Question: Standing Charge Abolish & Fixed Term Energy Contracts

QrizB

Has anyone got any advice?

If you're expecting the property to sell within a year, there's unlikely to be much to gain from signing up to a fixed-rate tariff with an exit fee.

Scot_39

https://forums.moneysavingexpert.com/discussion/comment/82184382#Comment_82184382

Just what we need - NOT

• far higher electricity unit rates for those with old existing electrical heating

and from a net zero perspective

• the c24m they hope to convince to leave gas to use electric heating

Because to my mind the current profile class 2 cap at 3400 kWh - a real significant drop this year from 3900 - is a completely unrealistic level to heat many all electric - conventional at least - homes.

Even in my fairly small modern mid terrace in EM - Ive had to drop to 14 and 16 living room - to get to that level - I was around the old 4200 when het to 17/18 around 5 years ago. I tried lower - I started to get circulation problems so stopped pushing.

And for those like family further north - I think i read in Scotland the average is more like 6000-7000 kWh and on one of the likes of Shetlands - anything upto 10,000+ isnt that abnormal.

I really dont trust Ofgem to get it right.

Scot_39

https://forums.moneysavingexpert.com/discussion/comment/82184498#Comment_82184498

nRAB funding already added about £12 to the cap - but at least that and the initial modular it covers will provide dependable predictable reliable generation.

The pre Apr £122 on renewables obligation that was just for old projects (2002 upto 2017 iirc) - came like todys renewables - with no such output stability. Just lots of promises of future lower energy costs.

FactualFinance

This was a good idea when Natural Gas was 80p to £1 a therm. It is a disastrous move when the price is (today) £2.42 a therm. Many (maybe most people) north of Birmingham i.e. Northern England, Scotland, and many others whose houses use mainly Gas, will lose up to £200 a year from day one. Martin was campaigning for REDUCTION of standing charges, but be careful what you wish for! This is the worst of all worlds. Also, standing charges were supposed to cover the infrastructure costs: these are huge, and National Grid is spending £ Billions installing mega cables and Pylons to cater for massive increases in need for electricity - did I hear anyone say Data Centres?….

QrizB

This was a good idea when Natural Gas was 80p to £1 a therm.

It was just as good/bad an idea then as it is now.

Many (maybe most people) north of Birmingham i.e. Northern England, Scotland, and many others whose houses use mainly Gas, will lose up to £200 a year from day one.

And they would be losing just as much if gas was £1 a therm.

Martin was campaigning for REDUCTION of standing charges, but be careful what you wish for!

This was just one of Martin's many misguided campaigns.

Also, standing charges were supposed to cover the infrastructure costs: these are huge

And will now be funded through unit rates.

PS: why stat a new thread when this is already being discussed?

Scot_39

I suspect because higher users will tend to lose out in any simple swap - as clearly demonstrated by Ofgem initial consultation documents.

And the timing matters because the higher the total bill - the more likely any "use penalty" on Ofgem style simple zero SC conversion swap out - combined with true rates itself will push some even further on affordability.

Take gas SC currently iirc a relatively low c£110 (£108 ?) - if that got converted at 110/9500 (*) recently lowered median TDCV - a house on the recently lowered upper quartile now 14000 kWh - would face the same absolute £52 increase regardless of underlying unit rates.

(*) iirc the current low SC - 50% off trials are £!50 df at old low TDCVs so 7500 gas)

So yes QRizB has a valid point. The offset is fixed regardless.

But whilst its easy to find £52 if have say a tight unallocated disposible income (sounds low to many here - but many homes are literally living paycheck to paycheck - are at near 0 cash - sometimes for days - before next payment)

When gas rates are increasing the higher they do the £52 just adds to the higher amount - pushing affordability - already stretched by the wholesale price rises.

If gas were to say increases by a "horror" sounding 3p / kWh from current just sub 8p in Jan.

Sounds bad - but based on Cornwall insights at 9.76p - was a c1.8p increase - for their forecast cap at just sub £2000. The big 3 were at £2200 for Jan and 2 of them £2374 for Apr earlier this week - so much bigger rises vs current c£1723 than old CI could be in store - a crass estimate say (2200-1723)/(2000-1723)*(9.76-7.97) = 3.1p put in Apr £2374 over 4p etc

The upper quartile user having to find an extra £420 - add in the £52 - and they now at same time have to find a combined £472.

The median user just the £285raw+0 for SC conversion

and a low user on lower quartile 6000 kWh = 6000*.03 = £180- £40sc offset - has to find less than wholesale rise.

Finding the £420 obvious the dominant problem for a poor or cash tight high quartile 14000kWh user (if they exist) - adding another £52 on top just doesnt help.

Of course they could just put part of the Healey £100 towards the £52…

And remember thats just their potential gas increase.

Waiting to the underlying unit rate was say to drop back to 7p - then it would simple absorb £52 of the £140 saved. Or at constant pricing once income raised - say after an Apr pension rise of wage rise - easier to find the £52.

In any case I suspect we are months away from action - as one BBC article put the timescale - 2027 (or hopefully soon after)

And there is of course the promise if pro / threat if not to repeat the same on electric in future - again mentioned in the post budget discussions if not budget itself. And I suspect there are many ordinary working folk who use far more than the current Ofgem PC2 cap - for all electric homes - a number I have always had doubts over. And the SC simple SC to unit premium penalty from median to upper - much higher as unit level 79% not 47% higher.

Jemma01

I would certainly like to see the back of the standing charge!!

sheenas

The idea works for many, maybe most. The typical saving is suggesting to be £45 and when you think about if you going to £200 more then you have to ask the question. Has affectively my usage been subsidised by others. Further consider the objective is to encourage high users to reduce their gas usage.

tfhnota

Imagine the howling protests when water and electric s/c's are finally gone…

tfhnota

It won't be as early as January as Ofgem will drag it out for as long as they can get away with helping out their industry chums…