/ Home & Energy

Scrap energy standing charges to keep it simple

A pile of colourful numbers

You may have seen today’s Daily Mail story about the ‘standing charges’ energy companies levy on customers. If you’ve ever read your bill, you’ll be familiar with the term, but what are these charges? Why do they vary?

The British Gas jargon buster on its website describes energy standing charges like this:

‘Suppliers have to pay various costs no matter how much (or little) energy a customer uses. The standing charge is a fixed charge designed to recover these costs.

‘These costs include the distributor’s cost of transporting energy to your premises and the meter operator’s cost of looking after your meter.’

Simple, right? The standing charge is a fixed amount to cover the cost of getting power to your home and maintaining your meter. So you’d think that energy companies would charge a similar amount for all of their customers.

Yet today’s Daily Mail article found two Npower tariffs with different standing charges – a difference that could cost you an extra £140 over the course of a year. Not an insignificant amount. We found another example, British Gas this time, where two different tariffs had total standing charges for a year differing by almost £50. This makes you wonder whether the standing charge really is there to recapture these fixed costs.

Simple prices, not standing charges

Hopefully you’ll have seen our campaign to introduce single unit pricing to the energy market. A single, simple price would allow all of us to compare energy tariffs at a glance. We wouldn’t have to wonder which energy company had both the lowest standing charge and the lowest unit rate. We wouldn’t be scratching our heads working out whether we’d be better off with a high standing charge and a low unit rate, or vice versa.

It would make it clear to all and sundry that one tariff is going to cost you more than another. It would help people to switch to the cheapest deals and stimulate competition in an uncompetitive market.

Continuing with the same old standing charge approach means that people will struggle to find the best offers. And this research clearly questions the energy industry’s claim that standing charges are needed to recover certain fixed costs. Yet, Ofgem’s new tariff proposals will make them mandatory.

The energy market just doesn’t work for the average consumer; people don’t trust their energy supplier and they don’t think they’re getting a fair price. We want people to be much better informed about how much they’re paying. For that to happen, Ofgem and the government need to make sure that simple energy prices are introduced.

We’d love to hear what experiences you’ve had with your energy company’s prices and standing charges. Do you think a single unit price would make energy prices easier to understand?

Comments
Profile photo of John Ward
Member

I have always advocated the abolition of standing charges, but if the regulator insists on having them in the simplified tariff structure then the regulator should determine the level of a universal standing charge and say exactly what it pays for. At present, the standing charges penalise people who use less fuel. Tapered tariffs for higher volumes should also be phased out. Energy supply combines commodity with utility. The digital age has produced a lot of benefits but the opportunity to apply tariff segmentation [if not fragmentation] and marginal charging have gone too far in this industry [and certain others we could name].

Profile photo of wavechange
Member

I agree with John about getting rid of standing charges, but I think we should continue to push Ofgem to get rid of them. There certainly are some customers in favour of standing charges, but I believe they are in the minority.

It’s the same problem with Ofcom rejecting the Fixed Means Fixed campaign of Which?, suggesting that all customers deserve is to be able to get out of phone contracts if the payment goes up.

I think it is high time that Which? launches a campaign to get our regulators to do a decent job.

Profile photo of ChrisGloucester
Member

Yep standing charges are a complete rip off, and the energy supplier argument to justify them is total nonsense.
Plenty of suppliers of all kinds of goods and services have fixed costs too but you don’t pay a standing charge to any supermarket, petrol station or anyone else I can think of for that matter.

Standing charges and especially the manipulation of them is a marketing ploy to make your overall bill look better depending on whether you are a high or low user.

No standing charge, no multiple unit prices depending on consumption, just one unit price regardless of usage and choosing the most cost effective supplier would be as easy as buying bin liners. And totally fair regardless of consumption levels.

Of course the marketing departments won’t like it but being honest and fair is a new concept they might eventually get use to.

Member
mick says:
5 May 2013

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

Member
Vic says:
8 July 2014

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

Profile photo of malcolm r
Member

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.

Member
brat673 says:
8 May 2013

Have been on the previous Electricity Consumers Committee, we strove to get fair tariffs and charges. Just when we seemed to be making progress the politicians ( Labour) combined Gas and Electric consumer organisations and made them weaker. A reasonable standing charge to allow the distributor to invest, improve and repair network. Properly regulated. The politicians and the regulator seem to have let the consumer down. Emphasis should be place on the word KISS- Keep it Simple Stupid.

Profile photo of brianac
Member

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?

Member
Arthur says:
2 March 2016

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.

