plus onsite generation (probably diesel) all combined reduces risk of outage due to power loss. Equally they will have large on site water tanks used as a buffer against low water pressure or supply loss for the cooling systems. 

Markus779

I'm sorry but I don't have the patience to plough through the entirety of this thread. All I know in my latest energy bill I have been stung with a £2:38/day standing charge. This is based on the consumption of 465 kWh of energy (For the month). My total bill was £169.33 which included a standing charge of £74.47.  I live in a 49sqm one bed flat supplied exclusively by electricity (no gas). My neighbours are in the same boat. In addition, our energy supplier is 'fixed' and cannot be changed. The whole building (All 200 plus flats) is forced to use the same energy supplier. We are given no choice, no options, no deals, no nothing. You either pay the bill within two weeks or we will cut off your supply (Yes, seriously). So, put simply, is this a fair situation? I really don't think so. For those justifying the costs energy suppliers charge really do need to take a hard look at themselves. Ok, rant over! 

Ildhund

Is that a bill from the electricity supply company, or someone else? It sounds as if the building may be on a commercial (as opposed to domestic) tariff, which Ofgem has little control over.

Markus779

The bill is from a very very obscure energy company (I won't name) who I suspect no-one here would have heard of anyway. And yes, you are correct. Our building that comprises over 200 flats and has Regus office space on the ground floor is classified as a commercial premise and is on a commercial tariff.                                                                                                                                                                                      And yes, I know Ofgem have no control on commercial tariffs. But the point is, that for people in my situation there is very little we can do and the energy company knows this. Just imagine this... the only feasible way that I could change my energy company would be to physically sell my flat and buy a property in which I could actually choose my energy supplier. Unbelievable!  So, i get a bit fed up with people complaining about things which they consider to be unfair, but to me, they seem in a very privileged position. True unfairness stems from not being able to do anything with a situation you are in, not being able to change anything and not having any complaints body that you can turn to to express a grievance. That is true unfairness. Or have I missed something?    

laidbackgjr

Markus779 said:

The bill is from a very very obscure energy company (I won't name) who I suspect no-one here would have heard of anyway. And yes, you are correct. Our building that comprises over 200 flats and has Regus office space on the ground floor is classified as a commercial premise and is on a commercial tariff.                                                                                                                                                                                      And yes, I know Ofgem have no control on commercial tariffs. But the point is, that for people in my situation there is very little we can do and the energy company knows this. Just imagine this... the only feasible way that I could change my energy company would be to physically sell my flat and buy a property in which I could actually choose my energy supplier. Unbelievable!  So, i get a bit fed up with people complaining about things which they consider to be unfair, but to me, they seem in a very privileged position. True unfairness stems from not being able to do anything with a situation you are in, not being able to change anything and not having any complaints body that you can turn to to express a grievance. That is true unfairness. Or have I missed something?    

And were you complaining when the commercial rates were much lower than domestic rates - it wasn't that long ago that the market used to be the other way round? Were you offering to pay more then so that the domestic customers didn't pay more than commercial customers?

Markus779

laidbackgjr said:

Markus779 said:

The bill is from a very very obscure energy company (I won't name) who I suspect no-one here would have heard of anyway. And yes, you are correct. Our building that comprises over 200 flats and has Regus office space on the ground floor is classified as a commercial premise and is on a commercial tariff.                                                                                                                                                                                      And yes, I know Ofgem have no control on commercial tariffs. But the point is, that for people in my situation there is very little we can do and the energy company knows this. Just imagine this... the only feasible way that I could change my energy company would be to physically sell my flat and buy a property in which I could actually choose my energy supplier. Unbelievable!  So, i get a bit fed up with people complaining about things which they consider to be unfair, but to me, they seem in a very privileged position. True unfairness stems from not being able to do anything with a situation you are in, not being able to change anything and not having any complaints body that you can turn to to express a grievance. That is true unfairness. Or have I missed something?    

And were you complaining when the commercial rates were much lower than domestic rates - it wasn't that long ago that the market used to be the other way round? Were you offering to pay more then so that the domestic customers didn't pay more than commercial customers?

The commercial rates have never been cheaper here. They have always been at the equivalent level or higher than domestic rates. Maybe in your neck of the woods they were cheaper, but they are not cheaper here. I do wish people would not make ill informed comments. 

wrf12345

Octopus energy, oddly, offer a zero standing charge electric business tariff, the unit rate is around 32p, not directly comparable to the residential rate as the business rate is usually quite bloated even with a s/c.