Standing Charges are Unnacceptable

Chris_b2z

BarelySentientAI said:

Chris_b2z said:

dunstonh said:

What makes you think energy supply to households is "vastly profitable"?

https://www.ibisworld.com/united-kingdom/industry-trends/industries-highest-profit-margin/

Supply and distribution are different things, done by different companies.

The Distribution Use of System (DUoS) standing charge component has increased more than seven times since 2020, from £17.27 in April 2020 to £82.41 in April 2024, with the proportion rising from less than 20% prior to April 2022, to around 60%.

BarelySentientAI

Chris_b2z said:

BarelySentientAI said:

Chris_b2z said:

dunstonh said:

What makes you think energy supply to households is "vastly profitable"?

https://www.ibisworld.com/united-kingdom/industry-trends/industries-highest-profit-margin/

Supply and distribution are different things, done by different companies.

The Distribution Use of System (DUoS) standing charge component has increased more than seven times since 2020, from £17.27 in April 2020 to £82.41 in April 2024, with the proportion rising from less than 20% prior to April 2022, to around 60%.

And that makes energy supply vastly profitable how exactly?  Because suppliers have to pay more to network operators?

Please enlighten us how increased expenses make businesses more profitable.

Chris_b2z

BarelySentientAI said:

Chris_b2z said:

BarelySentientAI said:

Chris_b2z said:

dunstonh said:

What makes you think energy supply to households is "vastly profitable"?

https://www.ibisworld.com/united-kingdom/industry-trends/industries-highest-profit-margin/

Supply and distribution are different things, done by different companies.

The Distribution Use of System (DUoS) standing charge component has increased more than seven times since 2020, from £17.27 in April 2020 to £82.41 in April 2024, with the proportion rising from less than 20% prior to April 2022, to around 60%.

And that makes energy supply vastly profitable how exactly?

Sorry, I thought this discussion was about Standing Charges. I don't work in the industry so you're obviously much more knowledgable. My simplistic understanding was that energy was supplied via a distribution network.

Anyway, let's not mention extortionate profits. Look away. There's nothing to see there.

BarelySentientAI

Chris_b2z said:

BarelySentientAI said:

Chris_b2z said:

BarelySentientAI said:

Chris_b2z said:

dunstonh said:

What makes you think energy supply to households is "vastly profitable"?

https://www.ibisworld.com/united-kingdom/industry-trends/industries-highest-profit-margin/

Supply and distribution are different things, done by different companies.

The Distribution Use of System (DUoS) standing charge component has increased more than seven times since 2020, from £17.27 in April 2020 to £82.41 in April 2024, with the proportion rising from less than 20% prior to April 2022, to around 60%.

And that makes energy supply vastly profitable how exactly?

Sorry, I thought this discussion was about Standing Charges. I don't work in the industry so you're obviously much more knowledgable. My simplistic understanding was that energy was supplied via a distribution network.

Anyway, let's not mention extortionate profits. Look away. There's nothing to see there.

Did you even read the comment that you quoted in your first post before linking to the irrelevant stats?

And this discussion was someone wanting to charge the energy supplier for having a meter on their property.  Neither of those things involve the DNOs.

As for why network costs have raised and such massive margins are quoted - two big chunks of that are system balancing costs and network upgrades like the offshore DC links.  For some reason, they count capital investment allowances for next year as profit margin in this year (like sort of pre-paying the investment cost) in the accounting returns. 

The actual profit margins after capital spending are nowhere near the 40% number that headline writers want you to think they are - a point actually noted by the article behind your stats - they're an accounting artefact.

Reed_Richards

Lies, damned lies and accounting?

Sterlingtimes

The single pensioner is aggrieved by paying a fixed charge on a property basis. The answer may take us towards a Community Charge ("Poll Tax") where each adult householder pays the same charge. 

Alternatively, all charges could be unit-linked: now, a house with a large family, poor insulation, and low energy management awareness could pay far more for its energy. The single pensioner living in a flat would be self-satisfied and may say that the large family deserve it. 

