Energy companies' standing charges

[StandingStill]

If the standing charge is the charge for being connected to energy infrastructure, it shouldn't go up due to the cost of fuel, should it? So why is it going up?

I saw a a graphic the other week that showed that now utility suppliers are lucky if they make £63 per domestic customer.

With companies like Centrica and Shell, their domestic arms, so British Gas and Shell Energy respectively, are loss making. Their producing arms are the ones coining it in.

"Well I guess British Gas can hedge on any basis it wishes given that it has a wholesale arm that sets whatever price it wants. "

It can't set whatever price it wants - the price is determined by the international gas market.

"And it can also watch its wholesale arm edge out any smaller companies by charging whatever price it wants. "

If the gas production arm of British Gas charged a higher price than smaller gas companies could buy at in the international gas market then they just wouldn't sell any gas.

"Doesn't mean we should pay for that. "

You pay the market price for gas which is mainly determined by supply from Norway, previously Russia and Middle Eastern LNG.

"As well as pay British Gas just for being British Gas."

Don't quite understand this point.

Of the gas supplied in the UK 50% is produced in the UK by the likes of BP, Shell, Total , a third comes from Norway gas mainly Equinor, 5% used to come from Russia which is Gasprom and most likely now at zero and the rest comes from LNG mainly QGPC, Adgas, Sonotrach.

@RedWingBoots

"With companies like Centrica and Shell, their domestic arms, so British Gas and Shell Energy respectively, are loss making. Their producing arms are the ones coining it in."

+++

I don't think there is an understanding of the difference between energy producers and energy suppliers. BP, QGPC and Equinor all produce a lot of gas but they don't supply it.

"As well as pay British Gas just for being British Gas."

You aren't paying British Gas for being British Gas. You are paying them for being your domestic energy supplier the same way Ovo, EDF, Scottish Power, Octopus, etc are domestic energy suppliers.

My energy company is going to be approximately £300 light because I will pay for what I have used but not the standing charge. Have stopped my DD so they can't help themselves to my cash!

The cost of bailing out Bulb energy adds £150 to everyone's energy bills.

www.ft.com/content/cbe1c23e-e929-42ec-8f0d-58065802c53e

They can get a Court warrant to come in and put you on a pre-payment meter if you don't pay all your bill. If you have a smart meter, I've heard rumours they can do it with out coming to your property. I suggest you email them and say you can't afford the DD. If they then refuse to offer to help you, ask for a deadlock letter and complain to energy ombudsman.

Also from 1st October your £400 rebate should help pay the standing charge anyway.

@1dayatatime ever have the feeling you are wasting your time?

You could bother to explain - which people like Martin Lewis and other consumer experts have been explaining for months - how our gas and electricity is supplied with all the different players involved but some people can't be bothered to listen.

It's been interesting to read all the 'informed' explanations, but this actually sums up the very detailed explanations.

This is where privatising profits, partly privatising losses, and competition leads, to less and less competition and eventually monopoly. Companies can not suck up losses, so we pay, if the government steps in......then we pay. These huge companies both wholesale and supply know this, they have everything to gain, especially so when you consider that gas and oil are finite resources, and that we need to cut our reliance on them. If we succeed in reducing carbon emissions by reducing reliance on fosil fuels they really need to be in a position of having monopolies over production and supply with the freedom of price control to a smaller consumer base. Its not as simple as arguing using the logic of supply and demand to explain prices. Irrespective of whether these resource are finite or infinite if less is 'demanded' they benefit from having monopoly control. They still have the largest share of a smaller market, rather than a smaller share of a larger market.

The government really need to be investing not paying people's energy bills. Free markets rely upon government investment into R&D because the free market monkey sick on huge profits is so drunk he can barely sit up, let alone be a rational animal. His only logic is profit now, profit in the medium term, let government pay for developing alternatives. So instead of developing alternatives he will seek to overcome diminishing demand through eliminating competition. Electric cars anyone? Do you think Shell and BP love an electric car? do these large conglomerates that extract and supply gas love the notion of wind farms? nope, especially not if they must forgo weaker demand, competition, costs of R&D and loss of profit in the short term.

