Updated on 15/01/25 by Abby_OVO
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 electricity 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.
Unfortunately the standing charge has increased for many reasons.
1. The cost of all the failed suppliers apart from Bulb has been loaded on the standing charge and front loaded rather than being spread over a very long time as some energy companies suggested. There will be more of these costs still to come unfortunately and the government could yet decide to load all the costs of Bulb onto standing charges, many billions of pounds.
2. The number of people eligible for the warm home discount has increased. These are funded via the standing charge currently.
3. Ofgem moved some of the network related costs from the unit rate to standing charges. At the same time network related costs have increased as inflation has risen, both material costs and wages have gone up. We have all seen what has happened to inflation generally. Also we need upgrade the infrastructure as we move to renewable energy, heat pumps and electric cars, hence again the standing charge is increasing. There have been recent changes where new generation capacity is not required to contribute to the upgrade costs, this again will transfer costs from the unit rate to standing charges.
These are just some examples, there are others i could give.
The majority of standing charge has nothing to do with OVO, they are simply passing on costs from others and government schemes.
Unfortunately there is no good news about the level of standing charge unless the government decide to shift costs to general taxation or to the unit rate which would benefit low energy users. While inflation is high, standing charges will continue to be under pressure unfortunately.
There did use to be tariff with low or no standing charge, but higher unit rates but these have long gone. For a short while there were even tariff with a fixed monthly cost irrespective of how much you used. My mum was on one of these tariff, these tariffs didn't last long for obvious reasons…
Personally i would prefer to see lower standing charges and some of the cost shifted to unit rates to benefit low energy users, but some people would be worse off obviously.
