OFGEM Standing Charge Consultation

[nowty]

There is a consultation on the future of standing charges, it opened a few days ago and runs till 19th Jan.

Website,
https://www.ofgem.gov.uk/publications/s ... call-input

Document is here,
https://www.ofgem.gov.uk/sites/default/ ... 0Input.pdf

What has surprised me is that the increase due to failing energy companies (SoLR) is now very little, but the shifting of some network charges (TNUoS and DU0S) from the unit rates to the standing charge now accounts for more than half of it.

[Bugtownboy]

Thanks for this Nowty. I’ll respond - our SC (£1.92 for NG and £3.97 Electric per week) is roughly 30%, annualised, of our total bill.

We’ve worked hard to reduce dependence on grid/fossil fuel.

Does seem a bit regressive on those that try to reduce overall consumption.

[Marcus]

I wonder what the reasoning was for transferring network charges from the unit rate to standing charge (i suspect a gov't motive of getting the poor to subsidise the big bills of the wealthy - but lack actual evidence).

[dan_b]

That’s the trouble with the high standing charges - it’s becomes more and more difficult for people to reduce their bills by reducing consumption (or timeshifting loads) which will be disproportionately affecting lower income households.

[chris_n]

Possibly moved some network costs as those with solar weren't actually paying their network costs

[Mart]

That’s the trouble with the high standing charges - it’s becomes more and more difficult for people to reduce their bills by reducing consumption (or timeshifting loads) which will be disproportionately affecting lower income households.

And also reduces the savings from spending more on higher efficiency items, which may make people not bother. An all in 'petrol forecourt' price would also encourage demand side generation (typically PV) by increasing savings, via a higher displaced unit price.

The 'petrol forecourt' idea would make no change to the average user, but reduce costs for low users, and increase costs for high users. Not your usual economic model, where prices tend to fall as you buy more, but since energy consumption is currently causing so many problems, there's no real excuse for unecessary high demand. [I stress the unecessary part, obviously energy is needed and essential.]

[nowty]

I wonder what the reasoning was for transferring network charges from the unit rate to standing charge (i suspect a gov't motive of getting the poor to subsidise the big bills of the wealthy - but lack actual evidence).

There was another consultation a long time ago about this, some of us discussed it at St Elsewhere.

One of the reasons was OFGEMs position that wealthy folk could avoid paying the costs by the use of solar and batteries.

It was going to be implemented in two stages, over a fixed timetable, but COVID delayed it and extended the time between stages. Few people have noticed its introduction as its been hidden by the the Suppliers of Last Resort (SoLR) charges which made bigger headlines and the fact that they are now dropping out.

[Tay]

There is a consultation on the future of standing charges, it opened a few days ago and runs till 19th Jan.

Website,
https://www.ofgem.gov.uk/publications/s ... call-input

Document is here,
https://www.ofgem.gov.uk/sites/default/ ... 0Input.pdf

What has surprised me is that the increase due to failing energy companies (SoLR) is now very little, but the shifting of some network charges (TNUoS and DU0S) from the unit rates to the standing charge now accounts for more than half of it.

I find the standing charges abhorrent, companies in the 'good times' would spend tens of millions in advertising to win new customers, running loss leader or discounted tariff promos to win new customers.
I fail to see how the expense of onboarding hundreds of thousands of 'new' customers is such a world ending catastrophe for these companies. I understood that the SoLR 'awardees' such as Octopus etc were able to make significant claims to recover costs that they wouldnt ordinarily recover through the onboarding of significantly more customers through the Last Resort Supply Payment.

If I were a cynic (which I am) you could argue that these last few years have worked particularly well for utility companies profits..either at the consumer end which was failing badly before and during covid to posting some pretty healthy profits during this consumer nightmare!!. I wont mention the extra costs to the consumers/tax payers for the roll out of non standard smart meter solutions to the tune of £11billion+ or more by now (At leats some of those will be SMETS2).

I'll file a response to standing charges input.

I just see this being agreed behind closed doors and the additional expense of this will just come from consumers one way or another.

[openspaceman]

One of the reasons was OFGEMs position that wealthy folk could avoid paying the costs by the use of solar and batteries.

They could but don't seem to bother, I regularly worked in the gardens of posh mansions but never saw PV panels, most of the owners were seldom home during the day. Round here the few houses that have solar panels are the smaller detached and semidetached, the ex council houses in the estate by me have a higher proportion of solar PV than elsewhere.

[Oliver90owner]

For those of us that are old enough, the standing charges were abolished (in about the ‘80s?) so people could more easily select the best tariff. Later, surprisingly, the suppliers wanted standing charges again. I expect at that time it was a well camouflaged increase in income for the suppliers. I hope things go back to no standing charge or at least one that can be seen to be necessary - not just a money grab. It would encourage power saving and home generation.