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

MattMattMattUK

QrizB said:

Ofgem set the rules. It sounds as though they might change them.

If they change the rules re. how the cap is implemented, or how suppliers are charged for their customers, suppliers will be able to offer zero standing charge tariffs.

I think what is going to be interesting is that the supplier, at least from what we know so far, will be required to hand over the same amount for network upkeep, social policy etc. per customer that currently comes from standing charges, so I am not sure that a tariff that is just a flat conversion of the price cap will work, because there will be a bunch of properties that do not use energy for days, weeks or even months at a time and use very little when they do. 

The reality is that standing charges were and are the fairest, most rational way to attribute the fixed costs to customers and because Ofgem have listened to the whingers they are likely going to end up creating a subsidy from normal users to those on the zero standing charge tariff. 

GingerTim

Who will be the first provider to offer a zero standing charge/£1 per kwh tariff?

dealyboy

I think this a positive move and look forward to the consultation next year. I know it won't happen but I would like the consultation to include what charges 'are/should be' the responsibility of the bill payer versus general taxation, leaving aside some of the charges themselves which are the result of policy.

booneruk

How many people are going to end up jumping on this without realising the rise in unit costs will actually make their bills higher. Imagine the howling.

QrizB

MattMattMattUK said:

QrizB said:

Ofgem set the rules. It sounds as though they might change them.

If they change the rules re. how the cap is implemented, or how suppliers are charged for their customers, suppliers will be able to offer zero standing charge tariffs.

I think what is going to be interesting is that the supplier, at least from what we know so far, will be required to hand over the same amount for network upkeep, social policy etc. per customer that currently comes from standing charges

That's one of the things that I think Ofgem will need to change. Move away from per-customer billing for some of those costs. Whether the change is for all customers, or just for those on zero-SC tariffs, we'll have to wait and see.

Edit to add:

From Ofgem's press release:

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

Low and no standing charge tariffs already exist in the market, and there are no clear regulatory barriers to there being more of them.

That seems a bit disingenuous; there's a clear obstacle in the way that Ofgem requires network etc. costs to be recovered on a per-customer basis.

And then they say:

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

So it's sounding as though they expect suppliers to accept negative-net-revenue low-consumption customers, where the cost of providing their connection is less than the income the supplier gets?

Gerry1

QrizB said:

If they change the rules re. how the cap is implemented, or how suppliers are charged for their customers, suppliers will be able to offer zero standing charge tariffs.

IIRC they can do this at present: there has to be a standing charge, but it can be 0p.  For most people the No Standing Charges tariffs aren't worthwhile because there's a hefty surcharge on the first couple of units per day which brings in the same revenue as the standing charge; only those with zero kWh usage would benefit.

Some suppliers used it as a marketing gimmick but most of these tariffs have disappeared because people did the sums and  realised was an illusory benefit.

bristolleedsfan

MattMattMattUK said:

wrf12345 said:

TOU tariffs should have s/c's much lower or zero because they are helping the Grid from overloading

They are still connected to the grid and should contribute to it's upkeep. Their reward is paying very little for their energy if the ToU tariff us used properly. 

Once upon a time Octopus Tracker and Agile had much lower SC/fixed daily charge due to fact unit rate could go much higher, Agile had a flat daily charge same across all regions not specifically called SC.

dealyboy

MattMattMattUK said:

QrizB said:

Ofgem set the rules. It sounds as though they might change them.

If they change the rules re. how the cap is implemented, or how suppliers are charged for their customers, suppliers will be able to offer zero standing charge tariffs.

I think what is going to be interesting is that the supplier, at least from what we know so far, will be required to hand over the same amount for network upkeep, social policy etc. per customer that currently comes from standing charges, so I am not sure that a tariff that is just a flat conversion of the price cap will work, because there will be a bunch of properties that do not use energy for days, weeks or even months at a time and use very little when they do. 

The reality is that standing charges were and are the fairest, most rational way to attribute the fixed costs to customers and because Ofgem have listened to the whingers they are likely going to end up creating a subsidy from normal users to those on the zero standing charge tariff. 

It is interesting that some suppliers have been offering tariffs with reduced SCs and higher prices recently. Mine, E.ON Next, offered a 40% reduction on the electricity SC and I switched to this tariff. It will make only a small difference to my costs with my current usage pattern but will encourage me to be more efficient.

My region is Eastern and the standing charge came down from 51.26p per day to 31.92p which is probably sufficient to cover the costs to which MMMUK referred.

nrmsmith

I can’t understand why these low / no SC tariffs are so difficult to quickly reinstate?  

10 years or so ago tariffs existed where you could pay no SC and a slightly higher unit rate, we had one then but for some reason they have all disappeared since then….,

born_again

dealyboy said:

I think this a positive move and look forward to the consultation next year. I know it won't happen but I would like the consultation to include what charges 'are/should be' the responsibility of the bill payer versus general taxation, leaving aside some of the charges themselves which are the result of policy.

Given the % of people who pay no tax.
Any utility costs should fall on the user. A simple you use you pay.