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Question: Standing Charge Abolish & Fixed Term Energy Contracts
Comments
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It's just like when Martin "successfully" argued for things like:
- Fixed annual increases on broadband bills
- Preventing energy companies from offering more than a handful of tariffs each
- The energy "cap"
It probably won't be long before he realises that this one will backfire as well. It's what you get for listening to the vocal minority.
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That is a hell of a leap for an "if" policy objective. The policy objective will be a short term headline win, which is what they seem to have got as the simpletons are lapping it up.
The standing charge makes sense, fixed costs of connection are applied, the basic maintenance etc. then the variable costs of supply, the gas itself, the transport costs, etc. are applied to the unit rate. The problem has been policy costs added to both in varying ways, but the premise itself of a standing charge is entirely rational.3 -
Then we will just be told that they implemented it wrong. Everyone sensible at the time with the bill increases just said they needed to ban in contract price rises, nearly every other European country does that, sign up for a two year deal, no mid-contract rises are allowed, not even contractually specified ones, but instead it was campaigned for fixed annual rises and they were just as high as the old system.
The campaign for the "cap" was a bodge for stable times, but of course it forced energy suppliers to sell their product below cost meaning many went bust, it is backward looking to reacts too late and holds price high longer than they need to be, especially when accounting for seasonal imbalance in costs.
The cap on the number of tariffs did not make things "simpler", it just reduced innovation, obvious before it was implemented, but ploughed ahead with regardless.1 -
No they are not going to get the dosh back from those benefitting - and thats the whole problem.
Ultimately the suppliers are going to recover that money - and likely from some very vuilnerable groups in society.
You are happy because you hope to be one of those - was it 60% in one media article saving ave £45 - who you hope will save - but caring little about those who will loose - including in the short term the suppliers - already buried under £5bn collective debt.
This shows a desperate act - and until see mitigations - risks completely ignoring Ofgems clear warnings about the many losers from such a move.
And for what a £45 saving which pails into insignificance compared to levies on all our bills - even after Apr policy line was still £106 on a dual fuel TDCV bill - and even VAT on gas is currently of similar order at cap TDCV - and about to be far higher.
Before Apr - that £106 on policy line was £246 policy + £84 vat - took up c20% of the DF cap - and that doesn't include other net zero policy costs like CfD (£39 in wholesale) and network costs (remember Ofgem increasing £108 by 2031 - £66 in Apr alone) - curtailment, balancing/CMS, physical grid expansion etc.
You dont have to be rich or living in a mansion to have to use a lot of gas.
A young couple with children, a disabled or elderly frail person in a modest old and badly insulated 2 bed bungalow or 2-3 bed semi and a health (often just simply age) related reason to need a house at 21+ several months of the year.
The home groupings Ofgem identified as at risk from zero SC policies from the very beginning - their very first consultation exercise.
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I’m so concerned about this push by Martin to scrap standing charges:
1. It will mean higher bills for the elderly and disabled, often living in relative poverty, who have to try to keep warm all day.
2. Please, please could we stop and think before doing the same for electricity. The government wants us all to move onto heat pumps. These run on electricity and mean relatively high bills. Removal of the standing charge will mean higher unit rates. This is going to be a disincentive to move to a heat pump. What we need is a choice of tariffs - with/without standing charge and corresponding unit rate.3 -
Switching the gas standing charge to what will be a gas unit increase is regressive for poorer customers who live in poorly insulated housing. My stone house up north eats gas energy during the 9 winter months which start in September here, yet electricity bills remain low and even. But rich people who live in well-insulated houses with heat pumps, solar panels and EPC ratings A-C will be the beneficiaries of this change. Like the poll tax, it's a regressive tax on the poor.
6 -
Various suppliers are currently offering low standing charge tariffs as an experiment. I'm signed up to one (5.1p/day for gas, so £18.62/year).
What will happen to those experimental tariffs?
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I presume they'll get scrapped at the end of the fixed period or just change to the standard variable tariff if they aren't fixed.
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Do you have exit fees ?
And in any case this is future - one articles says hope for 2027 - there is no plan - its a soundbite announcement.
Looking to paint over what is now a dire financial situation for UK govt (c40p in every £ of last years £330bn income tax receipts going on debt interest like gilt coupons) and many household finances about to be squeezed massively.
The latest suppliers forecasts - EDf and EOn updates on the 26th - shows a £450+ increase in Jan and another £150-200 on top by April.
See my update to MSE article tabled future projections here
https://forums.moneysavingexpert.com/discussion/comment/82183587/#Comment_82183587
Tinkering with £22 off electric, £45 in possibly distant future off of gas and £21 on some very unhealthy food tariffs - just doesn't cut it.
What many really need - and not just those on benefits - is Cons era style £550 cash in hand and maybe a more capped EPG protection - worth far more than £22 off vat and £45 for some on gas.
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Yes, £50 exit fee.
I locked this in as I'm a relatively low unit user and paying the higher unit rate leaves me better off overall. If the SC goes and I'm just left paying the higher unit rate.
If this does happen, its implementation needs thinking through. It's not as simple as just removing everyone's SC.0
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