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

prowla

The mistake is in thinking that OFGEM represents the consumers.

Hoenir

prowla said:

The mistake is in thinking that OFGEM represents the consumers.

A greener energy system isn't going to be delivered at zero cost. As much as many think it should be. 

Scot_39

Qyburn said:

I believe in an earlier discussion on poster here said the network costs, or a proportion of them, we're passed to suppliers in proportion to their total volume of energy supplied. That would suggest that element could quite reasonably be paid from unit rate, suppliers' cost and income both varying in proportion to quantity supplied.

On the other hand the Ofgem document states that these are charged to suppliers on a per customer basis.

Probably because its a complex mix, there is more than one main catagery of network costs, and Ofgem themselves allocate the domestic costs differently between gas and electricity - at least of late after 2019 review (2022 implemented ?).

So from sumnary letter In the curent cap period network costs total £363 ex VAT in the DD DF cap of £1568.

£121 of those costs are now  charged via the electric SC - 33p per day -  previoualy in unit rates - in Ofgems own breakdown of £220 regional average (figure from figure 2.1 breakdown in  recent initial response report on standing charge consultation exercise).  So that will be per customer.

And electric network costs over that £121 in the £363 will still be via unit rate.

And as not included in their gas SC breakdown - presumably 100% of gas network costs recoverd via gas unit rates.

Scot_39

Hoenir said:

prowla said:

The mistake is in thinking that OFGEM represents the consumers.

A greener energy system isn't going to be delivered at zero cost. As much as many think it should be. 

Perhaps that is because our green industry,  politicians and media who support the current statetegy refuse to present the true financial costs.

Focusing on the good and not the total picture.

Due to winds inconsistency we aren't even significantly able to replace fossil with renewables - so we are building renewables that exist in parallel - and with little resilience in themselves for low wind days / weeks or cloudy days and nights in terms of solar - as built basically with not enough new storage backup - we continually have to swap back and forth to meet significant fractions of our daily demand.

And as existing fossil isn't green enough we are still having to build new greener fossil generation plants az the renewables roll out continues seemingly unabated by real cost impact concerns on our poorest homes and industry.

So windy day currently wind can  dominate generation to meet demand - but at a higher financial cost - but as farcas greens concerned the key is the lower than say gas generations environmental cost - at least currently (hence the £37 for CfD costs in £613 wholesale costs in df dd July £1568 cap ).

On a still day or at night - we then rely heavily on gas and biomass - neither I consider green as emit as burn - and nuclear.

There are no concrete plans to build anywhere near enough storage capacity to shut down a significant number of fossil generation plants - a lot of it is simply too expensive - and would likely have sunk green roll out plans in their infancy if included.l in plans.

And the current solution to the lows appears in part to be simply more theoretical capacity - in not too distant future in some plans arguably over capacity. And that in some cases 100s of miles from consumers to improve average output. And that distance in itself presents additional network costs in itself - more pylons, more undersea cables and convertor stations - all adding to our bills

Last year  - c30GW of installed wind capacity - was able over 1/2 hr windows - to generate peak 21.8GW last Dec iirc, but also low of only c1.5GW - c5% installed capacity - and crucially iirc a lower 3-4% of UK demand.

The other 96% had to come from more reliable more predictable I.e. more controllable generarion sources.

And it's the lows that leave us needing parallel generating capacity in reserve. Or building potentially  TWh of storage capacity instead - if want to eliminate need for most fossil generation - even at current demand.

And those lows can last several days currently across UK and NW Europe - and can occur in both summer and in winter when demand for electricity is higher.


The increasing averages are important too (c40% from combined renewables in Q3 23 iirc ) as they clearly help with reducing  emissions and are crucial for UK net zero target plans.

Hoenir

Scot_39 said:

Hoenir said:

prowla said:

The mistake is in thinking that OFGEM represents the consumers.

A greener energy system isn't going to be delivered at zero cost. As much as many think it should be. 

Perhaps that is because our green industry,  politicians and media who support the current statetegy refuse to present the true financial costs.

There's no shortage of information in the public domain. Reading it thoroughly and comprehending it takes time. Doesn't win elections (soundbites) or sell newspapers though (compressed two hundred word articles). 

matt_drummer

I have been thinking about this a bit and I dare say that there's quite a lot wrong with my conclusion but I'll give it a go anyway!

Maybe we shouldn't have standing charges.

Our energy requirements have been privatised.

Why not just let the suppliers get on it with it? Market forces will win out in the end?

All of the trouble seems to come from the idea of putting a cap on what energy companies can charge.

That is cake and eat it for the consumer to some extent, we want the protection of never having to pay more than a regulated amount but don't want to pay the costs.

Maybe let businesses sort it out?

Standing charges will go which should make many people happy.

But ying and yang, all the protection will go too.

You can't have it all.

Qyburn

matt_drummer said:

...
Our energy requirements have been privatised.

Why not just let the suppliers get on it with it? Market forces will win out in the end?
...

I don't actually see why anything but their default tariff needs to be price cap compliant. The original reason for the cap was to make sure that consumers who for whatever reason didn't shop around, weren't ripped, or not ripped off too badly.

Qyburn

Just as a side note, it bugs me than none of these government or Ofgem discussions ever acknowledge the substantial number of households that aren't heated by gas or electricity. It's all about the "typical dual fuel", with just occasional references to all electric. I suppose there's a risk that if the government found out we exist, next thing there'd be levies on oil, wood, LPG, coal etc to contribute to policy and social costs.

matt_drummer

Qyburn said:

matt_drummer said:

...
Our energy requirements have been privatised.

Why not just let the suppliers get on it with it? Market forces will win out in the end?
...

I don't actually see why anything but their default tariff needs to be price cap compliant. The original reason for the cap was to make sure that consumers who for whatever reason didn't shop around, weren't ripped, or not ripped off too badly.

I don't see why any of it needs to be price capped actually.

We have had computers and the internet for a long time.

Just let the businesses that we chose to be our only choice of supply sort it out.

Standing charges will vanish, the suppliers will deal with the costs.

Remove all the protections, every man for themselves.

None of it goes together very well, the people that don't really want to pay their share of the fixed costs want all the protection that offers, they can't have that without paying or taking some risk.

Get rid of the cap, let the suppliers find ways to attract customers, that's the whole idea of privatisation and competition.

I am sure most of us would end up paying more but at least the constant whining about the standing charge would stop and those that chose to use little to no energy would achieve their goal of paying nothing or very little.

Scot_39

I make comments about the lack of coverage and provision here often - but we are a minority.

C4.4m in 27m are off gas grid as of c2021 Ofgem report I read.  Some moving to ashp might have been added since.  

But suspect few of those will choose e7 multirate.

And I am still on legacy E10 - some Ofgem reports suggest that's now sub 100,000 of the multirate - vast majority vanilla fixed e7 or RTS  an even smaller minority.


I am annoyed for instance by the way the sc domestic options report presents the data in tables a2-a6 and then even more so when esrimate savings / costs of shift A7.

As a7 shows one of the 2 ex of all electric paying a penalty of upto £116, the other c£80 iirc under the £100 column.

But they have split the shift disproportionately - c£38electric c£63 gas.

It strikes me as potentially misleading to someone scanning the document.
£116 extra  to save others upto £100 not bad, but to me it should be clearer it's  £116 to save others upto £38 and that strike me as much less acceptable.

I am thinking of replying on that basis alone.

Their comments elsewhere in past -  like  in the TDCV calculations worry me re the data behind the recently reduced from 4200 to 3900 TDCV for profile class 2 too.