MSE News: More energy deals with NO standing charges finally on the cards

Scot_39

Chrysalis said:

Qyburn said:

Chrysalis said:

I am not expecting them to do the way you describe, There will be higher unit rates on the zero version, and my suspicion is they will be considerably higher as a deterrent.  

No matter how much higher there'll still be people better off, second home owners, solar/battery and other ultra low users. So there'll still be a shortfall to be recovered by increased prices elsewhere.

There does seem bitterness from personal perspectives on it, which is how I interpret your comment, your concern is about a certain demographic getting a benefit from it rather than if the whole thing is workable.  I think it is fair to point out, what may seem a "natural" pricing to you, is not necessarily the case, different people have different point of views, e.g. there is an argument to be made, that moving variable costs to away from unit rates have to be recovered from somewhere and it ends up being the SC, basically the reverse of what you have just said.
The recent pricing model for SVR is quite different to historical levels, which is one of the reasons so many people got involved in it to try and get a correction.  Ofgem have even confessed to artificially raising the SC in recent years to unnatural levels to lower unit rates as they felt it was needed to help people with expensive to run medical equipment.

Link / source ?

mmmmikey

I've lost track of the timing of this, when is a decision expected and when is it expected to happen (if it does)?

Hoenir

wrf12345 said:

A gradual phasing out of the s/c at say 20 percent a year, part of the cost absorbed by the energy companies 

The world of business doesn't work like that. Why would anybody bother to invest the further capital that's required to build the renewable infrastructure that's going to be required. 

bristolleedsfan

mmmmikey said:

I've lost track of the timing of this, when is a decision expected and when is it expected to happen (if it does)?

"In early 2025 we will consult on a zero standing charge option within the price cap, alongside the existing tariff. If implemented, this would be available from next winter to anyone who thinks it is right for them and opts to change to this tariff, including with their existing supplier"

https://www.ofgem.gov.uk/publications/standing-charges-update-our-review#:~:text=In early 2025 we will,including with their existing supplier.

wrf12345

"Why would anybody bother to invest the further capital that's required to build the renewable infrastructure that's going to be required. " Nothing to do with retail energy companies who would be forced to absorb some of the cost, these are the guys who buy electric for 10p and sell it to you for 24p and have clever accountants to hide the reality that many are awash with dosh.

Qyburn

wrf12345 said:

A gradual phasing out of the s/c at say 20 percent a year, part of the cost absorbed by the energy companies and the rest by hiking VAT on gas 

What makes you think suppliers have enough margin to absorb any part of the standing charge?

Qyburn

What about these suggestions (both of which would be to my detriment by the way)?
(a) A second standing charge, or increment, for any export MPAN
(b) Suppliers not obliged to offer zero SC tariff to export customers

The latter has an analogy with Tomato who charge higher unit rates if you have solar panels, but at the moment not above price cap.

Scot_39

Qyburn said:

What about these suggestions (both of which would be to my detriment by the way)?
(a) A second standing charge, or increment, for any export MPAN
(b) Suppliers not obliged to offer zero SC tariff to export customers

The latter has an analogy with Tomato who charge higher unit rates if you have solar panels, but at the moment not above price cap.

It's an interesting solution to how many of the c1.5m with solar who potentially could but arguably genuinely shouldn't benefit from any potential increased risk of cross subsidy under any new scheme.

But again are thry all rich, are some poor etc - it's a crass switch.  There will be some renting with panels on social housing etc.

I'm no socialist - but I do believe ability to pay should be a factor - and I object to many of the existing policy costs added to our bills via cap on that basis too.

As a taxpayer I pay both anyways - it's just one knows how much I earn before taking it from me - the other doesn't.

But the problem then is they probably shouldn't be the only "exemption" if the new scheme was to actually permit further cross subsidy to low users.

For instance  - a quick google came up with in the c2021/22 gov housing survey suggested 712,000 folk in uk had second homes used as second homes (over 2 million do but many are rented out).

Again not a class of people energy charities are likely to have been looking for help for - or Ofgem should be looking to benefit.

And that's the slippery slope unleashed by energy charities begging for financial help for the poorest in society.

Using the energy market as a crude tool even further(*) to try and do so - regardless of others who don't benefits ability to pay.

Unfortunately the lines of social support have become well and truly blurred  - govt via working age and retirement benefits, min wage policy  - versus our utility bills.

(*) Now cross subsidy or special help for firms to cope with poor defaulting etc are built into the current price cap - the near £222 + vat of extended "policy" costs  - policy £187  - includes ECO insulation and WHD to name but 2, levelisation £7 (dd only) and £28 adjustment allowance (bad debt)


But from the summary -  Ofgem are - and as per August interim proposals paper I assume on the basis of no additional external funding from govt - planning that somehow most people will still have to cover their costs.

From Dec 24 update

https://www.ofgem.gov.uk/publications/standing-charges-update-our-review

"Under all options, the unit rate would include the costs that are currently allocated to the standing charge. "

So their solution isn't going to match part of the demands of charities and like of ML anyways.  As they ultimately wanted lower total bills. 


Ofgem clearly believes in their TCR review figures, they appear not to be getting further help from govt - e.g. epg style funding for social tariffs for those on means tested benefits wax one solution I proposed months ago - as per assumptions. 

So in theory no such special measures will be needed. 

They are offering linearity with use saving - but that's not the ultimate point for many poor. 

To them unit or SC based pricing cost recovery is just semantics - if it still ccosts the same £10 in lecy meter to heat in a cold snap - they gain no help.

I have more hope for tge longer term more structural reviews into say grid expansion funding and costs - than this narrow zero or non zero SC debate.

It's a distraction from the reality of net zero as Oftgem TCR world view fixed grid costs entering all of our bills - and again as per Dec update - likely to accelerate as a share of the total for foreseeable future..


But I expect a further round of shouting.


We should know more soon when next round begins.

Hoenir

wrf12345 said:

"Why would anybody bother to invest the further capital that's required to build the renewable infrastructure that's going to be required. " Nothing to do with retail energy companies who would be forced to absorb some of the cost, these are the guys who buy electric for 10p and sell it to you for 24p and have clever accountants to hide the reality that many are awash with dosh.

Where do they put this dosh down the back of the sofa? Corporate accountants in the main don't lose their livelihoods and reputations by committing fraud. Nor do they have any wish to go to prison. 

QrizB

You could scrap the (electricity) standing charge for domestic properties and add it onto Council Tax, and at the same time inroduce a universal (electricity) service obligation. I can see that being equally unpopular!