MikeJXE

Sterlingtimes said:

The single pensioner is aggrieved by paying a fixed charge on a property basis. The answer may take us towards a Community Charge ("Poll Tax") where each adult householder pays the same charge. 

Alternatively, all charges could be unit-linked: now, a house with a large family, poor insulation, and low energy management awareness could pay far more for its energy. The single pensioner living in a flat would be self-satisfied and may say that the large family deserve it. 

The single pensioner could also say

He too was part of a large family with more income to deal with the costs

As years went by the family made its own way in life and he, due to less income down graded to eventually a 1 bed flat and could get no lower 

That saved money on council tax, heating costs but not the standing charge which has increased out of proportion. 

housebuyer143

MikeJXE said:

Sterlingtimes said:

The single pensioner is aggrieved by paying a fixed charge on a property basis. The answer may take us towards a Community Charge ("Poll Tax") where each adult householder pays the same charge. 

Alternatively, all charges could be unit-linked: now, a house with a large family, poor insulation, and low energy management awareness could pay far more for its energy. The single pensioner living in a flat would be self-satisfied and may say that the large family deserve it. 

The single pensioner could also say

He too was part of a large family with more income to deal with the costs

As years went by the family made its own way in life and he, due to less income down graded to eventually a 1 bed flat and could get no lower 

That saved money on council tax, heating costs but not the standing charge which has increased out of proportion. 

Apart from many large families with poorly insulated houses potentially have less income than that single pensioner. Many high users have medical needs which use a lot of energy and shall we punish them also with unmanageable bills.

No one likes standing charges and I personally only got pushed into them about a decade ago when they removed the two tiered tariff. I was definitely worse off to the tune of £20 a month back then and no doubt am now but it is the fairest method I can think of aside from bringing back two tiered tariffs so people have a choice. 

TheBanker

MikeJXE said:

Sterlingtimes said:

The single pensioner is aggrieved by paying a fixed charge on a property basis. The answer may take us towards a Community Charge ("Poll Tax") where each adult householder pays the same charge. 

Alternatively, all charges could be unit-linked: now, a house with a large family, poor insulation, and low energy management awareness could pay far more for its energy. The single pensioner living in a flat would be self-satisfied and may say that the large family deserve it. 

The single pensioner could also say

He too was part of a large family with more income to deal with the costs

As years went by the family made its own way in life and he, due to less income down graded to eventually a 1 bed flat and could get no lower 

That saved money on council tax, heating costs but not the standing charge which has increased out of proportion. 

The single pensioner could also say that when he retired he decided to realise his life-long ambition of moving to the countryside, miles away from his family who he never really liked. Despite living in the middle of nowhere, his Standing Charge did not increase despite the power company having to maintain a mile long cable just to reach his house, rather than the cable serving the 60 flats in the block whete the other single pensioner lives. 

So effectively our rural single pensioner is not paying enough in standing charges to cover the cost of their supply, and are being subsidised by other customers who live in urban areas. And when the winter storms damage the cable supplying his house, it is fixed by the electricity distributor who do not pass the costs of repair onto our single pensioner directly.

The point is there is no absolutly fair way to allocate the costs which are currently covered by the Standing Charge. However it's done, there will always be cross-subsidy from one group of customers to another. OFGEM's consultation is really about trying to make things as fair as possible, but there will still be winners and loosers. I think there is a valid argument that some of the Policy Costs included in the SC ought to be covered by general taxation, but that's a different argument and ultimatley there would still be winners (low earners who don't pay any/much tax) and loosers (higher earners who already pay the highest amount of tax for decades). 

Qyburn

A part of me hopes the OP follows through. You see loads of this stuff about sending people invoices and charging rent for meters etc on the conspiracy theory social media groups. It would be interesting (dare I say entertaining) if someone tried that sort of playground fantasy out in the real world.