Standing charges differ by contract

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!

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.

Why are Standing Charges different for Fixed and Variable accounts? My enquiries are deflected by suggestions that Ofgen set the Standard Charges but this is not true. Ofgen only cap the Standing Charges that may be applied. As a green consumer who has reduced energy usage through fitting solar panels and heat pump at a time when these were not subsidised it would appear that I am now paying for others to be subsidised to do so? I am already being penalised by higher fuel prices caused by Russia/Ukraine conflict when my choice of renewable power only for last 10 years or more means I am not utilising the fuel that has increased in cost? I am also subsidising the deficits accrued from those unable to pay increased bills because they continued to use fossil fuel sources.

It’s all about what costs can be locked in and for how long upstream. In general, the longer you commit, the easier it is to get some form of “committed use discount” - and the easier it is for OVO to negotiate with upstream sources.

This doesn’t just apply to energy supplies - it works the same for just about everything these days.

I seem to think the standing charges are connected to the National Grid tarrifs and are based on electricity usage. Due to the accounting differences between fixed and variable tarriffs this may mean your supply fits into a different band and hence charge.

@STUVO As @Blastoise186 said, a longer fixed term gives the supplier the option to negotiate a lower unit rate that may translate to a lower SC to make the tariff look competitive for low users whom it affects the most.

As for the other points, life is basically unfair. You make a long term decision based on the current situation predicting that it will carry on and then the world goes crazy. As you've got solar panels you've cut out some of the worst electricity costs but a heat pump was probably not a good move. Who knew all this would happen.

I bought an EV (because its an automatic) two months before the fuel tanker driver shortage so I was very happy not to be paying £1.90 a litre for petrol but later on my unit cost went from 15p to 34p so that was not so good. If you think that anyone is ahead of the game on this then they either have a time machine or were very lucky. I don't have solar panels because I don't see how they pay back. I don't have an ASHP because they are stupidly expensive. I do have an A2AHP because it was cheap and it keeps my house warm without using much gas (10% of previous usage) and the tariff I'm on means the heat pump is cheaper than gas most of the time which is when it runs.

If you are a true green consumer then you can't really complain at the cost of making that decision. I've always said in my blogs that the only true path to going green is the one that is affordable otherwise it's not going to happen.

Peter

Hi @STUVO,

I can see our forum volunteers have already stopped by here to answer your question.

This thread may also help: