Standing Charges

[Svejk]

First my electric supplier and now my gas supplier have introduced Standing Charges apparently at the government's behest. I only use a small amount of either so these charges will represent 40/50% of my fuel bills. Am I subsidising people who use a lot of fuel? Has everyone been subjected to these charges or is it only (poor)people with low usage? And, most importantly, are there any suppliers out there who haven't introduced compulsory standing charges?
I've put this in 'personal finance'. We should start a 'fuel bill' category, lol.

[baza]

I think most of the rip off merchants have standing charges, I fail to see why, you don't pay a standing charge when you fill up with petrol.

[factor-fiction]

I think the standing charge may already have been there on your bills but was dressed up as a higher rate primary rate charge for the first X units ( a figure you will normally exceed) and a lower rate secondary rate for the remainder.

As part of the process of reducing the number of available tariffs in order to make comparison easier, the providers now have to offer a fixed standing charge option, although they could set it at zero of they want.

I know there are fixed costs associated with billing, fitting meters etc but I think it would make sense to abolish fixed charges altogether and just accept that the cost per unit will go up. It may also discourage excessive use of electricity

[Svejk]

Yes Factor, that appears to be their reasoning. I was wondering if they were being economical with the truth, because I'm a low volume user, and I couldn't go on a higher tariff sans standing charge. Indeed, did the Gov say we had to go on the lowest tariff or just be offered it.
It makes people like me, who put an extra jumper on, feel like saying 'sod it' and banging the heating on before January,lol.

[factor-fiction]

You can go on any of the tariffs they offer. If the 'no standing charge' one is better for you then switch to that.

[factor-fiction]

I have done quite well out of the current deliberately complex systems because know our month by month consumption, I shop around regularly, maintain detailed spreadsheets, pay by DD and get paperless billing discounts.

But I can see the present system needs to change. I think the government should appoint Martin Lewis to advise them. I also wonder if rather than trying to introduce more competition (more suppliers) and speed up switching they should go for better competition.

Why not ask all suppliers to put in bids to be the governments 'preferred supplier'. The government would choose the cheapest supplier and then introduce and push a simple switching service which doesn't require spreadsheets, online access etc

[sir.prize]

factor - be careful. EDF have discontinued Direct Debit and Double Fuel discounts. No doubt other companies will follow suit.

[Buenchico]

>>>EDF have discontinued Direct Debit and Double Fuel discounts. No doubt other companies will follow suit.

They have no choice. OfGem has banned them.

OfGem has also forced power companies to abandon tariffs that allowed users to pay only for what they use (albeit usually at a higher rate than others), without a standing charge. My gas bill used to total about £30 over a full year. Because of the introduction of a standing charge, it will now be about £110 per year.

Thank you very much, OfGem!

[factor-fiction]

I am sure the changes will adversely affect savvy switchers like me (who was subsidised by those who couldn't be bothered to switch or look for cheaper payment options or weren't in a position to take advantage of things like DD or paperless bills).
But I think the system had to change.
I agree with Buenchico- I think Ofgem and the government's insistence on things like 'move everyone onto the best deal' may have made things worse (with everyone ending up on the same worst deal).

I lost faith in ofgem about 5 years ago when my supplier at the time (Utilita) attracted new members with an attractive deal and was then allowed to levy a one-off retrospective charge because of an unexpected spike in wholesale energy costs. Ofgem just let them do it

[dzug2]

..Am I subsidising people who use a lot of fuel?..

No - quite the opposite. They have been subsidising you if they have being paying the same unit cost as you

The cost of providing and servicing a meter is pretty much the same whether you use only a few units or many - so a fixed charge for it makes sense

[Svejk]

The meter is necessary for me, the customer, but equally so for the supplier. How could they operate without one? I could just as well charge them £100 a year rent for the meter. Anyway, the amount required to 'service' a meter is negligible. The standing charge goes to cover various operating costs, green policies and people that don't pay their bills yet can't be cut off. A form of tax,
if you like. An extremely unfair tax if levied regardless of use.
Oh, and I did pay a higher unit rate to have standing-charge free tariff.

[Buenchico]

I take your point, Dzug2, but a supplier was happy to offer me a tariff without a standing charge. It meant that I paid nearly double the normal rate for first 2680 kWh (per year) so, if I used quite a bit of gas I'd effectively pay the standing charge by a different method of charging. However if I used very little gas I'd pay less than through a standing charge.

As I've stated, the supplier was happy with that arrangement. I was also happy with that arrangement. So why should an external body interfere in a commercial agreement where both parties were satisfied?

[factor-fiction]

The answer. Buenchico is that the number of tariffs had to be reduced to 4 in order to simplify the comparison process and they felt, rightly or wrongly that a fixed charge + single unit rate was better than the dual rate system that you and I have had. I think the standing charge option is easier to understand, but as some may use a low standing charge and high unit rate while others use a high charge and low unit rate it is still difficult to compare suppliers. Maybe the regulator should insist on a cap on the fixed charge or insist that all use the same fixed charge so that comparisons of unit rates are straightforward.

[Svejk]

On a lighter note, I think they're expecting to decrease prices next year. Regardless of the reason you call them they're desperate for you to sign up to a long-term fixed tariff. I somehow doubt its because they have our best interests at heart. ;))

[dzug2]

..As I've stated, the supplier was happy with that arrangement. I was also happy with that arrangement. So why should an external body interfere in a commercial agreement where both parties were satisfied?..

All in the name of 'fair' competition, Chris.

Markets only actually work when there are a large number of buyers AND sellers