Member
Doug Carr says:
15 May 2013

Today I surveyed standing charges and can report that they vary from £53.33 per year to £175.93 per year (8 different providers checked out).
Ofgem you are pathetic. Do we not all use the same National Grids and pipelines ? How in the wide world of sports can you call yourselves a regulator or Are you simply corrupt as some people allege?
Come on Which? get it sorted.
Regards
Doug Carr

Profile photo of wavechange
Member

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.

Member
Richard says:
30 May 2013

Living in a small village, mains gas and drainage is not available.
I switch from LPG to a air to water heat pump for my heating.
My installer recommend I apply for E18 supply.
I still have one cable supply to the house and a new meter which switches my heating supply on and off and different times of day whilst the normal supply is not impacted.
My electric suppliers tell me I have two supplies to my property as result I have to pay two standing charges…..confused I still have one cable into the house and one meter were the extra cost coming from…?

Profile photo of pdfbt40
Member

The most common alternative to standing charge was/is the duel tariff, where the first block of energy was at a higher rate to cover ‘standing charge’ by usage. If I remember correctly this was advocated as beneficial especially for the vulnerable low users.
We are told people don’t understand this so it has to be abolished as a tariff type. As it was developed as a successful way for a group of people to be able to afford energy, what will be the effect of its abolition.
Myself, going through a round of comparisons, it means an annual gas bill going from £10’s to £100’s if I have to pay a standing charge. Difficult on a fixed pension and disability benefits being cut again.

Member
A. Staras says:
5 July 2013

I have been with First Utility for a number of years now and have generally been pleased with the service, especially the smart meter. They do, however have a number of different tariffs, with different standing charges. To make matters worse the tariffs change frequently and when one ceases they make the choice of which tariff you will move to. As an example my previous tariff, called MySave Version 12, has been discontinued, I was automatically put on to one called MySave Everyday. This tariff would cost me about £350 extra in a full year. When I queried this I was told that I could move to MySave Version 16 (what happened to versions 13,14 and 15 I do not know) which would cost just over £100 a year more. Why was I moved to the most expensive tariff, and why did First Utility not let me know that there were alternatives?

Member
Timbo says:
15 July 2013

We all need to be careful here. Simply going for a “no standing charge” tariff has cost me dearly in the past. The companies offering this presently charge a lot more for a fixed amount of units per month or quarter. this can be as much as 50% more cost for those units than paying a standing charge.
The emphasis has got to be on the single price, as well as the standing charge and no one or the other,.

Member
Timbo says:
15 July 2013

We all need to be careful here. Simply going for a “no standing charge” tariff has cost me dearly in the past. The companies offering this presently charge a lot more for a fixed amount of units per month or quarter. this can be as much as 50% more cost for those units than paying a standing charge.
The emphasis has got to be on the single price, as well as the standing charge and not one or the other,.

Profile photo of pdfbt40
Member

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?

Member
Timbo says:
15 July 2013

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.

Profile photo of pdfbt40
Member

Josh Green,

Are you monitoring these comments ? I just ended a deal and had to switch supplier. Yes they are all offering only 4 tariffs, but out of 24 tariffs there was only 1 dual tier, no SC tariff !!

I wonder how other, maybe confused, can’t get the tariff they need as LOW users, are getting on.

Profile photo of malcolm r
Member

Not everyone agrees with Which’s stance on just unit pricing, as you will be aware from other conversations. There is not one pricing system that is fair to all consumers. I want to see a simplified range of tariffs that give us a choice – then I can decide which supplier and tariff suits me best – i.e. cheapest over the year. And not tariffs that just last a year then you need to change.
Ofgem have consulted again – The Retail Market Review – Final domestic proposals – in March and they have included Unit and Standing Charge in their proposed tariffs, but no two-tier tariffs. The standing charge can be zero, hence Unit charge-only options.
Tinkering with which group of consumers might or might not benefit is not the real issue. What is needed is genuine competition to reduce prices and speed up switching suppliers when a tariff may change so you are not financially penalised.

Profile photo of pdfbt40
Member

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.

Profile photo of malcolm r
Member

Which? As a query, your response to Ofgem’s consultation on the Retail market review was on behalf of around “1 million members”. What survey of members was carried out to produce your representative views? How do you view Consumer Focus as a representative organisation?
Tariffs are not a simple issue to decide in a way that is fair to all, so it is important that if changes are made they are truly representative of all consumers views.

Profile photo of pdfbt40
Member

This ‘Conversation’ was first posted over 3 months ago. Would Josh Green or anyone else in the organisation like to update us on the issue, particularly as from comments, its not as straight forward as represented by their campaign and response to Ofgem.

