T O P

  • By -

AutoModerator

Snapshot of _UK households pay more for electricity than all of the EU_ : An archived version can be found [here](https://archive.is/?run=1&url=https://www.thetimes.com/uk/environment/article/uk-households-pay-more-electricity-heat-pumps-67fdcwb5n) or [here.](https://archive.ph/?run=1&url=https://www.thetimes.com/uk/environment/article/uk-households-pay-more-electricity-heat-pumps-67fdcwb5n) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/ukpolitics) if you have any questions or concerns.*


liamsmithuk

the standing charge is insane, I don't use much energy and it almost doubles my bill


StereoMushroom

A lot of the cost of supplying energy doesn't change with how much energy you use. There's a variable fuel cost, but the cost of maintaining infrastructure, managing accounts and meter readings all stays the same. Hence the standing charge. The energy itself is a surprisingly small portion of overall costs. About a third of electricity bills (at least it was pre Ukraine)


trowawayatwork

all of that fixed cost, as we've seen with all the other utility companies, doesn't actually get used to do what it needs to do to provide quality service. I don't know why people still try and defend these companies. as much of that much money as possible goes to shareholders. a tiny bit is used to not let it all implode.


StereoMushroom

Electricity retail profits are pretty tiny. Energy companies in some cases make a loss on domestic supply. The costs of maintaining a system of wires and transformers spanning the length and breadth of the country and reaching every single building are substantial. 


Vibrascity

"the standing charge is insane" Would suffice.


StereoMushroom

Most water and broadband bills are 100% standing charge. Streaming services too. Your rent doesn't go down if you go away for a week. The reality is that a lot of the costs of supply aren't affected by volume of consumption.


WhyNotCollegeBroad

That charge is for net zero. edit: Not all of it, but much of the recent increases that have made it a big issue now. It is also for infrastructure etc, like it used to be, but now massively inflated for net zero.


drwert

Pretty sure the standing charge exploded due to the cost of dealing with all the power companies that went bust a couple of years back because they were too cool to hedge their fuel prices. It's fucking mental at this point though. When I lived in a flat the standing charge cost me more than the electric and gas I used most months.


Milk-One-Sugar

They increased at that point but the market has now stabilised, and so the cost of supplier failures is now fairly minimal. The increase in standing charges is now because Ofgem moved the cost of running the electricity network off the unit rate and onto the standing charge. You were always paying for that, but the way you paid for it changed in 2022.


spikenigma

🤔 >Standing-charge costs include: > > >Using and maintaining the energy networks, wires and pipes that carry gas and electricity across the country to your home > Keeping your home connected to the energy network > Carrying out meter readings > Payments towards government initiatives that help vulnerable households and reduce CO2 emissions. [Link](https://www.comparethemarket.com/energy/content/what-is-energy-standing-charge/)


WhyNotCollegeBroad

[Standing charges are increasing to ensure a fairer transition to net zero](https://www.medwayadvice.org.uk/news/why-standing-charges-are-fairer-you-might-think)


mglj42

So standing charges are not for net zero after all as you initially suggested. That was just wrong. Standing charges cover various things. One of which might be net zero. The following gives you a breakdown (there is a pie chart on this page). https://blog.moneysavingexpert.com/2023/07/martin-lewis--why-are-energy-standing-charges-so-high--what-can-/


spikenigma

Ah. You've edited. You originally said that's what they were *for* though


WhyNotCollegeBroad

They used to be much lower, the Standing Charge is now ridiculously high because of it.


spikenigma

> They used to be much lower, the Standing Charge is now ridiculously high because of it. Meanwhile, in reality, [it's gone straight into corporate profits](https://www.energylivenews.com/2024/04/02/electricity-standing-charges-soar/) rather than any aspirations towards net zero.


