Standing Charges are Unnacceptable

BarelySentientAI

Reed_Richards said:

Lies, damned lies and accounting?

It's actually even sillier than that - I was simplifying.

The network operator puts together a 5 or 7 year plan of what they want to spend, per project.  The latest plan ends in 2028 for electricity distribution.  Each project is assessed and an allowance towards each is determined.  These allowances get added up, combined with other things like overhead, profits, fees from distribution to transmission etc and turned into the distribution part of the network charge.  The 'projects' bit of the network charge doesn't change throughout the period - so before they start building anything the "profits" are obviously massive.

If they overspend on any of the projects, they don't get any extra allowance, but if they underspend (and still complete the project according to the pre-set agreed objectives) they get to keep the extra - supposedly an incentive for being efficient.  But then the improvement in assumed efficiency for each company is included in the next review, so you don't win twice by being good, you just get a smaller allowance next time.

In the latest reviews, DNOs asked for about £25.2 billion and have been allowed £21.4 billion.

There is an overall profit 'cap', just like there is in the retail price cap, sort of (its a rate of return on equity officially).  That's 5.23% for the latest plan, reduced from 6.11% in the previous.  There's also an adjustment plan that works like a profit sharing agreement, where the operators have to give back up to 90% of profit over the allowed return on a sliding scale (hasn't been triggered recently though as nobody has made enough).

debitcardmayhem

IbroxCreative said:

…….
I am furious and will pursue this all the way to the courts.

Be prepared to be laughed out of court

booneruk

MikeJXE said:

My thinks you will be in for world of pain from your opponents on here 

However I wish you luck 

You mean "well grounded and informed fellow forumnites" rather than "opponents" there, don't you?

EssexHebridean

IbroxCreative said:

Energy Companies charging us to have THEIR equipment on OUR properties so they can, rent free, feed us overpriced gas and electricity, is utterly outrageous. I didn't realise it was happening until I told them I wanted to be disconnected and they informed me I'd still have to pay a service fee!
I've just sent Octopus an Invoice for £2,029 for rental of my land for their conduits and meters from when I joined them in 2019, at £338p.a.
How dare they add a third onto my bill, as a single pensioner, on the lower state pension, especially when they charge a family of 6 the same standing charge.
A standing charge isn't acceptable in any case. It should be their cost of running a vastly profitable concern.
A company providing a service doesn't charge you for the vehicle they bring their equipment in. And if they were to leave that vehicle on your property, you would expect them to pay for parking, NOT THE OTHER WAY ROUND!!
I am furious and will pursue this all the way to the courts.

Oh dear - I feel that this whole situation must have arisen from a misunderstanding somewhere along the line! 

So if I am reading your situation correctly, you are in a position to go entirely off grid for electric - and gas too perhaps? You called Octopus to ask for a full disconnection (you were clear when you spoke to them that you wanted either meter fully removed?) and were told there would be a further charge to pay? 

Possibility 1 is that THEY misunderstood that you wanted the meter physically removed as you were going off grid - in which case they should have told you that they would make a charge for that removal, but then all charges relating to supply of electricity would stop. Of course there is a charge to remove the meter as obviously that comes with a considerable cost for the supply of skilled, qualified people to do that job  safely - and nobody in their right mind would object to that would they! In this instance I would guess that their misunderstanding could have been that they presumed that in fact you just wanted the supply capped (not really a thing with electricity) in which case they would have been correct in telling you that the SC continued. It’s not all that common for folk to walk to go fully off-grid even now, so this misunderstanding isn’t entirely surprising.
Possibility 2 is that YOU misunderstood when they mentioned that one-off charge and assumed that they were saying that in spite of you requesting a full removal of your meter, that they were telling you that the charge would be an ongoing one, ie the existing standing charge. 

It might be interesting for future readers if you could elaborate around how you have got to the point of going fully off-grid too - as others have alluded, we’ve had a handful of folk here over the years who have got at least close to that stage, but very few who have gone right through to no mains electricity or gas connections at all! 

One thing though - the cost of your energy infrastructure isn’t any different to that family of 6. You will presumably be using a LOT less energy than the family of 6 and so that is where your advantage is. That is why the SC is the same - it’s a “per supply” cost - after all, you don’t imagine that the family of 6 has six separate electricity meters, do you?! 

lohr500

I'm trying to keep up with all the replies on this, but something is puzzling, or more truthfully, worrying me!!

Aside from their very low six hour off peak rate of 5p per unit and a refreshing peak rate of 23.16p per unit, how the h*** can Tomato Energy be offering me a daily S/C of 40.82p per day for my electricity, when EDF currently charge me 67p per day?

My switch is due to take place on Wednesday.

I can only conclude that either Tomato Energy will be another failed energy supplier within a few months or the mainstream suppliers are taking the proverbial.

bristolleedsfan

lohr500 said:

I'm trying to keep up with all the replies on this, but something is puzzling, or more truthfully, worrying me!!