Profile photo of Josh Green
Member

Martin – you’re not wrong, this isn’t a straightforward issue. We are continuing to press for simple energy prices and in particular the introduction of a single unit price for energy (and along with it scrapping standing charges). As other people have said there are a variety of views as to what is the best way to solve what is a significant problem. We think that a single unit price would enable people to compare energy deals at a glance, something that you can’t easily do right now. We have been busy creating our new campaigns website and we will continue to press for change, and we need as much support as possible to help us in doing that.

Profile photo of malcolm r
Member

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.

Profile photo of malcolm r
Member

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

Profile photo of Josh Green
Member

Malcolm – sorry to have not come back to you sooner. On your first point, we agree that consumers should be shown the cost of Government policies. In fact, in a recent report we published on the challenge of decarbonisation it formed part of our first recommendation.

We have carried out extensive research comparing the Ofgem approach and our single unit price approach because, as you say, this is a complicated area that requires a rigorous approach. Our research told us that 8 in 10 people could identify the cheapest deal when presented as a single unit price, compared to just 3 in 10 using the Ofgem tariff comparison rate. We recognise that there is a lot to do in fixing the energy market and making it an easier place for consumers to navigate requires more than action to improve tariffs, but we think a single unit price is a step towards driving real competition in this market.

Profile photo of malcolm r
Member

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.

Profile photo of malcolm r
Member

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?

Member
Jackie Keen says:
10 September 2013

Frankly, I am amazed that the British public have meekly accepted the diabolical system that gives everybody constant headaches trying to work out what to do about the conniving ,
constantly changing charges of utilities bills. We are told we must ‘SHOP AROUND not just once,
but all the time. Has anybody given a thought to how exausting that ridiculous advice is?
For old age pensioners, many of whom do not not have a computer,so no access to the internet,
how are they to shop around ? an exhausting task even for the IT literate.
The elderly are unable to query their bills ,and fearing facing increasing debt, just pay whatever is
demanded. In winter we hear of numbers of old people dying of Hypothermia. An outrage and a blot
on the Government’s “care of it’s citizens” which is what it exists for, isn’t it?
So much for Privatization, trumpeted to give us the right to |Choose. Well, hands up all those who
choose to be ripped off in order that private companys can pay their executives VERY LARGE
salaries?
I suggest it’s high time to RENATIONALISE, along with all our other assets that were sold off to give
us ‘CHOICE.

Profile photo of malcolm r
Member

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!

Member
terri says:
23 August 2014

All standing charges seem to have been introduced and enforced through Off gem, to recover lost revenue. The only thing I can see when looking at all of the information I have read, is that standing charges apply to whether or not consumption has occurred and deeming into a contract(i.e. clicking a switch as soon as you enter or take on a property) or not deeming into a contract with these energy companies seems to be besides the point. If the energy companies have reported mass profits through out the years, this just means that their profits continue to rise because they have found a new way to increase what they consider to be losses. This being said .. Does anyone know of any company or organisation other than the central Government who can accrue revenue for no reason? The standing charges still apply to empty properties. When looking into the electricity Act 1989 and Gas Act.. they both are clear about deeming into a contract. So if no contract is deemed by the form of consumption , or for those people affected by zero to very low consumption the matter of standing charges raises a question. Why should anyone pay for something that isn’t used. Pipes installed and meters fixed is something the companies supply as standard with initial builds, the usage of these and the consumption of what runs through them is what people ideally should be paying for. supply and demand was created by these companies , yet now further down the line, these companies are now regulated by necessity to protect the public and protect themselves from themselves ensuring safer and better controlled ideals and environments, the demand and the supply and just simply being there now seems to warrant a charge. if they do nothing they get revenue, if they do something they get revenue.. Utility companies seems to have jumped into a never ending stream of revenue, even when they initially had to lose out like everyone else. Now they have this never ending stream of revenue regardless of whether we use it or not, the question needs to be asked .. is this legal and if so is this morally right? who thought that charging any of the public or business’s for something they don’t use and use the phrase “well its there and you get charged for having in place” really does have any foundation.
People are worrying more about a service and supply to keep warm or to see in the dark and some try not to use this when they really should.
The government was warned about privatisation years ago.. this seems to be the result, companies competing against each other and finding new inventive ways to accrue revenue at the cost of the general public when they have no right or reason . companies are becoming greedy and using different variations of reasons and complex answers to justify what should never have been allowed. The simple truth is cost are high, rates are confusing, unless you are working for a utility company , you have no real chance of understanding their charges or predict your future bills.. This is the result of too many smart a***s getting together to dupe the general public while the companies report profits yet complain about losses .

