Why does my standing charge go up 80%? Energy companies pile on torment – The Guardian

Energy customers who receive details of how much their energy bills will rise in April are preparing for higher costs — but the big jump in fixed charges has already surprised many.

For the millions of customers who implement a variable rate tariff, the daily fee for electricity, applicable whether or not you use any energy, will jump, with some set to pay 80% more when it takes effect in the spring.

While many have expected unit prices to rise, spurred by the increase in the wholesale cost of gas, they question why other charges have increased so much. One observer I contacted a reader last week about what she described as an “inexplicable” rise in the permanent electric charge.

One customer of SSE (now owned by Ovo), said the rise in unit price from 20.6p to 28.46p was “reasonable in the scheme of things” but questioned why the standing fee rose from 24.11p to 43.39p on the day.

Its annual bill is set to rise around £300, with permanent electricity costing more than £70. “It’s the energy price that changed, not the delivery system, so I’m struggling to understand how that can be justified,” she says. Ovo did not comment.

On social media, customers from a wide range of suppliers have posted increases of around 20 pence a day, or £73 a year.

One Twitter user posted that on his mother’s bill, standing charges for electricity had nearly doubled, while another complained that her fee had gone up from £8.43 to £13.43 a month “before I even turned on the light bulb”.

Another wrote: “I can understand the higher unit prices, but not the standing fees. Even if we cut our use off, we should pay that.”

Standing charges are a daily fee for gas and electric customers and are added to your bill regardless of how much energy you use. Ofgem doesn’t put a cap on this part of your bill – it’s up to suppliers how they break down unit prices and fixed cost below their total cap.

However, it makes assumptions about how to do this and, bafflingly, She publishes the average standing fee on her website. These findings suggest that as of April 1, direct debit customers will typically pay 45 pence a day for the electricity provider — up from 25 pence a day now — and 27 pence a day for gas — from 26 pence now. These increases add £76.65 a year to the average bill.

Ofgem also suggests that the highest flat fee is paid by those who have a prepaid counter, or settle their bills with cash and checks.

For prepaid customers, he suggests the standing fee for electricity is typically 50p per day, and gas is 37p. For cash and check customers, they suggest a standing electric fee of 51 pence per day and gas 32 pence.

These are in line with changes that many service providers are informing customers about.

British Gas notified customers of its permanent fee For electricity, it will be 45 pence for those with a direct discount, 50 pence for prepaid meters and 51 pence in cash and checks. The permanent gas charges will be 27p, 37p, and 32p, respectively.

Shell Energy recently warned those living in eastern England that the charge for permanent electricity had risen from 24.01p to 37.92 pa per day, or £138 per year. It’s not as big as some, but it’s still a 57% rise. The rate per unit of electricity increased by 40% to 29.24 pixels per kilowatt-hour.

By comparison, its permanent gas fee is set to increase by just over 4%, but the cost per unit consumed is set to rise an astonishing 81% from 4.05p to 7.34p per kWh. Other suppliers impose similar increases.

Joe Malinowski, founder of price comparison website TheEnergyShop.com, says permanent electricity charges have nearly doubled since January 1, 2019, when Ofgem’s price cap was introduced. After that, the average standing electricity fee for customers paying by direct debit was 22.77 pa per day. On April 1, this is set to rise to 45.34p. Over the same period, he says, permanent gas charges rose 5.4%.

Standing fees cover a range of costs that suppliers face. Rory Stoves, of comparison site Energyhelpline, says these costs include network costs—operating and maintaining the system, a supplier of last resort scheme, and things like a warm home discount.

The stoves say that grid costs “inevitably go up, especially when inflation is high, due to higher costs for wages, materials, etc.”

But a much larger part of the increase comes from the “resource of last resort” scheme – each family is expected to pay an amount That’s billions They went to save clients from failed companies.

Last week, Cornwall Insight energy analysts said they expect annual dual-fuel bills to average £2,900 in October.

“The regulatory changes ordered by Ofgem are already set to add around £30 to the standing fee per client,” says Andrew Enzor, Cornwall Insight’s managing consultant. “Since then, there has been a wave of company failures, each requiring a bailout, the cost of which is shared by all consumers.

“We calculate that the cost will add another £35 per year per family. Both are added to electricity bills, at a time when families cannot afford them.”

Stovs says that with 29 companies failing in 2021, there is a high cost associated with taking care of their customers. “Balances are protected when people are switched to a new resource, but there is money lost because companies invested some of it, so it needs to be recovered,” he says. This is added to the standing electricity fee, since every home has a supply, unlike gas.

For customers who want to lower their bills, standing charges, unfortunately, aren’t something you can do much about. When the power market is more competitive, there are sometimes tariffs available without a flat fee, but they have higher unit prices, so it’s only worth switching if you use very little.

Currently, most of us are stuck with our current provider and the potential for further spikes.

The stoves say the “resource of last resort” component at current prices “depends on what Ofgem knows so far about the cost – there may be more on the next cap as well”.

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