Scrap energy standing charges to keep it simple

I’ve been with npower for around 8 years me thinking i was a loyal customer but was informed by them the new easy to understand tariffs. The easiest thing to understand was that my annual bill was going to increase by £120 for the year nothing to do with increased energy prices it is down to the standing charge.Because i am someone who is classed as a low energy user what kind of message does this send out to people who are encourage to manage there energy.Anyway got a better deal through which so npower take a running jump

Standing Charges are a RIP OFF,there is NO NEED for them at all.THEY make it so hard for the LOW PAID and those on Benefits or Pensions who CUT DOWN on Fuel usage BUT they still have to pay these RIP OFF STANDING CHARGES EVERYDAY.
THERE should be ONE RATE for Electricity and ONE for GAS.
SO TO ALL YOU ENERGY COMPANIES STOP RIPPING OFF THE PUBLIC

Vic, There are costs invoved in providing you with an energy supply that do not depend upon how much energy you use. Some are imposed by the governemt, and in my view should be funded out of general taxation whilst others are real costs incurred by the provider.
For example;
– the policy and regulation costs imposed by the government (fixed costs, not dependent on energy consumption) such as support for low carbon technologies, support for vulnerable customers, improving customer energy efficiency; and consumption-dependent costs such as the carbon tax
– supplier costs – (fixed costs, not dependent on consumption) such as admin, meter reading, smart meter roll-out.
I don’t think a low user should expect to be subsidised in these costs by a higher user. Higher energy users may well be the elderly – in all day and needing a warmer home – those out of work, those in poor-quality housing ( badly insulated) – those on electricity only, no gas; bigger families. There is no discrimination on income between those who need to use more energy than others. The standing charge should be properly regulated to represent real fixed costs, but we should pay fairly across the board.

I tend to agree with this. The standing charge should cover cost of the network maintenance at least, irrespective of any usage. I see no reason why this should not be a fixed amount nationally. Few people would expect to get a telephone or TV land line without paying a line rental, so why should we expect a power line or gas pipe without paying for it?

Load of old b******s!! we own the infrastructure in this country we have paid for it over and over again our gas and electricity is ours too. only commercial users should pay for energy use, not us the people we have been duped by big brother government for decades and they are filling their pockets at our expense. I have had my telephone line into my house for decades and I have to pay if something goes wrong with it call out charges materials blah di blah di blah.so why the standing charge maintenance my a**e. They should maintain what they own out of what they charge us in the first place. The standing charge is to pay all their staff and all their admin costs so all the money they get from energy use goes to rich share holders. Take back all into public owner ship and run these utilities at none profit, we pay enough tax to take care of our infrastructure. I can hear you say well who’s going to pay for it all (again we pay billions in tax) why not use that .
again maintenance my a**e!!! Brian you must work for the establishment stop talking crap.

I have moved to Scottish Power for electricity and gas, and have chosen a tariff with no standing charge. I’m economical with my use of fuel, both to save money and for environmental reasons.

I don’t want to subsidise those who use more fuel, for whatever reason.

I’m sorry Timbo, but you are making a classic mistake, encouraged by the energy companies, in the way you are looking at dual tier tariffs. The higher first tier rate is to cover the cost of energy AND a standing charge. The cost of the equivalent standing charge is simply found subtracting the energy cost of the second tier.
For medium to high usage, where the first tier threshold is exceeded, a full ‘standing charge’ is paid. This can lead to a higher bill than single tier and standing charge, but is not what this tariff was introduced for.
The dual tier tariff was introduced IIRC, with support of Government and consumers, for LOW usage consumers. If they do not use enough energy to reach the second tier, they WILL SAVE MONEY. The energy companies don’t like that, which is why the don’t explain how the tariffs work and who it suits.
I have a very low gas usage, only for cooking (in rented property). Without even using any gas, depending on supplier, I have to pay (a standing charge) of £50 to £120 plus £10 in gas units, with a single price tariff.
On a dual tier tariff, I pay £15 in total on first tier units, equivalent to £10 in gas and £5 in ‘standing charge’.
Which tariff type do you think I prefer?

I see. I had done the sums after seeing the increase in my monthly payments having been convinced by one of the big six to transfer to one of there tariffs. I simply hadn’t factored in how little energy a low usage consumer would or could use, We use around 80% of average for the property size, obviously not the low usage I had imagined.

I can usually, using records of my usage, work out a comparison of current tariffs quite easily. I’ve just done it and moved to the obvious choice. As a single person in rented property and virtually zero Gas usage any fixed standing charge is prohibative. Only one major supplier has a dual tariff still, so that was an easy choice.
Dual tariff suits me more than no standing charge.
What I do have trouble with in comparison, and in reconciling bills, is the add-on discounts for Dual Fuel, Direct Debit, etc; always in the small print.

