Electric standing charge

[Treadx]

I am just coming out of a 6 year contract with Engie and the standing charge has gone up from 56p a day to £32 a day nearly £12000 a year before electric.
I just cant afford that and have been calling suppliers for days for prices.
I need to reduce the supply and downgrade the meter but just get passed around.
it would be impossible to run a small business with these charges and need help so any advise will be welcome

 

[antropy]

I am just coming out of a 6 year contract with Engie and the standing charge has gone up from 56p a day to £32 a day nearly £12000 a year before electric.

That's crazy!

Paul.

 

[WaveJumper]

Good lesson for others here, make sure you have something lined up before your current contract comes to an end. Unfortunately this is not unheard of and hopefully one of our members who works in this field can point you in type right direction.

 

[Gyumri]

I am just coming out of a 6 year contract with Engie and the standing charge has gone up from 56p a day to £32 a day nearly £12000 a year before electric.

The maximum rate anywhere in the UK doesn't exceed £1 per day. There is no cap it seems however on the daily standing charge - only on what can be charged overall.

so input from someone familiar in this field would be useful.

Get energy price cap standing charges and unit rates by region

Electricity and gas standing charges and unit rates by payment type for regions within England, Scotland and Wales.

www.ofgem.gov.uk

 

[Newchodge]

The maximum rate anywhere in the UK doesn't exceed £1 per day. There is no cap it seems however on the daily standing charge - only on what can be charged overall.

so input from someone familiar in this field would be useful.

Get energy price cap standing charges and unit rates by region

Electricity and gas standing charges and unit rates by payment type for regions within England, Scotland and Wales.

www.ofgem.gov.uk

I don't think there is any kind of cap on commercial utility usage.

 

[Gyumri]

I don't think there is any kind of cap on commercial utility usage.

I think a cap applies to the overall price, although Engie states that they don't impose any standing charge and yet the OP says he's being charged £32 per day.

Maybe they should change their name to "Genie" who is only released from the bottle after you've signed up.

 

[pentel]

We used quoterunner for our last utilities renewal.

www.quoterunner.co.uk

 

[NickGrogan]

There is no cap on standing charges. I've priced a few sites that pay more than £300 per day in standing charges. They'd be really pleased to see a cap of £1.

The increase in charges has come from the Government, more specifically Ofgem's TCR - Targeted Charges Review. More about it here https://www.ofgem.gov.uk/publications/targeted-charging-review-decision-and-impact-assessment

The idea is that those with larger meters put more strain on the grid and so pay more. Sounds reasonable but the bands are lower than expected, so quite small meters can be charged high fees.

It sounds like the OP has a "large" meter, but a low actual usage. This makes the standing charge seem very high.

Unfortunately, as it's a regulation, it applies to all suppliers, although some are slower to implement than others.

If you message me, I'll see what I can do.

 

[Stephen Ball]

I am just coming out of a 6 year contract with Engie and the standing charge has gone up from 56p a day to £32 a day nearly £12000 a year before electric.

Wow - that's a hefty increase. At that level of standing charge are you Half-Hourly metered?

If so, then I'd suggest a check to ensure you're in the right banding would be helpful. Although QuoteRunner helps smaller users and non-half hourly customers, there's a corporate arm which will certainly be more beneficial in this instance to talk it through. Happy to make contact and could go from there.

In terms of price caps - there's no caps on commercial energy I'm afraid, standing charge or otherwise.

 

[Poplars]

I am just coming out of a 6 year contract with Engie and the standing charge has gone up from 56p a day to £32 a day nearly £12000 a year before electric.
I just cant afford that and have been calling suppliers for days for prices.
I need to reduce the supply and downgrade the meter but just get passed around.
it would be impossible to run a small business with these charges and need help so any advise will be welcome

I am just coming out of an energy contract with British gas and have been quoted £46 a day standing charge from £3.17 , I am only a micro business, is there anything that can be done about this?

 

[NickGrogan]

I am just coming out of an energy contract with British gas and have been quoted £46 a day standing charge from £3.17 , I am only a micro business, is there anything that can be done about this?

Happy to have a chat about it, message me and we'll set something up

 

[Poplars]

Happy to have a chat about it, message me and we'll set something up

That would be good thank you

 

[NickGrogan]

That would be good thank you

I've just messaged you

 

[Clodbuster]

Excuse me for being stupid - why do we have a daily standing charge??

 

[Newchodge]

Excuse me for being stupid - why do we have a daily standing charge??

Greed on the part of the utility companies.

 

[IanSuth]

Excuse me for being stupid - why do we have a daily standing charge??

