MSE News: Energy firms to trial ‘low or no Standing Charge’ tariffs from April – here’s what we know

MattMattMattUK

https://forums.moneysavingexpert.com/discussion/comment/81954732#Comment_81954732

Standing Charges have increased 190% since 2019 - why is that ?

Network costs have increased, additional costs have been added to them that previously did not exist, were paid from unit rates or were paid via general taxation.

Have costs to suppliers increased by 190% ?- (remember we are talking purely about transport costs to the suppliers)

You are not talking purely about transport costs, you are also talking about new substations, new transmission lines, maintenance and upgrades of existing infrastructure etc. So the answer is yes, remember that they hand over nearly all of the standing charge to the grid, to government, to various scheme operators etc.

No - it's pure GREED and PROFIT !

It is not greed, it is not profit. It is a lack of understanding on your side.

Scot_39

https://forums.moneysavingexpert.com/discussion/comment/81954732#Comment_81954732

See table 2.1 here for what makes up standing chargea - or at least did 2 years ago.

Ae the link below, as part of the total charging review Ofgem moved an additional £103 in network costs - into the electricity standing charge - as low users were not contributing their share of fixed costs.

On electric, despite that extra £103 network, grid network costs then made up £121 of £219 ave regional SC - or just over half - so no we are not talking just about "transport" costs.

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

You might also be interested in section 2.6 which discusses the rise from £86 in 2021 to £219 by 2024 - over 150% increase

Net zero energy policy predicted to increase grid share of our bills - Ofgems words not mine - the fixed and variable costs for in short to medium term at least - as total infrastructure and curtailment costs rise.

(Grid thermal curtailment - actually the grids incapacity to deliver - in particular officially estimated by NESO to rapidly increase towards now c£3.3bn peak by c2031 (/29m homes and c/1.5m micro bussinesses = over £100) still largely to hit. Was revised up from old NGESO £3bn peak by 2030 late last year.)

Bemmy2525

Standing Charges are the majority of my electricity bill since I only use 1-2kwh a day. Unfortunately I don't think I use enough energy to qualify.

tfhnota

Same here but I think it is averaged over a year so you could tweak it with some extra heating in winter, if 2kw of electric works out as the same as the s/c or less. But with current mess of energy rises I don't think it will happen unless the govn actually bans s/c with a small rise in unit rates and tightening of margins to cover the loss.

Ildhund

@tfhnota wrote:

… unless the govn actually bans s/c with a small rise in unit rates and tightening of margins to cover the loss.

I wonder whether you've thought this through. Apart from the 'tightening of margins', which are pretty tight to start with, let's see what that 'small rise in unit rates' would have to be. To keep it simple, because we're only looking for a ballpark figure, we'll take electricity only. A few guesses to start us off:

• No. of households in GB (= no. of payers of standing charges): 27,000,000
• Total consumption of electricity using Ofgem's typical 2700 kWh/year: 72.9 TWh
• GB average standing charge: £0.5721/day
• GB average unit rate: £0.2467/kWh
• GB total standing charges: 0.5721 x 365 x 27,000,000 = £5.6 Bn/year
• 5,600,000,000 / 72,900,000,000,000 = £0.0768/kWh
• or 7.7p on top of the current 24.67p = 32.37p/kWh

Would you regard a 31% rise in the unit rate as a small one?

The 'typical' household's bill would of course remain the same. The typical high-usage home using 4100kWh/year would see a bill £120 higher, while the low user at 1800kWh/year would see a fall of £60. Is this the outcome you'd like to see? Where the old couple shivering in their draughty pre-war semi subsidise two young families in their modern energy-efficient houses fitted with the latest A-rated appliances?

How do you imagine it could work?

PS The supplier's margin is currently capped at £42 per customer per year. What do you think the effect would be of reducing that?

I'll happily provide links to the sources I used if you're interested.

QrizB

I see the maths haven't improved since we last went through this process with @tfhnota 's fellow traveller @wrf12345 a few years ago.

Here's the thread from 2022.

WiserMiser

https://forums.moneysavingexpert.com/discussion/comment/81955553#Comment_81955553

Same here but I think it is averaged over a year so you could tweak it with some extra heating in winter, if 2kw of electric works out as the same as the s/c or less

Not quite. Let's the try the BiB again…

'if 2kWh of electricity'.

That's because a kilowatt hour is very different from a plain old kilowatt. Mix up your apples and they'll all go pear shaped. 😱

Scot_39

https://forums.moneysavingexpert.com/discussion/comment/81955515#Comment_81955515

From Ofgems zero SC options report - Q3 2024 cap figures so a little out of date - in Figure 2.1 / Table from

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

So whether you use 0.1kWh, 1kWh or 50 kWh a day you still need the local distribution network, street level transformers cables to your home and part of your share of tge local distribution and national grid pylon and cable networks. And as above Ofgem (and NESO) have stated repeatedly during the zero SC discussions network costs (physical and renewables curtailment) are going to increase as a share of all our bills

So on network costs

£121 of then £229 - 55%

£103 of which specifically added by Ofgem to prevent lower users under paying their share of the core / fixed network costs following their Target Charging Review tgat ran from c2019 and actioned from 2022 to 2024.

You still need to cover your share of your suppliers operating costs

£62 of £219 - 28%

The govt imposed policy (social cost) - see WHD removal note below)

£11 of £219 - 5%

And misc costs - inc VAT and EBIT operating margin / headroom - applied via both unit and SC rates

£26 of £219 = 12%

its still not clear from MSE table what thresholds it any all trial scheme suppliers will use but the only old school zero SC - and that moved to only on prepay - by Utilita - charged maybe c25-35p more - around c100% more cf typical SR SVT - not ldhunds 31% aver across all homes above - depending on region for 1st 2kWh per day - so 730kWh per year. I doubt you would save much on it.

The economics dont change - suppliers have to be sure they recover all external and presumably to be fair all fixed internal costs from all customers.

And just to emphasise tge network cost increases tge current April cap includes a £69 increase in total network costs dual fuel - gas vs electric ?, sc vs unit rate split ?? - well the average electric SC only went up c2.5p - under £10pa.

But in theory c£20 in WHD costs also removed from electric SCs (£39 dual fuel - which had increased in last 2 dual fuel caps by £24ex vat) - so maybe as a fag packet guess if all other things were equal - closer to £30 of the £69 apllied via electric SC.

tfhnota

Always good to remind people that the 24p cost of electricity that we pay is actually 10p when bought at wholesale by the good old energy retailers, normally anyway - with energy prices going loco that may not be correct at this moment in time, hence my comment about the unlikelihood of any changes at the moment. Once we get back to normal, that massive gross margin (compared to the tiny net margin after operating costs and possibly offshoring as much profit as possible) can be tightened up and the s/c phased out, with only very small changes to the unit cost (which will then be paying for the network costs) - but that is a government call and would also mean taking out the remaining policy costs.

Scot_39

If you can go and hook a battery up to the high voltage generated safely and willing to pay the generators directly for nMWh then you might get that sort of volume wholesale rate.

Otherwise its just one part of the costs - and one that has been falking pre Iran unlike govt charges.

See Apr cap breakdown

https://www.ofgem.gov.uk/sites/default/files/2026-02/Summary-of-changes-to-energy-price-cap-1-April-to-30-June-2026.pdf

Wholesale only a tiny fraction of real world costs as delivered and billed to your home - £652 dual fuel in £1641 cap

And even the budget £133 only reverses the charges added in last 2 caps and Apr cap - which includes the increase in electric SC commensurate with the 5 yearly major review riio3 £69 extra on network costs - still leaving over £100 in policy costs on bills.