Increases and standing charge...

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  • AndyR's Avatar
    Level 1
    Hi.

    A comment and a question...

    Just had the email giving me my increase etc... my two points are that the email is worded so that it appears the government are the ones increasing the price when in fact OFGEM have given the go ahead for energy companies to instigate price increases to a certain level and it is those companies that are choosing to implement the increases to the max allowed. Not withstanding that wholesale gas per therm is currently less then 200p/therm (it only jumped above 300p/therm for a very short amount of time and only above 400p/therm for a couple of days in November). It was previously hovering around 50 to 80/therm so while it has raised in cost it is by nowhere as near the amount energy companies are 'shouting' to all and sundry.

    My question though is about the standing charge which lets face it, is something like a mythical entity to most and thats how energy companies like to keep it. Why is my standing charge increasing by almost 74%? From 28p per day to 44p day (approx). This is a secondary increase by stealth because as per usual, this seemingly arbitrary figure is not being mentioned in any increases but just a single innocuous line on my bill.

    An explanation of this increase would be appreciated.
  • 12 Replies

  • Best Answer

    UKDave51's Avatar
    Level 3
    Best Answer
    @AndyR My understanding of the increase on the standing charge which by the way had the backing of OFGEM was to offset the cost to energy companies taking customers from others that went under.
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    Last edited by Han_EONNext; 04-08-22 at 09:09.
  • Best Answer

    Beki_EONNext's Avatar
    Community Manager
    Best Answer
    @AndyR Heya it's Beki here. 👋
    There are many areas this covers from the generation of the energy, to the distribution throughout the UK & costs for infrastructure. All of these have increased alongside the wholesale cost of gas. The standing charge increase is mainly because of two factors; the rise in metering and network costs with the upkeep of pipes etc but also with other companies closing business, it means there are less companies out there to pay for the upkeep. So for example, if 5 of your friends were splitting a £50 pizza bill and 2 people were unable to pay, it would mean that 3 friends would end up paying more each.
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  • meldrewreborn's Avatar
    Level 53
    @AndyR

    I agree with UKDave51. The energy companies claim that even at the prices allowed by the yet to be applied price cap from April that they are still losing money on price capped tariffs. In those circumstances we're all facing high prices.

    I have to say that the OFGEM methodology is very complicated and includes a host of factors that most of us will never even have considered. That energy companies are charging the maximum they are permitted to is understandable if they really are losing money. But some companies claim to use only green electricity, and one supplier claims all nuclear energy - so should not be affected by the hikes in the cost of gas. But nonetheless they still charge the maximum they can.
  • meldrewreborn's Avatar
    Level 53
    @Beki_EONNext

    From the OFGEM press release announcing the new price cap

    "Network costs: The main driver of this increase is the recovery of Supplier of Last Resort (SoLR) levy costs (£68). A supplier acting as a SoLR can make a claim for any reasonable additional, otherwise unrecoverable, costs they incur. These levy claims are paid to energy companies by the distribution network companies and recovered from consumers via their charges." Its customers who eventually meet these costs not intermediate companies, and whether there are more or fewer of them.

    So the driver is the costs of handling the migration of customers from failed companies and any balances owed. The amount in the price cap for network went from £268 to £371 for the 6 month period.

    ​​​​​​​Also the cost of smart metering across the latest 2 price cap period came to £21 per annum. We're all paying through the nose for this kit whether we want/need it or not.
  • KimS's Avatar
    Level 1
    I’m sorry Beki and no disrespect but it is exactly that an increase by stealth and unjust as it penalises already struggling customers to pay off debts from failed companies. IT IS NOT OUR RESPONSIBILITY, pizza or no pizza!
    I’m fed up getting generic replies when I ask Eon next for justification why my standing charge as gone up by 6 times and 4 times on my electricity and gas supply. I have now contacted my MP as it is a national scandal and the sooner it is revealed to everyone the better.
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  • meldrewreborn's Avatar
    Level 53
    @KimS

    your ire is misdirected in this case Suppliers are only able to charge within the limits posted by OFGEM and these reflect past not current prices in the wholesale energy market. Prices particularly the electricity standing charge have been impacted by the decision to load costs of bailing out the contracts of the failed energy suppliers last year - these costs have been factored in to just the electricity standing charge costing us all circa £95. Under the price cap all energy suppliers are charging almost exactly the same rates - only fixed rates are different.
    Current Eon Next and EDF customer, ex Zog and Symbio. Don't think dual fuel saves money and don't like smart meters. Chronologically Gifted
  • KimS's Avatar
    Level 1
    Thank you for the reply.
    I understand that the standing charge increases are due to the failed companies debts, but that does not change the fact that the increases are unfair. Would we pay for everyone’s shopping if Tescos went bust? I’m guessing not!
    Ofgem’s guidelines are just that, Guidelines, and the energy companies choose to offload this debt to us, the customer.
    I’ve contacted my MP, hopefully this issue will be addressed and if it only makes a small difference to someone’s bill, well that’s something isn’t it?
    I fully understand the external influences which have increased the unit price on our energy bills, but there is absolutely no justification for the increase in our standing charges. Given the current rate of inflation, my standing charge should have gone up by 1.4 pence per day and not the 51 pence increase per day I am currently being charged.
    Eon next repute to be a 100% renewable energy company so indeed, why are we paying any extra on our unit price at all? Are those increases also paying off bad debt? Or is it just capitalising on the current situation and the fact we cannot switch supplier at the moment, so there is no competition within the market?
    Either way, questions need to be asked and a satisfactory reply required. Totally fed up with hiding behind the Ofgem guidelines and generic replies which do not address the questions….
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    Last edited by KimS; 18-07-22 at 19:56. Reason: Additional comment
  • meldrewreborn's Avatar
    Level 53
    @KimS

    the OFGEM rates under the price cap are backed by legislation - they go way beyond advisories.
    as to Tesco you already pay for things that other people steal. The problem was that if the failed supplier debts to the wholesale market were not met then some of the wholesalers would have failed too bringing the whole system crashing. The government could have taken the hit but whee does the government get its money from? And don’t forget Bulb effectively nationalised with huge debts/losses being sustained.
  • KimS's Avatar
    Level 1
    Hi, thanks for your response but being backed by legislation is not the same as the energy companies being forced to raise prices to the cap. The fact that they are, is purely a business decision to create the most gain from a difficult situation. If that gain turns into profit eventually, we all know who stands to benefit from that and it will not be the customers! The shareholders will reep any rewards.
    I totally agree that the Government, who after all, instructed the energy suppliers to take on the customers of failed companies, should be the ones to take on the debt and that would then fall on the tax payer. Ultimately, it will always be the consumer or tax payer footing the bill. At this present time, no one needs any excessive charges added to their already inflated bills. It might only be £95 extra per annum but that might make a small difference to someone. The increase for me is way beyond £95 and I’m guessing there are others like me who have come off fixed deals and suffered huge price hikes. I am not bemoaning the fact that, due to external pressures, the price per unit has increased and, despite Eon Next claiming to be a 100% renewable energy company, I understand that the price of electricity is governed by global prices. Also, unjust considering we, as a nation, are moving towards renewable energy provision. But that is the way the global economy works. Maybe it is time for change? But that is another subject entirely!
    I am waiting for a response from my MP, hopefully she is more sympathetic to the issue than Eon Next are, and is moved to address it. Whatever you say, the instigation of these price increases in the standing charge, over and above the rate of inflation is unfair. It doesn’t happen with other failed companies that existing companies (consumers) pay off their debts and it shouldn’t happen here.
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    Last edited by KimS; 21-07-22 at 21:10.