Aside from their very low six hour off peak rate of 5p per unit and a refreshing peak rate of 23.16p per unit, how the h*** can Tomato Energy be offering me a daily S/C of 40.82p per day for my electricity, when EDF currently charge me 67p per day?

My switch is due to take place on Wednesday.

I can only conclude that either Tomato Energy will be another failed energy supplier within a few months or the mainstream suppliers are taking the proverbial.

Many months ago, Moneysavingexpert energy guide mentioned Tomato Energy variable tariff, if my memory serves me correct, regional average SC and unit rate albeit I suspect did not increase SC when most regions SVR increased on 1 April.

BarelySentientAI

lohr500 said:

I'm trying to keep up with all the replies on this, but something is puzzling, or more truthfully, worrying me!!

Aside from their very low six hour off peak rate of 5p per unit and a refreshing peak rate of 23.16p per unit, how the h*** can Tomato Energy be offering me a daily S/C of 40.82p per day for my electricity, when EDF currently charge me 67p per day?

My switch is due to take place on Wednesday.

I can only conclude that either Tomato Energy will be another failed energy supplier within a few months or the mainstream suppliers are taking the proverbial.

Because whilst the amount that suppliers have to pay to the networks and things from the standing charge is fixed, as is the maximum amount they are allowed to charge you, what they choose to charge is not.

They are allowed to, if they think it fits their business model, charge less and just absorb some of those costs (by trying to be more efficient, getting better purchase prices for energy, ...).

One advantage that small suppliers have is that some of the extra costs (like certain eco obligations) only apply to suppliers with more than a certain amount of customers - so if they stay small enough they don't have to pay that part (but the price cap still assumes they have to).  The big suppliers can't do that.

Scot_39

Standing charges to cover fixed costs where they exist are inherently fair.

Anything else potentially leads to cross subsidy.

More so within the constraints of tariff simplification and the defualt tariff level (cap) linear pricing model.  Many of our variable and even fixed tariffs shadow closely although Don have to follow cap at all. 

Whether direct by other bill payers - or if govt intervenes and pays a component (like EPG, EBSS etc ) taxpayers.

And of course like any fixed cost - if you refuse to see it as such - and continue to try to attribute to any per use - the less you use the more you pay per unit - and that festerwcand becomes a grievance.

So yes the current per customer (operations, fixed network component)  currently £220 averwge electric SC costs more per kWh if you think of it that way the less you use.

But unless that £220 is built into exactly your consumption when you will pay your same total costs - not what some low users want though. You wont be paying your true total cost.


But if say equalised at some say cap level nominal consumption -  you will pay less as a low user vs nominal and more as a high user vs nominal  - compared to the true combined cost - and that's a cross subsidy.  Which is what some expect to happen.

Let's make the maths easier

£100 fixed cost, 3 users on 1000, 2000, 3000 units but that cost equalised, built into unit rate at the ave 2000  - 5p per unit increase. 

User 1 saves £50  (-£100 sc + 1000× 5p extra on rate =£50) 
User 2 pays the same
User 3 pays £50 more

For the same total pricing for their use..

And that is shown using real figures and tables in the current Ofgem retail options interim discussion doc.

Some low users are relatively rich (they've invested potentially £10,000s in solar and battery beyond the reach of many on average incomes in maybe their larger than ave / expensive houses ) and some high users are poor (elderly, disabled, heating to higher temperatures in  low efficiency standard, possibly even rentals)

It's a mindset that it's fair or unfair to you.

If and when your sitting watching TV this evening - do you think that TV cost me say its £500 purchase price ' or do you just enjoy it.

Or do you try and work out what that cost is for every hour you use it.

And then do you think you can - taking the pay purely by unit / by use argument to a silly end point - but demonstrates my take on what in reality your asking for - and expect to be able to say when go into store to replace it - 

I am only going to watch the TV for 1 hr per day - so I am only going to pay half of the asking price. 
The person who watches it for 2 hrs can pay the asking price.  And the person who watches it for 3 hours per day can pay 50% more.

Because that's the reality of what many low users are essentially expecting when they think abandoning the SC is going to save them.  It's on the expectation of cross subsidy - someone else paying.

Some challange the existence of course of some of these fixed costs. 

And that we pay for other things as just per unit - per tin of beans etc in  shop. 

The reality is pricing of everything is a complex mix.

Because that's essentially what Ofgem are saying will happen if they use a simplistic shift at one balance (cost neutral) point per fuel.  See tables a2 through a7 in sc retail options links i other threads.

And they have no option - there is a total cost to be paid and currently only 2 price components - 1 SC and 1 total for x,xxx kWh - in the cap -  from which you can get the unit or ave unit rate for e7. 

And until thats abandoned - or external money provided say by govt - a la EPG discounting for prepay - which is now itself a cross subsidy (which doesnt bode well for future like if social tariffs introduced ) as in April intoduced a levelisation charge of £10 to DD and credit caps - they don't have many options.

