Soldato
Why is the SC increasing by up to 50% again, the reason for the previous increase was due to the bail outs over covid, what is the reason this time? Specially at a time when everyone has been hammered by inflation and high prices.
Energy Prices (Strictly NO referrals!)
- Thread starter DXP55
- Start date
I shall respond in the same manner of the responses I received circa 6-12 months ago when I started complaining about the SC increases/problem - Suck it buttercup.
NOW the SC is a problem??... Oh the schadenfraude
They have us by the balls. Would be great to get rid of gas. Alas with a terribly insulated house it's not feasible so I hear.
Well they wanted you to believe this was the reason but it only ever made up a small percentage of the SC. Ofgem need to be more transparent about it.
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Soldato
Yeah, I've been spoilt with my three year cheap fix (RIP) so time to lube up and bend over I suppose.
apparently paying for customer debt (the main thing they are talking about) and more failed suppliers going bust.
My standing charge is 50% of my bill already, it's just silly.
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Soldato
We've been over this on this thread a few times now I think, but from what I understand, the standing charge is mostly not related to failed suppliers or supplier debt.
I can't find a source for it but I'm sure someone else has posted one before, and it showed only a few pence was to do with failed suppliers.
At the peak it was about 6% of the SC.
Soldato
same here, i cut back to almost nothing, yet the bill keeps going up
cannot see how my standing charge was about 20p for BOTH gas and electric 2 years ago
now its getting on for £1 every day
whats the difference? i get some for debt but the rest, i see it as just another way to get money from you
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It isnt.
The debt was the excuse needed to start a longer term increase of the SC, and I think now most of the debt has even been dealt with.
I dont know all of what has been lumped on to the SC.
But some of the stuff.
Funding to allow suppliers to write off debt, without them needing to take it from their now much healthier profits, or to use the court system. (doesnt go to grid)
Variable grid costs that have been moved from the unit rate to SC.
Funding to allow for unexpected costs, basically a profit margin bump in another name. (doesnt go to grid)
Increased funding for administration costs to the suppliers (this doesnt go to the grid), this includes things like marketing expenditure.
Funding for what Ofgem describe as some kind of adjustment, this as I understand it significantly contributed to the increased profits of the suppliers in the last set of accounts, has been mentioned by some press specifically. (doesnt go to grid)
There is very likely other stuff, but these are off the top of my head what I do know.
The grid currently takes less than half of the SC.
Also currently most political costs related to energy are taken as SC instead of from general taxation. (the one exception being VAT).
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Soldato
So basically what your saying is
The service charge is basically just a scam and a method for the energy suppliers to extract more money out of us rather than spend their profits on improving their service.
The service charge is basically just a scam and a method for the energy suppliers to extract more money out of us rather than spend their profits on improving their service.
Yeah, to me Ofgem have been stealthily increasing their margins as a means of assurance of having no more suppliers leave the market. They obviously aware if they announced a margin increase from 1.9% to the current 6.7% it wouldnt go down well, so it was done in stages under different descriptions.
Grid currently gets 36%. (including the variable costs moved to it so should be lower)
Smart metering 5.2%
In my opinion that should all be what SC is with a margin allowance on top. If we include the administration costs that go to suppliers the 6.7% becomes a whopping 51.7%, so currently more than half of the SC is going to suppliers now. Apparently the admin costs of suppliers now costs more than grid expenditure.
7.4% is on government policies which probably should be in general taxation.
Its only going to get worse because as it turns out the grid has been underfunded, we need capacity to hook up renewables and batteries to the grid, Octopus have recently revealed they have a 13 year wait to hook up some new infrastructure. But this is a legit cost increase, however it will be harder to take due to all the fluff Ofgem have been adding.
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Standing charge is an absolute scandal. It just shows how out of touch ofgem is and whose interest ofgem looks after.
I am on tracker combined standing charge is 70p now. It’s insane.
There are 28.mil house holds in the UK so on lower bound estimate, energy companies are making 20mil a day for doing nothing. That’s £7.3bil/year revenue or pure cream profit.
Well done ofgem you are truly the king of pins - looking after your cartel business super well.
I am on tracker combined standing charge is 70p now. It’s insane.
There are 28.mil house holds in the UK so on lower bound estimate, energy companies are making 20mil a day for doing nothing. That’s £7.3bil/year revenue or pure cream profit.
Well done ofgem you are truly the king of pins - looking after your cartel business super well.
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Soldato
I work in water sector and Ofwat are our regulator. They come under criticism too of course for various things but one thing they are continually hot on is minimising bill increases, affordability, vulnerable customer support and fair charging.
In contrast Ofgem appear to be very weak on the customer facing side of things. I don't know what they achieve on the wholesale side but they clearly have no desire to do anything about charging fairness or affordability issues and every decision they make appears to favour the energy companies.
Well it's not for 'doing nothing' is it, can't take people seriously who post such rubbish.
Soldato
Or perhaps you see it that way as you are on the "inside" of one one sector and the "outside".of the other so don't see as full a picture on Ofgem as you.do with Ofwat.
I'm not defending Ofgem, the above is purely a practical observation.
I wonder if forcing more and more people to consider / buy at home power generation is making them wonder how they'll continue to fund the infrastructure?I shall respond in the same manner of the responses I received circa 6-12 months ago when I started complaining about the SC increases/problem - Suck it buttercup.
NOW the SC is a problem??... Oh the schadenfraude
Edit - Also, privatise the profits, socialise the losses....a tale as old as time.
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Soldato
Yep sure I'm far more familiar with water regulation of course.
I've read many Ofgem consultations though and am continually left with that impression.
Take bad debt for example.
Water companies have to fight tooth and nail for their bad debt allowances in retail costs, set by the regulator every five years with no option to change that between price reviews.
What do Ofgem do when energy companies are faced with an increase in bad debt? Ah just throw it on the standing charge.
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Tell me what is there to do to have a meter sitting there in a property?
Operational cost is in the margins
For £7.3bil a year that’s 243,000 employees at a wage of £30k/year.
Clearly the combined industry employees by the operators in UK industry is not even close to that 243,000 people. So it is pretty fair to say they are doing bugger all with that revenue other than pure profit.
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Soldato
Like I said of course there are problems, but you'd be surprised at the positive things that the water sector has done.
Take social tariffs for example, to support lower incomes. Implemented in water, not implemented in energy.
And despite the news, there is billions in investment going into the environment from the water sector.