Zero standing charge tariff proposal

System

This discussion was created from comments split from: Octopus Tracker.

Telegraph_Sam

I read in the news today: "Ofgem have proposed a £0 standing charge price cap option to sit alongside the current price cap".  I'm guessing that current tariffs would not be affected.

GingerTim

Consultation here: https://www.ofgem.gov.uk/press-release/ofgem-drives-forward-plans-introduce-zero-standing-charge-tariffs

"However the regulator is clear that it cannot remove the costs that make up the standing charge from the system, it can only moved from one part of the bill to another. This means that tariffs without a standing charge will have a higher unit rate. These may be better suited to those who are low energy users but will not automatically equate to a cost saving for all consumers.  

Options under consideration for zero standing charge tariffs include:  

• Tariffs with a single unit rate, meaning the same unit rate would apply at all levels of energy consumption.  
• Falling block tariffs, where customers would pay a higher unit rate until a certain amount of energy is used, and then a lower rate thereafter. 
• Rising block tariffs, where customers pay a lower unit rate until a certain amount of energy, and then a higher rate thereafter."

wrf12345

"Rising block tariffs, where customers pay a lower unit rate until a certain amount of energy, and then a higher rate thereafter."

Absolutely no way this will happen, Ofgem already know what they are going to implement so the whole process is just delay and giving an illusion that customers have a choice in the matter. Ofgem have allowed electric s/c's to go up by a huge amount that has nothing to do with network costs and are now trying to work their way out of a hole they themselves dug, helped along by inept energy ministers. 

Scot_39

Of the total near £400 in network costs for both - only just over £103 new in last 2 years - £121 in total - is included in the standing charges - just electric the curious thing.

https://consult.ofgem.gov.uk/energy-supply/standing-charges-domestic-retail-options/supporting_documents/standing_charges_domestic_retail_options.pdf

Literally 100s of pages of their Targeted Charging Review documents (iirc even the summary document was 18 pages)  - formulated the need behind that recent £103 shift ?

And as todays report makes clear - there are costs to be paid - and someone has to pay them.

They talk of under recovery  - but what it really means - without extra money from the government is cross subsidy.

In some of their example charts - from well below medium - certainly way below median TDCV - consumption people will pay more - let alone very high users - and that regardless of income or wealth / ownership / renting so ability to control even if had the money - needing to subsidise low users regardless of their income / wealth.

So lets have a quick think at some of the wealthy who could benefit - from that subsidy - my mind goes immediately to many of the c1.5m solar users, and then theres the nearly 1m by some reports "empty" second home owners.

Ectophile

GingerTim said:

• Falling block tariffs, where customers would pay a higher unit rate until a certain amount of energy is used, and then a lower rate thereafter. 

Suppliers used to offer those.  But Ofgem banned them as they were too confusing to customers.  Now Ofgem is proposing to re-introduce them.

Scot_39

To be fair - Ofgem implemented the policy of the govt of the time.  Under Cons Lib by time got implemented - but supported across the house by all parties iirc.  Might even have been the current Libs leader Ed Davey (sp ?) as Energy minister.

Qyburn

They need to drop this "dual fuel" attitude. There's around 20% of households who don't even have the option of mains gas. In addition the current push for heat pumps will mean more and more don't use gas even though it's available.

Scot_39

Given the two most adversely impacted example households in the last (c Aug 24) report - and that was just moving £100 of the c£220 average standing charge at the time of the report - were all electric - it is perhaps wise not to push for inclusion of all electric homes.

Personally I dont see a mad rush to take one of these zero SC tariffs - particularly if they exclude solar and second homes - used for only a few weeks a year. Which Ofgem are clearly well aware of the risk of under recovery of the fixed costs from - and planning to qualify entry to avoid it.

jackieblack

Ectophile said:

GingerTim said:

• Falling block tariffs, where customers would pay a higher unit rate until a certain amount of energy is used, and then a lower rate thereafter. 

Suppliers used to offer those.  But Ofgem banned them as they were too confusing to customers.  Now Ofgem is proposing to re-introduce them.

When you get to a certain age you see the evidence that everything in life is cyclical…

MattMattMattUK

This is an example of the problem of listening to those who shout loudest, rather than considering the information and making a rational decision. If one looks at the data on the Ofgem website it demonstrates that there is a very real risk that implementing this system will result in a significant shortfall in revenue raised and result in suppliers either being forced to sell below cost or for them to not be able to make the network payments. That will result in a short term (2-3 years probably) period where suppliers risk going bust and the network is underfunded, followed by a period of 5+ years where we have to make up for that. 

We need to stop listening to the shouty stupid people and start making rational decisions, or the cycle of boom and bust, of failure to make progress will continue.