I don’t know about you lot but head wall and bang continuously spring to mind. One price for all, the only exemptions should be to those on lower income struggling to meet their daily lives. Companies should consider their social purpose to their customers and well as to the environment.

Profile photo of pdfbt40
Member

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.

Member
steve says:
20 October 2014

Hi,i just wanted to chime in,I’m with british gas for both gas and electric and have a key and card meter.Having health issues i am currently on benefits.
I never use hardly any gas during summer,in fact £10 pounds see me through from about the end of
march till about now(October).Recently i have put about 50 or 60 pounds on my gas meter and have only recieved about 6 actual quids worth of gas!This has wiped me out financially and simply cannot afford these standing charges.How can they justify this?Somebody told me gas will be cheaper this winter because of it but how can i trust a company that basically doubles my bill when it feels like it,how can the goverment allow this!btw i know some pensioners who also are in my position and wont be out of debt until at least January,I pray we have a mild winter until then.
It’s absolutely criminal:(

Member
chris says:
9 December 2014

just found out about the standing charge after not having gas on for almost a year. went to top it up with a tenner to find out im £89 in debt.wtf. rang up southern electric to find out why and they tell me about the standard charge.
guy on the phone tells me its written clearly on their website.

Going on holiday?

One more thing to do before you go – check your meter to make sure you’ve got enough credit to last until you get back! Even if you’ve turned all your appliances off, the meter will still collect the daily standing charge and any weekly repayments towards any outstanding balance you may owe.

Make sure you’ve also got enough credit for appliances you have left on, such as your fridge and freezer. If you run out, there’ll be nobody home to start the emergency credit. And nobody wants to come home to a defrosted freezer!

its in the going on holiday section. not bold, not highlighted.
im a single parent and cant afford holidays, why would i look in the going on holidays section!

this is a blatant rip off. i used gas for 3 weeks last year, and will probably use the same again this year. and its 90 quid before it even starts.
not happy

Profile photo of malcolm r
Member

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.

Profile photo of pdfbt40
Member

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?

Profile photo of malcolm r
Member

Martin, the dual-unit tariff has, as far as I know, been abolished. (I happen to think the dual unit charge tariff in principle was a fair way of recovering fixed costs as it was capped – you reverted to a lower unit charge after reaching a particular usage).
We now have unit-only charges (from very limited providers such as Ebico), or standing charge + unit charge from most providers.
I believe we need that choice – preferably from more providers – to give consumers a choice that best suits their usage.
I believe the standing charge is good for most – providing that charge only reflects costs that are not related to energy consumption. It should be approved by Ofgem.
I am not in favour of the “simplicity” proposed by Which? I think it is based on a false premise and distorts the market by introducing cross-subsidy not based on any ability to pay. So I think your last comment may be misplaced? We may be of the same view? I’m not sure.

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Member

Sorry, meant Which, not you. Oops.

Member
chris says:
9 December 2014

thanks for the replies. was proper fuming earlier lol. im thinking of just scrapping the gas, getting an electric heater, and use that 1 month a year, then tell Southern Electric to stick there meter somewhere dark and cramped.
i’d only use elec heater it for an hour in the morning/evening. so pretty sure id save a lot more cash than paying the standard daily charge malarkey.

only thing now is, my electric is with them as well, so will be shopping around for one thats cheaper than SE.

thanks again for all your advice

Member

Next time you shop at Tesco, examine your receipt. Is there a separate standing charge to cover store maintenance, deliveries, running costs? Of course not! These costs are covered by the mark-up on the products they sell. Why should energy be any different? To me it is obvious that the fairest pricing system *for everyone* is a unit cost only. The more you use the more you pay. If you hardly use any then you hardly pay any. Simple. The standing charge always has been a rip off. It guarantees that regardless of how much energy you use, you will always owe a substantial amount to the provider every period. With a standing charge, cutting down on your usage has less of an impact on your bill, making it harder to be frugal. The concept of a standing charge makes absolutely no sense to me.

Profile photo of malcolm r
Member

“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.

Member

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.

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JILL says:
10 October 2016

I absolutely agree that standing charges should be abolished. It makes bills much more complicated than they need to be and makes comparing different energy suppliers’ prices a nightmare. We should pay for what we use, nothing more, nothing less, and just have the price per kw/hour as our method of calculation of our costs. A further point, why can’t the units on gas meters represent kw hours? All meters seem to be different – I had a modern one in my last home, the reading of which I had to times by 11 to get the approximate kw hours, now I have an older meter where I have to times the reading by 31 to get the kw hours – the actual correct method of calculating kw hours is horrendously complicated, surely the meters could be adapted to show kw hours?

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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.

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I agree with Jill.

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

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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)?

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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.