UKC

I've just dared to look up the current rates for my gas/electric supply - gulp.

Could someone explain why the hell the my standing charge gone up so much? Isn't this supposed to support infrastructure? How is that affected by market rates for energy supply. It seems that I will be getting royally shafted regardless of how energy efficient I become (i.e. freezing my ass off) in the near future.

Are we being conned?

Standing charges affect the poor and low users more. It should clearly be rolled into the unit price.

It has nothing to do with royalty.

It's a result of the government rescue package for all the suppliers that went bust when their customers on now unsustainable prices were either shoved onto other suppliers or in the case of bulb essentially nationalised.

These costs were put onto the standing charges rather than on the unit price.

They went up to pay for cleaning up the mess caused by bailing out all those energy companies that folded a few months ago. There are many ways it could have been paid for. All of them suck.

It's mainly down to OFGEN being useless and not setting sensible resilience tests for energy providers. When the crisis hit loads of suppliers went bust ...and that's before things got really bad. The supplier of last resort scheme is proving to be very expensive.

https://www.theguardian.com/money/2022/mar/06/why-is-my-standing-charge-up-...

Seems to me that the Standing Charge is the closest thing to a flat tax that's possible in terms of extracting monies from consumers. Why get high users to pay more when you can shovel more of the load onto the poor instead?

Well, yeah, that would be one option but a large, skint family would be a high user, so it's not that easy to wave your hands and fix it. Poor and high user aren't mutually exclusive.

There probably are fairer ways, don't get me wrong, but there are a lot of unintended consequence with most if not all of the solutions.

I'd say as well as unfairly blaming the suppliers above (even if they are not saints) for regulatory failure, you're mostly wrong on this as well. The vast majority of the genuinely poor (high energy users or not) have already been forced onto prepayment meters and have protection of supply rights. Yes this crisis will force many more 'newly skint due to energy cost increases' to follow the prepayment shift and is of course inevitably discriminatory to a degree, especially for big familes (albeit that being a choice), including richer customers more easily affording energy saving measures.

It is totally ethically wrong that the poorest users on prepayment meters pay the highest standing charges in 2022 and this crisis should have forced change to that already.

I think we're agreeing here.

I'm saying that piling the cost onto the unit rate instead of the standing charge isn't any better for the poor. 

Where did I "unfairly blame the suppliers"??? You really need to stop reading words that aren't there. Seems to be less and less resemblance between what I say and what you hear these days.

The "regulatory failure" thing is a bit of a weak argument though. All the regulator could/would have done is force the companies to spend more on being resilient, making smaller ones uncompetitive. All of the shouldawouldacoulda scenarios that came with more resilience came with slightly more expensive energy, which nobody wanted, so we're paying a lot more for it now prices have spiked.

I apologise if I misrepresented you but it's hard to spot when as a very bright guy you use such silly emotive language (especially all options "suck"); and you fail to mention the avoidable causes of those failures, down to OFGEN and the government, in your reply (and don't hint at the other separate cost rises). The level of regulation is a choice and cheaper energy due to many more competitors (who don't even hedge and take fewer other precautions) is a false economy leading to worst national resilience of energy supply in any shock and/or massive additional costs. We had similar foolishness in saving money on reducing our national gas storage capacity. I'm glad if we agree it's not wholly the fault of a company if OFGEN gives them a licence, as the company failure expectations of shocks should be in the long term regulatory costing model.

The primary cause of the current energy problems is energy being used as a weapon.... which seems to happen in a big way every couple of decades at least on average. It's also a problem the west haven't learned to build in more resilience for such events, despite the extra costs during good times. It's not me coming up with this, nor just politicians, but energy consutants like Cornwall and companies like Octopus, who have been complaining about too lax a regulation system for energy shocks and a need for reform.

I said "They went up to pay for cleaning up the mess caused by bailing out all those energy companies that folded a few months ago". Your linked article said "Since then, there have been a wave of company failures, with each one requiring a bailout, the cost of which is being shared by all consumers." Don't see how you are ok with their wording but take issue with me "blaming" the companies.

