Standing Charge Abuse

Cardew · 10 February 2019 at 11:50AM

SteveJB58 wrote: »

I am not advocating the standing charge should cover 'actual' costs, I am simply saying that for a single supplier, the standing charge should be the same irrespective of what tariff someone is on. It appears that the Ofgen cap restricts energy prices (usage prices), so companies change the standing charge to bolster income i.e. I cannot charge any more for the gas the person is using, but I can increase their standing charge.

Not so! The energy cap is on the unit(kWh) price and DSC

What is actually being capped?

The cap is on the unit price of energy, and the standing charge.
So the cost of electricity - for those on default tariffs - will be capped at 17p per kWh. Gas will be capped at 4p per kWh.
Dual fuel users will pay no more than £177 a year for a standing charge; electricity-only users will pay no more than £83, and gas users £94.

The price cap is £1,136 pa for a typical customer. According to Ofgem's definition a typical customer uses 3,100 kWH of electricity and 12,000 kWH of gas in a year.

So if a company charged for 3,100kWh @17p and 12000kWh@ 4p that would cost £1,005 so the standing charge could be no more than £131 to keep it at the £1,136 limit.

matelodave · 10 February 2019 at 12:34PM

Cardew is correct, however you should also be aware that those who are not on a default tarrif (formerly the SVT) the energy companies can charge what they like for both the standing charge and kwh tariff.

That's why some on complex metering have been hit quite hard and even the cheaper fixed tariifs have increased in price to compensate.

You should still shop around to work out the best tariff to suit your consumption (and risk factor) but the differentials have been eroded by the imposition of the cap. Which by the way, supposedly saved the average default consumer around £70 a year on first of 1st of January.

However it will increase by around £120 on 1st April, so you'll actually be guaranteed to be about £50 a year worse off with more to come on 1st October when they review it again.

amcg100 · 10 February 2019 at 12:41PM

The OP was complaining about the cost of standing charge on fixed price long term contracts. The Reason that energy companies charge more on long term contracts is that infrastructure costs may increase during the term of the contract and they protect themselves from this by increasing the standing charge.

andyfzr · 10 February 2019 at 9:00PM

I am with Ebico and used to be on the no standing charge deal and it was great till the price cap came in and ruind it. I was paying £38 a month for duel fuel and claiming around £100 back once a year but the price cap meant it wasn't viable for them to do it at the prices set as I paid slightly more a unit but got no standing charge. The price cap meant they coouldn't charge the rate anymore so I had to go on a normal tarriff and now its costing me more and no more claiming money back for christmas. Thanks again to the greater powers interfering.

Former_E.ON_Company_Representative:_Malc · 12 February 2019 at 4:20PM

SteveJB58 wrote: »

Having just looked at the tariffs on offer from E-On, I am very angry to see them using the standing charge as a means of generating extra money. Given the standing charge is SUPPOSED to cover the overheads of getting the gas to your house, why is it different for each tariff? To give one example: gas SC on standard tariff is 25.82p per day - on Fix2year it is 32.393. Quite frankly, this is outrageous, has been known about (as a simple internet search reveals) for at least 5 years and needs to be stopped.

SteveJB58 wrote: »

I am not advocating the standing charge should cover 'actual' costs, I am simply saying that for a single supplier, the standing charge should be the same irrespective of what tariff someone is on. It appears that the Ofgen cap restricts energy prices (usage prices), so companies change the standing charge to bolster income i.e. I cannot charge any more for the gas the person is using, but I can increase their standing charge.

Hello SteveJB58 and already lots of good advice on here - thanks all.

You're right, we do have different Daily Standing Charges depending on the tariff chosen. This reflects variations in the costs and benefits of individual products. To confirm what's already been said, Daily Standing Charges cover our costs when supplying energy to your home. Things like meter reading and maintenance, transporting energy to homes, the upkeep of the infrastructure, customer service costs, keeping you connected to the energy networks as well as additional expenses like environmental and social obligations.

As Cardew says, these costs differ depending on many variables like location, types of property, specific circumstances etc. There are also other variables. For instance, it costs us less to manage accounts paid by Direct Debit and this is reflected in lower Daily Standing Charges for customers paying this way.

Another aspect is we're now offering tariffs with an upgrade where we guarantee the standard fuel mix will be matched with 100% renewable electricity and 100% carbon offset gas. These tariffs cost more per month through higher Daily Standing Charges and are for customers interested in 'clean' energy.

Additionally, a two year tariff will usually see higher daily charges than a one year deal as we build in a different level of expected cost increases depending on the respective periods the contracts run.

Overall, we try to even these costs out as much as possible and include them in an overall tariff package. Given the different packages available, customers will see variations depending on their choice of tariff.

To confirm molerat and Cardew's advice, the Price Cap covers both unit rates and Daily Standing Charges.

Hope this goes some way to explaining why our Daily Standing Charges differ depending on the type of package chosen.

Malc

Sterlingtimes · 12 February 2019 at 5:37PM

One supplier positions its price model as promising to supply gas and electricity at cost and then charging a membership fee to cover its own administration. Their membership fee seems to equate to a standing change.

I would assume that the variable charge of most suppliers accounts for the supply including the total cost of delivery.

Of course, the provider can position the pricing division as it wishes, but I doubt that the variable element applies to supply and the standing charge applies to delivery.

Obukit · 13 February 2019 at 12:49AM

It has to be said this is how most goods are supplied albeit they are hidden in one price.

When you buy something from a shop you are paying both fixed costs - the cost of the shop existing - and variable costs - the costs of buying the products you purchase and sell them to you.

Just like with utilities you can choose to shop somewhere with low fixed costs, like Aldi, vs high fixed costs, like a motorway service station. However, ultimately you still pay them.

Standing Charge Abuse

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