Why have Standing Charges also increased so much with the Energy Crisis?

OVO are charging according to the OFGEM price cap rates - yes even the EPG doesn’t affect standing charges.  There’s lots on the OFGEM website about what goes into the standing charge - its guaranteed to give you a headache within minutes.  But it's pointless asking OVO - as at the moment they are not computing their own version of the standing charge - nor are the other suppliers.  A lot of the increase in April was to compensate suppliers for their cost increases because of taking on customers from failed supplier, their credit balances and moneys owed by the failed companies to other parts of the supply system - to prevent a cascade of failures elsewhere.  Much of these will drop out next April -in theory.

this will answer more questions than you’ve already thought about:

Your energy bill explained | Ofgem

@meldrewreborn Yes, OVO are charging the maximum that Ofgem permits for the Standing Charge - but I think that is open to challenge.

If you read the Ofgem link that you sent it shows that the Standing Charge is “money goes towards maintaining, running and upgrading the networks”, plus some other things.

Those costs did not increase by the amount that Ovo bumped their charges up by. They should therefore be made to itemise what they are including in the Standing Charge and justify the increases.

Ofgem does not set the Standing Charge, it sets a maximum, and the charge made by the supplier is supposed to have some basis in what the actual costs to the supplier are.

So what you’re saying is that Energy Suppliers should lose even more money by making the standing charges have a 99% discount??? That doesn’t make much sense to me if I’m honest!

Hi @AngryOVOCust that isn't how the world works unfortunately.

We are in a country where these companies are not owned by the state. They are commercial companies. The regulator is there amongst other things to set the maximum price a supplier can charge for the standard charge on the ofgem price cap. In a free market suppliers can then do what they want.

If you don't like the way it works they lobby your MP or add a petition on the Parliament website for example

https://petition.parliament.uk/

As it is a free market, some companies have decided to undercut the ofgem price cap standing charge, e.g. Octopus. So shop around if you want the best price, just like you would when buying anything. 

Ofgem has been considering removing some or all the standing charge and incorporating the costs in the unit rates. There did use to be tariff with no or low standing charges but these have long since gone. 

 @Jeffus wrote;

….that isn't how the world works unfortunately.

We are in a country where these companies are not owned by the state. They are commercial companies. ...In a free market suppliers can then do what they want.”

Are they really free to do what they want though. They are operating in a regulated industry and there are also consumer protection Laws.

If they tell the consumer that the Standing Charge is to cover the cost of electricity delivery, then they cannot really charge for something else. Why are they afraid to itemise and justify what they are including in the charge?

Also Ofgem does not set ‘a’ maximum Standing Charge it sets multiple maximum Standing Charges based on population density and terrain to reflect the real cost of delivering electricity to those areas.

Ofgem cleary see that the Standing Charge is based on the physical reality of electricity delivery. In addition I am quite sure that Ofgem do not want to be seen as actually setting the Standing Charges, they are setting a maximum. I am quite sure Ofgem does not want suppliers to take that maximum figure and simply adopt it as the charge.

As a result I think if Customers banded together and demanded a breakdown of what Ovo is including in Standing Charges and then a justification of why those items increased so dramatically in April then Ovo will have a case to answer.

If suppliers charge less for the standing charge than the maximum allowed, they can then charge more for the units supplied.  Such a move would favour lower than average users of energy and penalise larger users.

But since energy SUPPLY companies all claim to be losing money at the moment, they will set their charges to maximise income to ensure losses are as small as possible.  Remember 20+ companies went bust last year - is that what you want?

I think you are on a loser with this notion.

The wholesale cost of gas increased resulting in the cost of electricity generation increasing, it did not affect the cost of delivering electricity to the home which is what the Standing Charge is supposed to be for.

I expect the unit cost of electricty to rise substantially but not the Standing Charge. I can avoid the unit costs by cutting back on usage but I cannot avoid the Standing Charge.

You have your argument back to front. Raising the Standing Charge penalises small users of electricity who are subsidising larger users through inflated Standing Charges.

@meldrewreborn ; I meant to add OVO CEO Stephen Fitzpatrick’s Cirencester mansion uses over £850/month on electricity. He suggested that, to stay warm, people should  'cuddle your cat, eat porridge and do star jumps' !

Why should my Standing Charge be increased to pay for his unit electricity costs?

It’s true though. Doing star jumps and eating porridge really can help to warm you up. And cuddling up to a St Bernard definitely helps too! :P

And none of that was Stephen’s idea anyway. He most likely wasn’t involved in coming up with those suggestions.

As for his electric bill? I’m pretty sure he pays it himself somehow...

@Blastoise186 

As for his electric bill? I’m pretty sure he pays it himself somehow...

Well that is the point he doesn’t. I pay part of his unit electricity costs because his company made an unjustified, inflated, increase in the the Standing Charge.

Let the Standing Charge reflect true delivery costs, and let the unit cost reflect the true generation cost. That is better for the environment and Mr Fitzpatrick would be paying his fair share.