I think you're violently agreeing with me here. We could have had a more resilient, more expensive market, but we went for cheaper because that what everyone wanted.

I can't wait for a time in my life when I can afford the type of property where I can live off grid. I find the idea really appealing, Especially now. Although probably best not to wish my life away I suppose.

Which does remind me of a major divide that's brewing, "the energy divide". If you can afford solar panels and a Tesla then you don't have to suffer the pain that those who can't afford such things. Being poor is now very expensive. You pay more tax on your car, you have to pay extra to drive into cities, your fuel costs a fortune and you can't sell your sunlight to energy companies and you probably don't have very efficient heating. 

I know it's always been that the rich pay less for many things, but with this energy crisis, I'd say that is more true than ever. It's no longer the elite that get the benefits, it's those who are just a bit richer than average. Which, in a way is a good thing. It means more wealth to more people, but then it's more obvious to those who are left behind.

Tricky problems to solve ahead.

I disagreed on the first point due to your omissions and I apologised if I misrepresented you (I do this regularly... when's the last time you did).

I disagree on the second point... I think most people would want more robustness built in at a slightly higher cost if they knew the risks. It's the job of a regulator to do that on behalf of government and for politicians to hold them to account. I think OFGEN drifted too far from their remit into supporting a wider, too risky market. We have an estimated  £130 billion debt to pay back now of which a good proportion would have been avoided with stronger regulation and better built in national resilience.

Electricity costs are increasing faster than petrol/diesel costs and solar panels can only offset part of that for local journeys.

I'd have liked to see our gas storage kept open too. And domestic production not cut back so heavily back in the Blair/Brown days (although that would have only left the same stupid decision to be made in the stupid decisions era anyway). But it's how we roll. "nnn crisis can be traced back to to lack of regulation in the nnn sector" is the mantra of the century.

Edit to add: 

My thinking differs here; I don't think they would. Everyone just wanted the cheapest bill possible. Same reason everyone wants rid of the green levy now even though that's (in a very analogous way) paying for not being screwed in the future.

Domestic solar panels aren't the win you think they are. They've never been more expensive than now, and the payback is minimal unless you can use it all yourself. And even then you won't save that much in the UK winter.

I'm fairly confident that investing your solar panel cash in grid scale renewables and battery storage is better for the individual, and better for society, but interested to hear thoughts on that.

Our national culture is to always go for cheapest and only complain about it when the shit hits the fan. We have (over the reign of the Queen - to keep it topical) basically had a combination of Labour governments giving us "free" services and Tory governments saying "tax is bad" and we've ended up with this culture of wanting quality services (resilience being a quality) but not wanting to pay for them.

Government borrowing, as well as transferring a lot of the repayment to future generations, hides the real cost - in 5 years time, will anyone be able to say (or care) how much of their tax is paying the loan for today's policy decisions.

One good thing that may come out of this is that we might end up with a long-term energy strategy. We might not agree with bits or even most of it, but I think almost any such strategy will be better than no strategy.

Maybe because the mantra is often true. I'm not even convinced the current regulations that led to this mess saved us anything (light touch regulation has certainly cost us hundreds of pounds a year minimum per household in additional debt repayment on top of future bills)... and protection against major shocks is a vital government  function. 

Costs are increasing in the last couple of years after decades of drops from a much higher level than now.

I think it matters much sooner if it ends up on the official government balance sheets, just as it did when student loan debt was forced to be included.

This is why I said if you have a Tesla (or any EV of course). I expect you can always use all the Solar as you have a massive battery pack in your EV which has a high demand for energy.

If you just have solar, you may have a point. But coupled with an EV I think they are a bit of a game changer.

Only if everyone does it. And there will always be an overhead charge for the instructure. Owning your own panels is an almost build and forget for 30 to 40 years. But in terms of cost efficiency you would be right if large providers didn't have the massive overheads they do.

If the consequences of a solution apply to a majority and are transparent enough even for someone like me to clearly see, they aren't unintended.