Yep this absolutely

🤦‍♀️

@CherryGenoa

Bulb energy is effectively a nationalised energy supplier and look what it is costing the tax payer - no profits there..

www.ft.com/content/cbe1c23e-e929-42ec-8f0d-58065802c53e

Plenty of companies, not just energy, will be profiteering from the current situation. Perfect time to ramp prices up beyond any extra costs and blame it on the cost of raw materials, etc.

You need to think of the standing charge as payment for the network infrastructure, ie getting the gas and electricity to your house.

So will they reduce the standing charges once all of this has been paid for? Thought not! Plus profits have gone massively up so I don't buy that argument anyway.

I was discussing this with my DDad who worked in energy for years.

Companies and Ofgem consider very carefully how to balance extra costs between the standing charge and the per kWh price.

A lower standing charge/higher per kWh charge benefits lower users whilst a higher standing charge/lower per kWh charge benefits people who use more.

In general the energy industry see that poorer people have tended to use slightly more energy than average, as their houses may be less well insulated, they are likely to have less energy efficient appliances, are more likely to have many people living in the house.

Some of the lowest users are second homes, so reducing the standing charge could disproportionately benefit many very wealthy people.

And yes the standing charge seems very high (especially when you have gas and electricity), but with electricity it is currently roughly equivalent to the cost of 1 kWh- a lot of people could tweak their energy use to reduce usage by that much per day (batch cooking, use air fryer, cut down tumble dryer use, wash at cold/20c/30c where possible rather than higher temps).

The increased per kWh cost will have a much larger impact for most people.

Thanks for this very clear explanation.

I noticed that the standing charge this time around isn't rising as much as it did back in April?

But the cost of gas per KW seems to be doubling?

Another great explanation.

Thankyou

@lpaisjw

sadly, I fear pointing out the fucking obvious isn't going to help here.

@StandingStill

I get that you're pissed off, but no one here put the standing charge up. You asked about it, people are trying to help you understand the reason for it & you're just being rude.

NONE of us are thrilled about it & yes I agree that many/most of our suppliers are 'arms' of wholesalers so I'm not sure I 'buy' the losing money on supplying power because if the wholesale price for these companies either (yes it explains the smaller companies going under, but not the big ones that are both.).

but it's not people here causing it, so I think you need to calm down a bit.

You're going to end up on a pre-payment meter. Have fun with that. You'll be paying even more as it is the most expensive way to use fuel.

You have used their infrastructure to get the energy to your house.

you can't choise how much you pay.

you don't pay the supermarket 5p for a tomato because that's what it cost to grow it. You have to pay for all the overheads if getting it to the shelves as well.

Besides, they'll just put you manually ir electronically on a pay as you go meter anyway, you won't 'win'

This is just cutting your nose off to spite your face.

The price cap level is lower for people paying by DD than people who don't. So each unit you use will cost you more, each day that extra cost will probably be more than the standing charge.

Plus if you don't pay enough they can cut you off and force you onto a prepayment meter, again much more expensive than DD.

Plus the standing charge is your cost for being connected to the infrastructure. If you don't want to pay then don't use their infrastructure- go off grid and have an oil or pellet boiler, plus loads of solar panels and battery storage (hope you don't want to cook or watch Tv on a very cloudy day in winter, or you might need a back up generator too). The cost and inconvenience of setting all that up might make the standing charge suddenly seem quite good value.

Does the standing charge rise even if you’re on a fixed rate tariff?

Nope.

You are not affected by the tariff changes until your fixed rate tariff ends.

Just be diligent in ensuring your meter readings are up to date, and you are getting regular monthly bills regardless of whether you have a smart meter or not. Some smart meters don't always submit reading correctly.

If they start estimating your readings when you come off the fixed rate tariff and do a proper reading you will be screwed.

Ok thank you.