Standing Charge abolition. Why is it so difficult?

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[John_S]

It will be interesting to see the proposals on standing charges.

In my humble opinion, there is a good case for linking the standing charge for electricity to the fuse size. Ie if you want a 100 amp fuse, you pay a bigger standing charge then if you can get by with a 60 amp fuse.

Better still, adapt the French system of resettable circuit breakers instead of having a fuse.

[ecogeorge]

what is wrong with zero standing carge ? Put it on the unit price so those who consume more pay more ............
We dont have a water standing charge do we ?

[Krill]

what is wrong with zero standing carge ? Put it on the unit price so those who consume more pay more ............
We dont have a water standing charge do we ?

Well there are four parts to the wate charge and at least one of them isn't related to the usage amount so that's arguable.

[resybaby]

what is wrong with zero standing carge ? Put it on the unit price so those who consume more pay more ............
We dont have a water standing charge do we ?

My industry this one, and my view is we do indeed have a water standing charge - its just not called that.

Use no water for a year and you'll get stung for what are affectively standing charges for both water, and sewerage if connected. Approx £120/annum where i live. Supposedly for reading the meters, but most folk either do that for them or there is 'radio reads' carried out. Only industry where compulsory 'smart' meters (on the basis of detecting leaks, cough) are enforced.

Im another fan of pay for what you actually use - bung the cost on the unit rate. Those that then make an effort with the likes of PV etc are not penalised.

[Bugtownboy]

On our Wessex water bill, we have an item ‘Standing Charge’ on both supply (7.5p/day) and Sewage (17.5p per day).

This isn’t related to usage and increases per year.

[chris_n]

I think people need to be careful what they wish for.
If standing charges are incorporated into unit costs high users pay more as stated. The question then in why are they high users. Do they have a medical condition that requires extra warmth or extra power to run machinery, are they in substandard accommodation that leaks heat etc.
These people are likely to be amongst the poorest in society and they will be subsidising many members of this community (myself included) who have little to no import from the grid but still rely on the same infrastructure to be able to sell their excess. Can't really see how that is fair to be honest, same with the fuse size thing, if you have poor inefficient storage heating in a poorly insulated (rental?) house you require a higher current capacity than someone able to afford a heat pump in their private well insulated house.

[nowty]

It will be interesting to see the proposals on standing charges.

OFGEM proposals are here,
https://consult.ofgem.gov.uk/energy-sup ... pdf#page=8

But don't get too excited,

"This document outlines a range of options for moving £20 - £100 of operating costs from standing charges to unit rates, but we are seeking views on whether this is sufficient and what mitigants might be required to enable this."

If folk want to provide input to the consultation, you can provide them here, its open until 20th Sept.
https://www.ofgem.gov.uk/call-for-input ... il-options

[Countrypaul]

As I understand the standarding charge for electricity, there are two main parts (please correct me if I have misinterpreted). one part is for provision of the service so maintenance of cables, repairs etc. and one is to pay for the companies that went bust/subsidised etc.

I think that the service provision part is in principal largely justified, it does not matter whether you use it or not you want it available. If you want a vacuum cleaner you buy it and maintain it, whether you use it or not you still have the cost. The same applies for say a car in both cases you may have to pay extra to provide it with consumables, electricity, petrol, oil, screen wash, new tyres etc. depending on amout of use. The cost of the standing charge should relate to the cost of providing the service with inevitably some overheads.

If you went to a shop and bought 10KWh of energy that you carried home, in say a battery then you would not have the service to be maintained at home and it would make sense that al the costs were rolled into the cost of the energy you bought (it would be very easy to shop around as it is for petrol, milk etc.).

If there are other costs such as a charge to pay for bailouts of companies that went bust then that should be a separate item on the bill (even if fixed per customer) and itemised as such e.g. Goverment bailout charge. The aim imho should be to eliminate these charges as they are not directly part of ongoing electricity supply.

If you use never use any electricity but do supply it then you make use of the service so should pay for the infrastucture you use. Similarly if you use very little but you want the option in case of, for example, emergency then pay to have it available.

I think you should also pay for what you use, just like milk, petrol, meat etc., but also for what you supply. I can see an argument for it to be cheaper for those that use more (less overheads sending one bill than 10 sort of thing) but that also feeds back to the idea of paying for diffferent levels of service, 60A, or 100A, or 3-phase etc. Most households would probably be very similar (eg. 100A supply) so the same standing charge.

The bill should also discounts such as given for DD payment, or if the electricity supplier gives a "vunerable person discount" for any reason.

I disagree with the idea of hiding additional costs to those of simpy proving the electricity in the standing charge.

Just my tuppence worth...

[nowty]

As I understand the standarding charge for electricity, there are two main parts (please correct me if I have misinterpreted). one part is for provision of the service so maintenance of cables, repairs etc. and one is to pay for the companies that went bust/subsidised etc.

From the OFGEM options paper,
https://consult.ofgem.gov.uk/energy-sup ... ptions.pdf

What makes up standing charges

Energy tariffs typically consist of two components: standing charges (fixed
charges unrelated to energy use) and variable unit rates (charges per unit of
energy sold). Standing charges have been a feature of energy bills for as long as
there has been a retail energy market. This two-part tariff structure is common
in other sectors too, such as the water industry.

Standing charges play a legitimate role in the retail energy market. They
recover the ‘fixed’ costs of the system, by which we mean costs that do not vary
by energy use. This includes suppliers’ fixed operational costs of serving each
consumer, the cost of network upgrades and maintenance necessary to keep all
consumers connected and fund the technologies to drive progress towards net
zero targets. It also includes the cost of providing Warm Home Discount
payments to eligible customers. These costs cannot be avoided; they must be
paid for, but there is some optionality in how these costs are recovered.

To an extent, suppliers are free to determine the balance between standing
charges and unit rates (including whether their tariffs include a standing charge
at all). But on domestic variable tariffs, the total level of the standing charge
(and the total tariff including the unit charge) is currently capped by the Default
Tariff Cap (the price cap).

We set the price cap to allow an efficient supplier to recover their supply costs
and make a reasonable return. Therefore, the balance between the standing
charge and the variable unit rate within the price cap is generally determined by
whether suppliers face fixed or variable costs for supplying their customers.

The current standing charge component of the cap includes the cost of electricity
networks, metering costs, some policy costs, and some supplier operational
costs.