Without as I say going back to complex variable pricing and that all too easily  breaks a decade plus of govt / Ofgem regulation (on tariff simplification and the cap itself)

lohr500

BarelySentientAI said:

lohr500 said:

I'm trying to keep up with all the replies on this, but something is puzzling, or more truthfully, worrying me!!

Aside from their very low six hour off peak rate of 5p per unit and a refreshing peak rate of 23.16p per unit, how the h*** can Tomato Energy be offering me a daily S/C of 40.82p per day for my electricity, when EDF currently charge me 67p per day?

My switch is due to take place on Wednesday.

I can only conclude that either Tomato Energy will be another failed energy supplier within a few months or the mainstream suppliers are taking the proverbial.

Because whilst the amount that suppliers have to pay to the networks and things from the standing charge is fixed, as is the maximum amount they are allowed to charge you, what they choose to charge is not.

They are allowed to, if they think it fits their business model, charge less and just absorb some of those costs (by trying to be more efficient, getting better purchase prices for energy, ...).

One advantage that small suppliers have is that some of the extra costs (like certain eco obligations) only apply to suppliers with more than a certain amount of customers - so if they stay small enough they don't have to pay that part (but the price cap still assumes they have to).  The big suppliers can't do that.

Is it known what the suppliers have to pay to the networks? Is that a fixed amount per customer on a regional basis?
And are the extra costs (like certain eco obligations) that you mention allowed to be applied to the s/c or must they be stirred into the unit price?

The difference between EDF's 67p and Tomato Energy's 41p seems hard to comprehend. Especially as TE are offering such low unit prices. They don't appear to be trading off the low S/C they against high unit prices.

I can't help but think that the Ofgem cap is similar to University tuition fees.
As soon as the Student Loan system set an upper limit for fees, unless I am mistaken, virtually every Uni in the country set the pricing at the upper limit.

I am playing devil's advocate but unless the Tomato Energy model is doomed to imminent failure, something smells bad. 

BarelySentientAI

lohr500 said:

BarelySentientAI said:

lohr500 said:

I'm trying to keep up with all the replies on this, but something is puzzling, or more truthfully, worrying me!!

Aside from their very low six hour off peak rate of 5p per unit and a refreshing peak rate of 23.16p per unit, how the h*** can Tomato Energy be offering me a daily S/C of 40.82p per day for my electricity, when EDF currently charge me 67p per day?

My switch is due to take place on Wednesday.

I can only conclude that either Tomato Energy will be another failed energy supplier within a few months or the mainstream suppliers are taking the proverbial.

Because whilst the amount that suppliers have to pay to the networks and things from the standing charge is fixed, as is the maximum amount they are allowed to charge you, what they choose to charge is not.

They are allowed to, if they think it fits their business model, charge less and just absorb some of those costs (by trying to be more efficient, getting better purchase prices for energy, ...).

One advantage that small suppliers have is that some of the extra costs (like certain eco obligations) only apply to suppliers with more than a certain amount of customers - so if they stay small enough they don't have to pay that part (but the price cap still assumes they have to).  The big suppliers can't do that.

Is it known what the suppliers have to pay to the networks? Is that a fixed amount per customer on a regional basis?
And are the extra costs (like certain eco obligations) that you mention allowed to be applied to the s/c or must they be stirred into the unit price?

The difference between EDF's 67p and Tomato Energy's 41p seems hard to comprehend. Especially as TE are offering such low unit prices. They don't appear to be trading off the low S/C they against high unit prices.

I can't help but think that the Ofgem cap is similar to University tuition fees.
As soon as the Student Loan system set an upper limit for fees, unless I am mistaken, virtually every Uni in the country set the pricing at the upper limit.

I am playing devil's advocate but unless the Tomato Energy model is doomed to imminent failure, something smells bad. 

The eco costs that can be avoided like that are mostly in the standing charge calculations (because they're seen as per customer obligations).  Other eco costs like system balancing, subsidising wind farms, and carbon certificates are in both SC and UR.

The network costs are known by region and are also split between SC and UR.  There's an overall 'per year per customer' figure, but only as a combination of all factors and some parts are fixed but others are based on total energy transferred through the network.  Same with some of the costs for 'mismatch' and things like that, they're mostly in the UR right now but a bit slips into SC through the 'operating costs' component.

This is the "Network Costs" section of the latest cap publication (pre levelisation and final allowance adjustments) :


OFGEM publish all the calculations and assumptions in spreadsheets issued with each price cap change.  Interestingly, they also have historical data to estimate what the price cap would have been before one even existed.  (I've spent a silly amount of time reading these sheets!)

https://www.ofgem.gov.uk/energy-policy-and-regulation/policy-and-regulatory-programmes/energy-price-cap-default-tariff-policy/energy-price-cap-default-tariff-levels

Older versions of the sheets have a little more explanation in them.