Theoretically it pays for 2 things

1. The infrastructure, even if you use no energy the pipe/wire is still running to your property and needing to be maintained irrespective of usage. That is why standing charge varies from area to area to recognise the differing cost of supply in different places

2. A slush fund to cover for energy company insolvencies. When there was the spate of domestic supplier insolvencies a couple of years ago users were shifted to others some of your standing charge pays for the costs of that.

 

[Newchodge]

Theoretically it pays for 2 things

1. The infrastructure, even if you use no energy the pipe/wire is still running to your property and needing to be maintained irrespective of usage. That is why standing charge varies from area to area to recognise the differing cost of supply in different places

2. A slush fund to cover for energy company insolvencies. When there was the spate of domestic supplier insolvencies a couple of years ago users were shifted to others some of your standing charge pays for the costs of that.

But why are those things not included in overheads (or undergrounds ) as they would be for any other business?

 

[IanSuth]

But why are those things not included in overheads (or undergrounds ) as they would be for any other business?

Like everyone the energy suppliers have fixed costs and variable costs

Ofgem allows them to try and cover their fixed costs with a fixed charge

If you were running an energy company wouldn't you take advantage of that ?

It is Ofgen who have created (allowed the continuation of) that business landscape - it would be stupid for any energy company to hamstring themselves by going to totally variable income based on usage only as they would only get the lower usage customers for whom standing charge is a ;larger % of total charge.

 

[Clodbuster]

That is rather a LOT- I'm paying £178/year and I suspect all around do similar so about £4800 around me. Multiply that out over all the houses 39 million?? then businesses on top - a nice little earner.

 

[Newchodge]

Like everyone the energy suppliers have fixed costs and variable costs

Ofgem allows them to try and cover their fixed costs with a fixed charge

If you were running an energy company wouldn't you take advantage of that ?

It is Ofgen who have created (allowed the continuation of) that business landscape - it would be stupid for any energy company to hamstring themselves by going to totally variable income based on usage only as they would only get the lower usage customers for whom standing charge is a ;larger % of total charge.

We are all supposed to be reducing our energy usage. The standing charge means those with a higher usage het charged less per unit used. Hardly sensible.

 

[IanSuth]

That is rather a LOT- I'm paying £178/year and I suspect all around do similar so about £4800 around me. Multiply that out over all the houses 39 million?? then businesses on top - a nice little earner.

The failure of Bulb and the gov stepping in cost the exchequer £246m apparently (cost of bailout - proceeds of sale to Octopus)

UK energy bill payers could bear cost of Bulb bailout

The PAC has said that UK bill payers may have to bear some of the cost of the government's 2021 bailout of utility Bulb Energy.

www.power-technology.com

 

[IanSuth]

We are all supposed to be reducing our energy usage. The standing charge means those with a higher usage het charged less per unit used. Hardly sensible.

How would you do it then (other than nationalisation) in a way that incentivised competition whilst protecting those on prepay/unable to pay ?

Only way i can think of is a price per unit up to x then a much large unit price after that but you would need to vary by house size/construction/number of inhabitants/disabilities to be fair

 

[Newchodge]

How would you do it then (other than nationalisation) in a way that incentivised competition whilst protecting those on prepay/unable to pay ?

Only way i can think of is a price per unit up to x then a much large unit price after that but you would need to vary by house size/construction/number of inhabitants/disabilities to be fair

There is no competition in a monopoly supply situation.

 

[IanSuth]

There is no competition in a monopoly supply situation.

But energy retailers werent a monopoly - i saved loads by moving my domestic energy around - i only came off a fixed rate last Oct which i had been on for 2 years and agreed to the weekend it became obvious the prices were going silly

 

[Newchodge]

But energy retailers werent a monopoly - i saved loads by moving my domestic energy around - i only came off a fixed rate last Oct which i had been on for 2 years and agreed to the weekend it became obvious the prices were going silly

When you changed supplier, did they put in new cables and pipes from the National Grid to your house?

 

[Poplars]

When you changed supplier, did they put in new cables and pipes from the National Grid to your house?

I haven't changed supplier, they said that the meter has been reclassified with the new laws from ofgem and it is a half hourly meter

 

[Newchodge]

I haven't changed supplier, they said that the meter has been reclassified with the new laws from ofgem and it is a half hourly meter

Sorry, I was replying to the post I quoted, from @IanSuth

 

[NickGrogan]

Greed on the part of the utility companies.

Required to by the regulator, Ofgem dont allow no standing charge tariffs for domestic usage any more.

 

[NickGrogan]

We are all supposed to be reducing our energy usage. The standing charge means those with a higher usage het charged less per unit used. Hardly sensible.

Could you show me a domestic tariff where this applies? Genuinely interested.

 

[NickGrogan]

When you changed supplier, did they put in new cables and pipes from the National Grid to your house?

The supplier doesn't own the cables, the pipes or the meter.

