OFGEM announce lower standing charge tariff plan

GingerTim

https://www.bbc.co.uk/news/articles/cx20dwzgq51o

"Ofgem has announced a plan which would see all suppliers in England, Scotland and Wales offer at least one tariff in which such fees are lower but customers would then pay more for each unit of energy ... and it would also require tariffs to have a minimum usage level.

Ofgem said costs covered by standing charges must be paid somehow, and so has said it could only move them to another part of the bill."

Which will, of course, be no surprise to members of this forum since the fixed costs have to be paid one way or another. It's now going out for consultation.

TThemandated zero standing charge tariff idea seems to have binned, too, sensibly.

Ildhund

OVO commissioned a recently-published report into the question of social tariffs which may be of interest in this context:  Affording-warm-homes_The-case-for-a-social-tariff-to-address-fuel-poverty.pdf

superkoopauk

Full Ofgem paper

https://consult.ofgem.gov.uk/energy-supply/requirement-to-offer-lower-standing-charge-tariffs/supporting_documents/requirement_to_offer_lower_standing_charge_tariffspdf

They are proposing a minimum consumption of 666kWh and 2,836kWh per annum for electricity and gas

respectively to qualify for the lower standing charges.

And yes unit rates can be upped by suppliers to cover the lost standing charges. 

"Suppliers must ensure these tariffs are priced reasonably. This would still allow suppliers to determine and set their own unit rates in a way that is competitive and best suited for their consumers. However, we would reserve the right to ask for the rationale and methodology behind their unit rate if a tariff’s unit rate appears to be excessive." 

Will be interesting to see how this plays out in practice.

Scot_39

Not so far from the 2kWh model at Utilita for electric,  but they just dropped it for credit customers iirc the posts.

Maybe to switch to this new model which was originally rumoured for about now at one stage.

wrf12345

Very surprised the energy secretary is letting them get away with this as it ruins any chance of the government persuading votes they are on their side re lower energy costs but, as mentioned elsewhere, moving the green tax et al on to companies rather than consumers, even if not retail energy companies, does make sense.

michaels

I suspect we might se:
Removal of VAT on domestic fuel 
A 5% per unit surcharge on the per unit cost to subsidise a reduction in standing charges

(And an overall increase in VAT to 22.5% and a 2% cut in NI along with a 2% increase in income tax 'cost neutral to workers = no increase in taxes on working people')

booneruk

GingerTim said:

Ofgem said costs covered by standing charges must be paid somehow, and so has said it could only move them to another part of the bill."

Hooray. Now, if only everyone could obtain this higher level of comprehension we might be able to avoid the 20+ page regurgitation of the same arguments each few months (though I won't hold my breath)

falcieri

The quota Ofgem has set for kwh usage for this scheme is stupid. I just scrape through on the electricity but I am way below on the gas usage. So presumably they think I am in a second home? Basically they are saying that if you are a very low user, they're not interested in helping. What a surprise. 

Qyburn

falcieri said:

The quota Ofgem has set for kwh usage for this scheme is stupid. I just scrape through on the electricity but I am way below on the gas usage. So presumably they think I am in a second home? Basically they are saying that if you are a very low user, they're not interested in helping. What a surprise. 

Who do you think should subsjdise you, and why?

wrf12345

"Who do you think should subsjdise you, and why?"
High users who are overloading the grid and pushing up the unit price with excess demand, only fair way to do it. Ofgem's solution is a test of the energy secretary who likes to delve into the details, if they get away with it, will just be the beginning...

EssexHebridean

wrf12345 said:

"Who do you think should subsjdise you, and why?"
High users who are overloading the grid and pushing up the unit price with excess demand, only fair way to do it. Ofgem's solution is a test of the energy secretary who likes to delve into the details, if they get away with it, will just be the beginning...

Could you provide some substantiation for the claim that this is pushing up the unit price, please? I've not seen anything that really points to that, and would be interested. Cheers!