Standing Charges: Gas & Electricity

MattMattMattUK

WibbleBaaaaaa said:

The standing charge is a utter mess alright, and i suspect some suppliers are fleecing consumers with them, 

Energy is a regulated sector, SVT pricing is set by the regulator and suppliers are audited.

WibbleBaaaaaa said:

as that has been only highlighted recently by the fact that up here in Glasgow BG are offering a SC down at 51p, but octopus have kept the 64p on some of their tariff, now excuse me for being dim, but if the sc is based on transmission costs, then pray tell how octopus can offer me 2 tariffs, one with a 64p sc and one with a 55p sc, do octopus have a second set of cheaper cables coming into my home that they can switch me to if i chose the 55p sc tariff????...........

On the SVT the Standing Charge covers thr fixed costs of the network (some of them, others are spread over the usage), on a non-SVT tariff the supplier is free to price how they want in terms of standing charges and unit rates, they can do that to appeal to different customers with different usage. Regardless of how they choose to price their non-SVT tariffs they still have to hand over the money for the fixed and variable costs to the network operator, generators, government, regulator etc. which includes an amount per connection, a usage charge and transmission costs for energy used.

WibbleBaaaaaa said:

but i suspect some are simply war profiteering from them at this point because as we all know, when things rise in cost they go up instantly, but come down like a feather in a updraft.

Prices for domestic energy supplies are regulated, the prices change when the regulator changes them. The suppliers do offer tracker tariffs, some move daily, weekly or by the half hour usage, other offer windows of different costs on a ToU basis. Energy suppliers are not "war profiteering" whatever you mean by that. As an example Octopus, as tou mentioned them, in their last financial year had a profit margin of 0.7%, that is very far from "profiteering".

wrf12345

"Prices for domestic energy supplies are regulated, the prices change when the regulator changes them"

Unfortunately, Ofgem have never shown any interest in looking after consumers so there is no merit to that statement.

booneruk

wrf12345 said:

Unfortunately, Ofgem have never shown any interest in looking after consumers so there is no merit to that statement.

How would they show an interest in looking after customers? Forcing suppliers to take a loss?

MattMattMattUK

wrf12345 said:

"Prices for domestic energy supplies are regulated, the prices change when the regulator changes them"

Unfortunately, Ofgem have never shown any interest in looking after consumers so there is no merit to that statement.

Your posts repeatedly demonstrate that your idea of looking after consumers is for Ofgem to force suppliers to operate at a loss and your concept of fairness is for other people to subsidise you. Both of those positions are fundamentally and fatally flawed.

wrf12345

"our posts repeatedly demonstrate that your idea of looking after consumers is for Ofgem to force suppliers to operate at a loss and your concept of fairness is for other people to subsidise you. Both of those positions are fundamentally and fatally flawed."

There is absolutely nothing in the system - regulated by Ofgem - that forces efficiency on the energy retailers and a good starting point would be a reduction in the multiple of wholesale to retail cost, reducing by a very modest five percent a year for the next five years... rather than capping overall profits at 2-3 percent which has the accountants rolling around in hysterics at how easy it is to lose money to nebulous expenses, not least salaries and bonuses in the hundreds of thousands of quid.

MattMattMattUK

wrf12345 said:

"our posts repeatedly demonstrate that your idea of looking after consumers is for Ofgem to force suppliers to operate at a loss and your concept of fairness is for other people to subsidise you. Both of those positions are fundamentally and fatally flawed."

There is absolutely nothing in the system - regulated by Ofgem - that forces efficiency on the energy retailers and a good starting point would be a reduction in the multiple of wholesale to retail cost, reducing by a very modest five percent a year for the next five years... 

Once again you immediately demonstrate a complete lack of understanding. The energy suppliers would be loss making within a year or two at most, there is nowhere near as much profit in the system as you think there is.

wrf12345 said:

rather than capping overall profits at 2-3 percent which has the accountants rolling around in hysterics at how easy it is to lose money to nebulous expenses, not least salaries and bonuses in the hundreds of thousands of quid.

All expenses have to be deemed allowable by Ofgem, the suppliers do not get to decide how much their expenses are, Ofgem set expenses, bonuses, running costs, etc. That is why some suppliers make slightly higher profits on SVT tariffs than others, because they run their operations more efficiently, they pay less in bonuses etc. 

It would really make sense for you to educate yourself and to understand the energy supply and the regulated market if you are going to continue to post on these threads, because nearly every post you currently make is factually incorrect. 

powerful_Rogue

I should be in favour of having the SC abolished as I have solar and batteries, but i'm not.

For £5.22 a week, I can flick a switch and a light comes on. I can turn on the hot tap and have hot running water. A lot of people pay that for a coffee or a pint. I believe we're very fortunate to have the infrastucture to do that for what I think is a very reasonable price.

