Martin Lewis: Standing charges update risks households paying more

MSE_Andrew

MoneySavingExpert.com founder Martin Lewis has warned that updated plans to require providers to offer low or no standing charge tariffs could risk some households paying more.

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Martin Lewis: Standing charges update risks households paying more

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QrizB

We've debated standing charges to death on this forum.

As soon as you create a zero-standing-charge tariff it's going to attract a whole bunch of low users - not just poor (or miserly) single people but folk with solar PV, second homes and detached garages - looking to pay less. But the costs of supplying energy and building / maintaining the grids aren't going to fall, so either:

- energy companies go bust,

- prices for everyone else will go up, or

- central government increases taxes/borrowing to make up the shortfall.

Making energy bills cheaper for one group of people is just another way of transferring wealth. And "how much energy you use" isn't a particularly accurate measure of deprivation. It would make more sense to increase benefits to reflect energy costs, rather than try to use Ofgem as a substitute DWP.

It's a daft idea and Martin should know better.

GingerTim

Oh look, it's Martin Lewis discovering the consequences of his actions.

born_again

Well what did he expect. Someone has to pay for any removing of the S/C.

Sometimes  like above. Not enough thought is put in before spouting off.

MWT

Be careful what you wish for...

Nothing new here, all of this was obvious from the start, at least if you consider the details not just go for a popular opinion...

debitcardmayhem

Wait for the obvious champion of zero SC

mmmmikey

I think it's a real shame that so much effort has been wasted on this idea rather than looking at other ways of helping those struggling with energy bills, whether they are vulnerable / disadvantaged low users or vulnerable / disadvantaged high users. That's a cause I believe that the majority of forumites could get behind which would have been much better than the division and discord this proposal has caused.

Peter999_2

GingerTim said:

Martin Lewis discovering the consequences of his actions.

We call him Captain Obvious or Captain Oblivious in our house.  He's the Jeremy Vine of money saving - dumbing literally everything down and not thinking of any consequences.

Scot_39

As soon as Ofgem made clear all they could do was shuffle costs - any changes were going to be price neutral (*)- without say the govt i.e. taxpayers stepping in and contributing - this idea should have died - certainly in terms of the "worthies" and the "charities" were concerned.

You might well have noticed many of the poverty campaigners were openly hostile to the Feb update - but yet some like ML still pushing for it - and worse still IMO - pushing for mandatory enrollment. 

Which flies in the face of one of the major concerns of Ofgem report - which talked far more about protecting the vulnerable from being on them by poor choice, simple poor numeracy in some cases and marketing style pressures - and so paying more on them.

As it is the govt has kind of stepped in - and extended the £150 WHD to millions (2.7m?) more  households on benefits from next year.

Perhaps the WHD should have been re-born effectively as what it acts as - a "social tariff" - an EPG style payment messaged as paying "50% of the standing charge" on those social tariffs - and then people like ML and the energy charities could claim their partial victory.

And the distraction from much bigger issues increases in all of our bills would get the focus they deserve 

- govt policy and part of debt costs - now £198 - up a quarter in two years  + part of £50 in DF DD cap 

- of course the £82 VAT itself (VAT ON domestic energy bills isn't mandatory since left EU)

- net zero costs buried in other figures - like the CfD £27, like balancing costs heading towards £8bn 

- for those upset by standing charges in particular - all the new grid infrastructure costs - just waiting to be allocated as fixed netwrok costs - and so risk will be added to the electric SC - just as current ones were added 2022 to 2024 after Ofgem TCR - to double them. 

- the wholesale pricing bid auction settlement (the high gas price wins issue we saw increase profits at renewables etc at height of crisis) 

And probably many others.

I'll read the new Ofgem update over the weekend - but I am not expecting much to have changed - from their first response - let alone the second - due to the price neutral constraint (*).

Brie

Sadly I know people who are in debt and use no energy if they can possibly help it.  So no heat on, lights off, eat cold food, no TV or radio.  Go to bed when it gets dark as they can't see to read.  And yet they pay money to the energy companies.  They have a PAYG meter and lose a portion whenever it is topped up simply due to the SC.  Those are the ones that need to be helped.  Somehow.  

Meanwhile - trying to figure out a way to compare tariffs with differences on SC & use charges requires one to be pretty good at math or at least on how to manipulate a spreadsheet.  Getting rid of SCs would at least make that a tiny bit simpler.  

Oscarmax

I have no issues with the standing charge, unfortunately it is the majority of my electric bill, the national grid needs updating, paying wind farm/solar to switch off than paying fossil generator to switch because of the poor infrastructure makes no sense.