Hi @The_Dom

The standing charge (SC) comprises many different elements all of which change from quarter to quarter and the average of these charges, which have to be predicted by energy suppliers in advance, will change whether you are looking at a one year period or two year. You could say that the SC for the Standard Variable Rate is the only accurate version. The SC also varies from area to area as well. The other element to consider is that the the energy supplier might trade a slightly lower SC for a slightly higher unit charge (within the cap) and hope these balance out over the contract. To some extent it depends on their particular mix of high, medium and low usage customers that they have. Someone might list the elements that make up the SC but I'm keeping it simple at this point.

Peter

I don’t know which contract had the lowest standing charges but I would have thought a longer you are tied in, the lower they should be.

Hi @Lpen Not true unless the SC is going down in the long term.

At the moment the trend for SC is upwards meaning longer term SCs are higher. The SCs are currently under review because low users are unable to significantly reduce their monthly cost. During the summer my SC is ten times the amount of gas I use but only a small fraction of my winter heating costs so I put up with it.

Here is a link to what charges are applied to make up the SC.

https://www.moneysupermarket.com/gas-and-electricity/standing-charges-explained/

Peter

PS Looking at the information below here I've managed to reduce my gas usage to the point where the SC is a significant percentage of my gas cost. You could say this is the price of going green. Ho hum!

@The_Dom , @Lpen , @Skeck , @LozT-B and others who find their way here I found a rather lengthy document from Ofgem called: Standing Charges: Summary of Responses which goes into some depth about the SC and Unit rate and it had asked for questions from the public and supplies regarding this issue and it came up with this. Now, it’s a bit of a long read but the interesting bit comes in at page 16 where it looks at the comments and tries to provide answers and some of the difficulties associated with each option.

https://www.ofgem.gov.uk/sites/default/files/2024-08/Standing%20Charges%20-%20summary%20of%20responses.pdf

The one that interested me most is reproduced below as a supplier comment:

Q 1.5 A heightened burden of compliance was also referred to as a constraint to
innovating with zero standing charge tariffs. Suppliers indicated that whilst the
relevant conditions of the Gas and Electricity Supply Licences (SLC 28AD 32 and
33) allow for alternative tariff structures, they also require the supplier to firstly seek a direction from Ofgem and to assess each customer’s charges under the
tariff within the relevant Charge Restriction Period. One supplier noted that “we
would find it very onerous to provide evidence to Ofgem that we are still
compliant with the price cap across all customers and all regions - and this is an
onerous assurance that would need to be repeated every time the price cap
changes.”

So from this it would appear that it is Ofgem (not the suppliers) that have put an obstacle in the way of zero SC tariffs so it would appear that, far from Ofgem helping customers, it is actually impeding the process with regulations that prevent customers being offered a better deal (significantly reduced SC). Anyway, there is a lot to read in that document but before you blame your supplier for not offering a tariff that is fairer to you then bear in mind that there are a lot of regulatory hoops that each supplier has to jump through before you even get access to a tariff. This is on top of the requirement for each tariff to pay its way otherwise they go out of business.

I hope this provides the information you were looking for. Whether anything will change is anybody’s guess but at least the situation is being reviewed. The one thing everyone can do is look at ALL of the available tariffs out there and try and work out which is the best one for you. I’m not offering any advice but my suggestion is to gather detailed information about your energy usage and try a number of switch sites to see if there are any common results. Being a forum volunteer maybe I shouldn’t be suggesting that but being on the wrong tariff is no good to anyone if you are paying too much and end up in debt.

I sincerely hope that helps

Peter

PS I also sincerely hope this is not my last post

Hiya!

@Peter E I just spotted your post so I hope you don’t mind a peer-review from me.

As far as I can tell, everything in there looks good. One of the goals of Forum Volunteers here is to provide the best advice we can, even if that sometimes means suggesting leaving OVO if it’s in the best interests of the individual customer. Just as long as you’re not trying to make money out of it by doing things that’ll give you kickbacks, you’re good in that regard.

I also take the view that being on a bad tariff is not in the customers best interests and I’ve said that many times before without issue, so I think you’re also good in that department too.

Your comment is actually pretty useful! Far from heading to the Bin, I think you’ll find it gets a few upvotes. :)

Hi @Blastoise186 Thanks for the confirmation I hadn’t gone too far. Having run down my gas usage to something that is very minimal I hadn’t really noticed how annoying/frustrating it is to realise that you can’t do anything about the SC. For me it’s an annoyance. For a lot of people it takes a significant proportion of their income and I had been having quite a chat with @Chris_OVO about the issue of how this can be fixed but basically it can’t be fixed with one tariff. The way it can be fixed is by energy suppliers offering a range of tariffs with a different ‘bias’ towards either SC or Unit Cost and I only learnt today that even the suppliers were complaining about Ofgem’s rules regarding zero SC tariffs. Unfortunately customers target the suppliers when they should be venting their anger at Ofgem. The very organisation that is there to be their champion. Hopefully something will change.

Cheers buddy

Hey @Peter E,

Thanks for sharing this with everyone and hopefully we’ll see some great discussions off the back of it. I’d agree with you that it’s important that every customer looks at their current tariffs and any benefits that come along with them. Everyone has different positions in life and there’s no one size fits all approach. Standing charges are still a challenge for many and hopefully we’ll see some progress on this front in the future in terms of how these are considered. 

I don’t know what you mean about this being your last post as we love having you here and hopefully i’ll have the chance to meet you again someday! 

I think Peter was just worried about getting kicked off the Forum with that post.

Which definitely won’t happen!

I think so too and they’d have to take me with him  We’re big @Peter E fans here (inside joke as me and Peter have been talking about big fans recently!) 

But you already know I am your biggest fan… Right…?

There is no ‘one size fits all’ plan as far as standing charges are concerned. There is no getting away from the fact that a supplier’s costs all have to be met, and if he’s to remain in business, he has to make a profit. The price cap - applying only to the standard variable tariff (in OVO’s parlance, Simpler energy) - specifies a maximum for the standing charge, which includes a small amount for the supplier. The supplier can charge less, or offer other tariffs with different conditions. 

If the standing charge is reduced, the unit price will have to rise. A smaller standing charge would help low users, but higher unit prices would be hard on high users - large families, for example, or those with essential power-hungry medical equipment. However you try and massage the prices, any gain for one group will lead inevitably to a loss for another. 

To the question of different standing charges for what appear to be similar tariffs, Ofgem allows for extra expenses in some cases. Payment by Direct Debit is relatively low-risk for the supplier, but those who elect to pay on receipt of bill don’t always do so. Debt collection is a costly business, so rates are higher for those who pay on demand.