Why do standing charges vary from different energy companies?

We have a handy OVO answers topic on this here which I hope you’ll find helpful!

Lucy

Isn't it time that Ovo scrapped the daily standing charge altogether and built it into the unit charge? I just compared the price I pay per unit with that mythical average and it's way out. In the interests of slowing down climate change it just doesn't make sense to financially penalise those who are trying to do do their bit by changing to LED lighting, turning things off etc.

But the problem is that a separate standing charge is not transparent. The cost per kWh consumed varies according to how much you use, and the more you use the cheaper it becomes per kWh. You need a calculator to work it out. If Ebico can give a single per kWh price, why can't you?

But the problem is that a separate standing charge is not transparent. The cost per kWh consumed varies according to how much you use, and the more you use the cheaper it becomes per kWh. You need a calculator to work it out. If Ebico can give a single per kWh price, why can't you?

This might be the case for some other suppliers, SianiAnni but our price per kWh doesn’t fluctuate. For example, if your price per kWh for your electricity was 15p, then you’d pay this regardless of how much or how little energy you’ve used and regardless of when you were using energy (unless you’re an economy 7 customer).

Our daily standing charge is just one fixed amount that is taken each day. This also doesn’t fluctuate.

Hope this helps,
Lucy

I'm sorry Lucy, I obviously failed to explain myself very well.
Given that I have to pay a daily standing charge, regardless of how much or how little fuel I use, the cost to me of each kWh used is the standing charge plus the unit charge.
So if I use say 500 kWh of electricity in a year, the total cost to me is £100 (standing charge) + 500 x 15p. That works out at £175, or 35p per kWh, because I can only use those kWh if I pay you the standing charge.
And if I use 1500 kWh of electricity in a year, the total cost to me is £100 (standing charge) + 1500 x 15p. That works out at £325, or 21.6p per kWh, again because I can only use those kWh if I pay you the standing charge.
If I use 2500 kWh of electricity in a year, the total cost to me is £100 (standing charge) + 2500 x 15p. That works out at £475, or 19p per kWh. In this case the total cost per unit is approaching half of that for a 500 kWh per annum user.
So that's what I mean by saying the more you use the cheaper the total cost per unit becomes:)

I'm sorry Lucy, I obviously failed to explain myself very well.
Given that I have to pay a daily standing charge, regardless of how much or how little fuel I use, the cost to me of each kWh used is the standing charge plus the unit charge.
So if I use say 500 kWh of electricity in a year, the total cost to me is £100 (standing charge) + 500 x 15p. That works out at £175, or 35p per kWh, because I can only use those kWh if I pay you the standing charge.
And if I use 1500 kWh of electricity in a year, the total cost to me is £100 (standing charge) + 1500 x 15p. That works out at £325, or 21.6p per kWh, again because I can only use those kWh if I pay you the standing charge.
If I use 2500 kWh of electricity in a year, the total cost to me is £100 (standing charge) + 2500 x 15p. That works out at £475, or 19p per kWh. In this case the total cost per unit is approaching half of that for a 500 kWh per annum user.
So that's what I mean by saying the more you use the cheaper the total cost per unit becomes:)

Thanks for explaining this a bit more. 🙂

You've said that you'll only use those kWh's if you pay the standing charge, but the amount you pay is completely separate to the standing charge, so this won’t be true.

You’ve given the example of if you used 500 kWh of electricity in a year, the total cost to you is £100 (standing charge) + 500 x 15p. This is correct. Broken down, this would mean you would pay £75 for your electricity consumption and £100 for your standing charge. This won’t equate to you paying 35p for your unit price as this amount if fixed and won’t change so it will always be 27p for your daily standing charge and 15p per kWh (assuming that there isn't a price decrease or increase!)

I really hope this helps explain things a bit more. 🙂

Lucy

I see, SianiAnni hates standing charges, and Lucy_OVO loves them, while not a piggy in the middle I can see both sides of the debate. However in my opinion the standing charge system is flawed. Let me explain, if I buy petrol/diesel I pay a price pre litre, and depending on the location of where I buy it determines the price, but I can quite simply compare. I live in the N Yorkshire Dales, where prices are high, distribution in rural areas dictates this. I do all my shopping in Darlington, and as a result always buy fuel there, it's much cheaper( I should rephrase that) it's less expensive there! 🙂 With a standing charge on gas and electricity, and in most cases variations by area of the kw price it seems to me the domestic energy companies want, and get, the best of both worlds. The daily standing charge also suits energy companies because it makes all comparison sites, door knockers and canvassers making totally untrue claims about how much they can save you by switching. Unless they know exactly what your annual consumption is there is absolutely no way to compare, quite simply because every supplier is free to, and does, set their own standing charges. Now I know exactly how much fuel I use and what it costs, from time to time I do checks on other suppliers, and yes there are cheaper alternatives to OVO, but I'm not one to switch for the sake of as much as £50 pa saving, I feel there is more to OVO than saving a pound a week! At the same time, the standing charge is to my mind high, and as it seems to be increasing bit by bit, sometimes more than a bit, the day could come for me to say , no this is now unacceptable, I hope not but I can envisage it. To end all the frustrations of this. all energy companies should sell as petrol and diesel is sold, by price and location, the customer chooses both ( in that he can move from an expensive area if he so wishes) At 73 years of age, spending 54p every day before I get out of bed does go against the grain a bit, well it would, thats what I earned in a week, and that means 7 days for doing a paper round until I left school. So now Lucy take off the OVO hat, even if only to yourself, admit I right 🙂