Just another point for Which. What about the no choice water industry. Fixed Price or Metered are they getting a fair deal with a standing charge. Can you even get a fair comparison to decide whether a meter is the way to go.

You might like to respond to the questions I asked above? It is not a simple issue, and a single unit price only, with no alternative types of tariffs, might be simple to compare, but not necessarily the best, or only, way to recover costs. Some of the costs above the raw energy can be argued as consumption related, but some not. For example, provision of a meter and reading, contribution to the Government’s carbon-reduction policy, administration of your account; perhaps these should be shown individually as fixed charges for all consumers. Ofgem have consulted widely on many issues, including this, and publish the responses on their website (ofgem.gov.uk – search Retail market Review) – including those from consumer groups. It would be useful to examine the arguments and making members aware, rather than forcing a blinkered approach. There is also a consumer poll (Ipsos Mori) about understanding unit + standing charge tariffs.
I want to see a choice in tariffs that consumers can use to find their best annual cost. This will not be at all difficult for most people with the very limited tariffs proposed; the only bit of information they will need is annual energy consumption that either they can record or your current energy company will provide.
We will soon have smart meters to contend with, that can charge different rates for energy at different times of the day, low when demand is low, high when demand is excessive. British Gas are considering free energy on Saturdays when demand is low. Those consumers who can plan the timing of some of their energy use to use the best rates will benefit, but a simple unit price will not help them choose the best deal. No more than Economy 7 type tariffs will. So things will be more complicated than you are plugging.
I think it a pity that Which should not present a balanced argument on this topic.

Josh, are these comments something Which? prefer not to address?

Josh, thanks. It doesn’t, in fairness, need much research to reach the conclusion that it is easier to compare single figures than a price that has two components. I contend the difference in effort for most people is not great. That does not mean it is the right way to price – consideration of the variety of costs that make up a final tariff is important, some of which apply regardless of consumption.
Ofgem have now published their proposals that will be implemented, subject to any appeals. Ihave given a link below. These include a unit price plus a standing charge, which can be zero. It will be interesting to see how companies implement their new tariffs.
Whatever the outcome, I hope Which? will accept the consensus and advise members on how to achieve the predicted cheapest deal. Switch with Which provides an excellent and easy to use tool to find your best supplier, requiring that you simply have a record of your previous annual energy usage.

Josh, Which seems to be still pursuing a single figure tariff despite the latest Ofgem report on the consensus for revised tariffs (that do allow both single figure tariffs and unit plus standing charge). It will be interesting to see what the energy companies offer as tariffs – will all standing charges be zero?
My concern is how Which justifies only supporting the single figure. It presumably should be representing its members views; these may be a clear majority, or may be split. How did you arrive at this policy? What were the relevant numbers of members proposing either method?

Shopping around should be a once-a-year job when your current tariff comes to an end. It is easily done on Switch with Which – best if you keep a record of your annual gas and electricity kWh usage (on your bills).
For those without internet (and no family to help) it can be done by telephone.
I agree with your remarks about old age pensioners (some) although many are extremely savvy and computer literate. However a system that works for a great many should not be rubbished just because a small minority cannot access it – we need to put in place methods of helping that small minority. Proposals that require energy companies to offer you their cheapest tariff is a step in that direction.

Shopping around for the best deals has long been a fact of life – energy, banking, insurance, domestic appliances, whatever and has been made much easier for most people through the internet. The telephone was a similar benefit to many – but did we condemn it because many people were still without phones? Progress helps many; stifling it is no benefit in the long run.

Nationalisation removes choice and, is run by incompetent beaurocrats and interfering politicians with no idea about running an efficient business. Look at how we run the Health service, Defence, Public Procurement, Govt computer systems. I don’t want any of that!

Standing Charge is not a direct rental charge. Its claimed to be a unified charge for provision and maintenance of the supply network to the supply point. It is calculated as a per diem not a per energy unit charge.
OfGen, supported by Age UK and Which decided dual rate tariffs were confusing. This was despite explainations that the higher initial rat was to cover the Standing Charge at a per unit charge. The method had been introduced under Government pressure precisely to reduce the exorbitant Standing Charge for low users.
At the moment, when I have to change tariff early next year, my annual energy bill of ~£860 per year will increase over £100 to cover a fixed Standing Charge.
I have been told, that now dual rate tariff is not allowed, all tariffs will have a Standing Charge. That Standing Charge may be low or even zero. I’ve yet to find such a tariff without high unit charges.
So those authorities who claimed reduce energy charges and simplify tariffs, if they achieved that with the help of consumer and vulnerable persons representatives, have achieved significant increases in potential bills for low users.

chris, suggest people take out a unit-charge only tariff from someone like Ebico if they are likely to be very low users. The unit charge will be significantly higher than a standard charge tariff offers. Don’t know if this will work with a prepayment meter.