There is competition when new connections are made, so you can choose who installs the initial pipes/meter.

The meters are owned by different companies, and they compete to service the different suppliers. You could also choose to have the existing meter removed and a new meter installed by the company you choose. Of course you'd have to pay for it.

 

[Newchodge]

Could you show me a domestic tariff where this applies? Genuinely interested.

I probably phrased it clumsily. The total bill is less per unit the more you use as the standing charge is spread over a greater number of units.

 

[Newchodge]

The supplier doesn't own the cables, the pipes or the meter.

There is competition when new connections are made, so you can choose who installs the initial pipes/meter.

The meters are owned by different companies, and they compete to service the different suppliers. You could also choose to have the existing meter removed and a new meter installed by the company you choose. Of course you'd have to pay for it.

But whatever comes through those pipes and cables does not come froom your own 'supplier'. So those whose contracts state they only use green energy do not only use green energy.

 

[NickGrogan]

I probably phrased it clumsily. The total bill is less per unit the more you use as the standing charge is spread over a greater number of units.

Would it be fair for those who use more to pay a higher fixed charge, given that the fixed charge is fixed?

 

[NickGrogan]

But whatever comes through those pipes and cables does not come froom your own 'supplier'. So those whose contracts state they only use green energy do not only use green energy.

Moving goalposts?

Gas is never green, but any emissions can be offset by your supplier or not. Whether this is a good idea is open to debate.

Supply side is more complicated as its impossible to accurately state where "your" power came from. But suppliers are required to show what power they bought and introduced into the grid, so for every unit of Green power that they say you're using, a unit of Green power has been added to the grid.

Are the electrons flowing from a solar panel or a gas turbine, no one knows, but switching to a green supplier increases the amount of green energy they're required to buy.

 

[Newchodge]

Would it be fair for those who use more to pay a higher fixed charge, given that the fixed charge is fixed?

No, it would be fair to have no standing charge, but to allow those whose higher usage is caused by, for example, disability, to pay a lower rate. The idea being that those who use escessively out of choice are encouraged to use less.

 

[NickGrogan]

No, it would be fair to have no standing charge, but to allow those whose higher usage is caused by, for example, disability, to pay a lower rate. The idea being that those who use escessively out of choice are encouraged to use less.

What about those with lots of children, those with poorly insulated houses, and those with serious illnesses like cancer? Should they pay a lower rate as well? Or a higher rate for excessive usage?

What about if they're disabled but wealthy? Should they pay less because they are disabled or more because rich?

What about disabled people who use less power due to their disability? What rate would they pay?

Seems like a very complex system.

How is it fair?

 

[IanSuth]

What about those with lots of children, those with poorly insulated houses, and those with serious illnesses like cancer? Should they pay a lower rate as well? Or a higher rate for excessive usage?

What about if they're disabled but wealthy? Should they pay less because they are disabled or more because rich?

What about disabled people who use less power due to their disability? What rate would they pay?

Seems like a very complex system.

How is it fair?

And complexity causes inefficiencies which mean higher overall total cost.

I just don't see how by the time you added in all the exemptions and special tariffs for particular user groups that it would be an easy system to administer or get right and would cost a fortune to run.

 

[SillyBill]

I am just coming out of a 6 year contract with Engie and the standing charge has gone up from 56p a day to £32 a day nearly £12000 a year before electric.
I just cant afford that and have been calling suppliers for days for prices.
I need to reduce the supply and downgrade the meter but just get passed around.
it would be impossible to run a small business with these charges and need help so any advise will be welcome

Sorry to hear that, you are not alone. We had a 2200% increase in standing charges from our last contract to new, and yes that isn't a typo. We pay £750 a month in standing charges now so c. £25 a day, add in the capacity charges and other bolt-ons we pay about £1000 a month out too...BEFORE a kwh of electricity is used.

From what I could gather, there was a reappraisal of standing charges and now your type of meter/KVA requirement determines a band and presumably suppliers then have some play to then leverage that with their own quotes. In any case, on a per kwh basis now, once I factor in standing charges, I pay a lot more per unit of electricity (landed cost is my cost as far as I am concerned) more than companies who use a fraction of the energy we do. So whereas being a reasonable SME user once meant we had a better rate to support a manufacturing operation like ours, we'd now get better rates if we were running a laundrette. What a way to support manufacturing jobs...

 

[Stephen Ball]

... From what I could gather, there was a reappraisal of standing charges and now your type of meter/KVA requirement determines a band and presumably suppliers then have some play to then leverage that with their own quotes...

Exactly correct.

Think of your electricity supply is being pigeon-holed like council tax banding.

Electricity suppliers have to pay these fixed costs depending which band you are in, and so need to include for these charges in their own quotes.