Remember, there is nothing to stop you going off grid and having your meters removed.

QrizB

There is absolutely nothing in the system - regulated by Ofgem - that forces efficiency on the energy retailers and a good starting point would be a reduction in the multiple of wholesale to retail cost, reducing by a very modest five percent a year for the next five years...

That sounds very much like an argument for increasing the standing charges, so that the per-unit price is the wholesale price (plus VAT). Possibly at odds with your previous viewpoint that the standing charge should be refunded the costs rolled into the unit price?

If you want a lower multiplier from wholesale unit price to retail, there's always Octopus Agile. The multiplier varies but is around 2.

Scot_39

https://www.ofgem.gov.uk/sites/default/files/2025-02/Summary-of-changes-to-energy-price-cap-1-April-to-30-June-2025_1.pdf

Read the breakdown.

Compare it to previous breakdowns.  Like last Aprils major uprating to so called "policy" costs.  Which means policy costs went up £30 - c19% - almost double inflation - and now this year another £11 - to £198 ex vat.

And that excludes one other adder - in mny respects in large part a policy cost - that jumped over 150% when did so - the £28 debt special allowance.

Still £28 for dd/sc again this year - so not temporary at all as the £11 forerunner was meant to be c4 years ago



Whilst you rail against the injustice of board pay - have you checked the salaries at pseudo nationalised / Quangos and top civil servants including their pension costs.
And on profits - the cap limits EBIT - thats an operating margin metric not profit adding c£45 to cap, is tiny compared to many other industries.

But you ignore the social and govt policy costs that add £10s if not in fact actually £100s to all our bills at TDCV levels.

Eco 4 grants that used to come from taxation for instance buried under policy costs.

Green levies on gas generation for electric.

The near £100 rise in network costs over 5 years - and Ofgem say more to come - as firms spend £10 bn plus per annum over next 5 years on new pylons, hvdc links etc etc. To hook up renewables and expand capacity.

Or the £3bn pa peak forecast thermal constraint to remote wind farms roughly £100 per connection - because govt sells licenses that pay renewables not to generate - before it has authorised grid companies to install the capacity to deliver their energy to consumers.  The 2 years delay to egl2 final stage approval last year a classic example - during which time it's cost agreed rose over £1bn



Suppliers are not operating in a profitable environment  - if you can ever manage to seperate them from some energy producers who have been. As one example non CfD renewables allowed to cash in on high gas prices due to auction mechanism in UK - and even those on capped CfD rates are again now adding to our bills - just under £30 inc vat - so 1p/kWh electric - when Ofgem last quoted the figure seperately in the wholesale cost section in their quarterly cap letter.


Debt as of Q4 24 - £3.85bn total debt in agreed payment plan and 91 day arrears - most of it in the 91 days arrears catagory.

Those now repaying via prepay was rising in line with debts - it has now been dropping for last year. 

https://www.ofgem.gov.uk/publications/debt-and-arrears-indicators

The effective interest on servicing normal levels of debt and its impact on  operating costs should in normal times (in a normal company always(*)) come out of the 2.4% EBIT margin - in cap a regulated allowance - currently £45.  It was raised from 1.9% in order to help it do so as debt problem started to surface.  But then that wasn't enough - hence the £11 and now £28 special allowance on top.  And in part I suspect seperated to avoid the figure being put in as another rise to ebit - partly as some more likely to accept, partly to avoid problems with people who equate ebit to actual profit either through lack of financial knowledge - or perhaps deliberately.

(*) but energy suppliers do not operate like other companies - they are legally obliged to supply regardless of payment to those on protected lists - they are obliged to pay for insulation and efficiency improvements for vulnerable customers (taking future business away from them) and in recent years they are attacked by liberals and left alike for taking measures to protect themselves from further debt.

The average debt for those in that arrears category without any debt plan in place stood at over £1500 electric, just under £1000 gas at Q4 24.  Growth slowing but still growing - but that fefore last 2 cap rises. That's now over 1 million and over 800,000 homes respectively.  So guessing duel fuel homes will be in both sets of stats. 
And there's also a drop in % of those repaying via prepayment meters - so whilst debt climbs - measures to prevent it appear to have been blocked or delayed (e.g. temporary ban and new policy onprepay installs) - it's often taken months or years in any case - its certainly simply not kept pace with the debts.

Qyburn

wrf12345 said:

.. rather than capping overall profits at 2-3 percent which has the accountants rolling around in hysterics at how easy it is to lose money to nebulous expenses, not least salaries and bonuses in the hundreds of thousands of quid.

You misunderstand. Ofgem doesn't cap profits, they cap prices. A supplier paying inflated salaries and bonuses can't put up their prices as a result.