Malcom,

The thing is major suppliers, perhaps wrongly, give one a sense of reliability and customer service.
Anyone currently on a dual tariff should be aware of the high cost per unit initially to cover ‘standing charge’, but at least its by usage not days.
There is, by definition, no such thing as no standing charge, though it might be zero.
Dual tariff included the standing charge, so why as you imply would a “unit charge only” be significantly more than an average standing charge + unit charge.

To me just cooking on a gas hob, it all seems quite simple. Why did people such as myself, as previously asked, get abandon for the sake of a false ‘simplicity’ by yourself and Age UK, etc?

Sorry, meant Which, not you. Oops.

“These costs are covered by the mark-up on the products they sell”. Which would mean every unit of energy would carry the mark up for “running costs etc” – so you will pay more to have your meter read, more for your account to be sent to you, more towards your smart meter – and more for the energy companies costs that should be the same for every consumer – if you are unfortunate enough to have to consume above average energy.

We should have the option to pay for the cost of what we consume – the variable cost of fuel, transmission, and the fixed cost of administering our account. Ofgem should ensure the latter is fair. One effect of distorting the unit cost will be to disadvantage many who are higher users in fuel poverty, and be advantageous to better-off wealthy low energy users. Then we’ll get into more complex subsidies to correct this.

Yes, without a standing charge, the unit of energy itself would indeed be more expensive (slightly), but my point is, that is a fairer, more honest way for the energy companies to profit. Simply, if I half my usage, I half my bill. Double my usage and I’ll double my bill. Pay for what you use. What could be simpler? If all energy companies were forced to operate without a standing charge then price comparison would be a walk in the park. Who knows, the energy companies might even become more competitive as they couldn’t hide behind confusing tariffs. Any customer (of any intelligence level) would recognise immediately what the cheapest deal would be, regardless of their usage.

Jill, part of your energy bill contains costs that are the same for all consumers on that tariff, whether you consume a lot or a little energy. Standing charges should represent those costs so all “pay what it costs”.

The calorific value of gas (the amount of energy you get from a cubic metre) can vary. It is therefore necessary to measure the volume you use and then apply the correct factor to ensure you pay for the actual kW hours you use as your ordinary meter cannot take a calorific value into account. Maybe smart meters do – £11 billion is what they cost so they should do something useful.

The complication of working out bills is not adding a standing charge to the annual units cost, but doing that for the many potential suppliers. Use Which?Switch that gives you an annual estimate from all energy companies so you can choose the deal that best suits you. Your postcode and annual spend or consumption is all the information you will need.

I agree with Jill.

I inherited a smart meter with my house and that does not take into account the standing charge.

I’m not sure that was Jill’s point; it seemed to concern conversion of cu. m to units and comparing suppliers tariffs. However I see no reason why smart meters cannot take account of a standing charge and even discounts when they are applied daily (as the ones I am on are). I do wonder just what value smart meters have for most people. Will we really religiously watch our hour to hour consumption and then….do what? Turn off the central heating, the dishwasher, use the cooker less? I’d be interested to know from people who have them just how they use them.

Two uses I can see are that
– they provide regular meter readings – saves logging in to your account and submitting manual readings, so getting accurate bills
– and they have the potential to charge you one hourly tariffs – cheaper or more expensive depending upon energy demand and the time of day you are consuming energy.
Will all this be worth £11 billion (out of bill payers pockets, of course)?

My view remains that smart meters should not have been imposed on us. I have seen some of the advertising and the companies are implying that they are doing us a favour by fitting a ‘free’ meter.

I had intended to decline the offer of a smart meters on principle, but inherited them when I moved home. It was interesting to find out just how much it costs to heat a tank of water using the gas boiler. Fortunately the new fridge and freezer have proved more economical than I had expected. My biggest savings have been to turn off radiators in unoccupied rooms and to replace halogen bulbs with CFL and LED ones. The novelty wore off when the power supply for the smart meter was recalled and I have yet to explore its potential and limitations.

Having seen how energy aware people can become when they have solar panels installed, perhaps some will make good use of their smart meter display when they can see how much their energy is costing.