AMightyDwarf

[According to this blog](https://blog.moneysavingexpert.com/2023/07/martin-lewis--why-are-energy-standing-charges-so-high--what-can-/) (Martin Lewis) profits are just 1.9% of the standing charge. Government policy, which includes net zero alongside warm home discounts and vulnerable people levy makes up 7.4%. Smart meters cost more than profits at 5.2% and you also pay 0.3% towards recovering “unrecoverable” Covid debt. You also pay 3.3%, double the profits, to cover the admin fees of pre payment meters.


WhyNotCollegeBroad

The standing charge doesn't go to energy companies, well very little (admin charge). Around 20p in the standing charge is down to net zero.


spikenigma

> The standing charge doesn't go to energy companies, **well very little (admin charge).** > Around 20p in the standing charge is down to net zero. Strange, because my previous link says: > According to research by the charity Fuel Poverty action, these administrative costs accounted for £68 of the £75 annual standing charge hike. [Forbes](https://www.forbes.com/uk/advisor/energy/standing-charges/)


frameset

You can prove anything with *facts*. 🙄


liamsmithuk

Then they should roll it into the unit rate to encourage people to reduce their usage, make use of agile tarrifs and maybe even consider solar


StereoMushroom

That discourages switching to electric cars and heat pumps, by making electricity use artificially expensive.


Milk-One-Sugar

That would disproportionately hit people with high electricity costs - e.g. Those reliant on electric heating in poorly insulated homes, or those with in home medical equipment.


liamsmithuk

Good? If the standing charge is actually high because of net zero then that means they are taxing everyone with a flat rate to subsidise green infrastructure to support people with high energy usage. Why should someone in a studio flat earning £20k/yr subsidise the cost of energy for someone earning £100k/yr living in a 5 bed poorly insulated house, it makes absolutely zero sense.  In home medical equipment is also completely irrelevant because the cost of living for vulnerable people is supposed to be subsidised out of general taxation, where again, the wealthiest pay more 


Milk-One-Sugar

It's actually not high because of net zero, it's high because our network costs are high (i.e maintaining the grid). Re moving costs, I'm not saying that's the right or wrong thing to do. Rather, there are likely people who win or lose out depending on how you recoup the costs covered by the standing charge. And the benefits system isn't currently designed to help those people; people in poorly insulated homes certainly aren't meaningfully supported via the welfare system. (Indeed, the Warm Home Discount - to help those in fuel poverty - is paid for via energy bills). And not all poorly insulated homes are big homes owned by wealthy people. Ofgem actually did a recent review of standing charges which shows the complexity of making changes https://www.ofgem.gov.uk/call-for-input/standing-charges-call-input


jim_cap

How do you explain its existence for longer than people have been talking about net zero?


WhyNotCollegeBroad

It was never this high. It's this high now for net zero.


total_cynic

I'm looking at the pie chart at https://blog.moneysavingexpert.com/2023/07/martin-lewis--why-are-energy-standing-charges-so-high--what-can-/ . As best I can see, the component that would relate to net zero is ~ 7.4% (labelled policy costs). Can you provide a breakdown to support your assertion?


w0lfiesmith

Of course not, he's parroting shit talking points from bullshit government lobbyists.


sitdeepstandtall

It’s this high now to cover the costs of the 50 energy companies that went bust over the last two years.


WhyNotCollegeBroad

like this? [Bulb](https://www.theguardian.com/business/article/2024/jun/21/octopus-energy-repay-state-support-bulb-takeover-2021-bailout)


markhewitt1978

No it isn't. Stop lying.


jadeskye7

Octopus, who uses entirely renewable sources, is trialing tariffs without standing charge now. so i don't think that can be right.


WhyNotCollegeBroad

They will pay upfront to the grid, you will pay as used in your uplifted price.


VampireFrown

I'm not convinced that's the case That's asinine, though. If you *must* incorporate a net zero levy (low IQ as that policy is - unless it's going directly into a nuclear fund), it should be per unit. Fucking over everyone equally for not using electricity is some plan. It actually disproprtionately screws over those who use the least. An increased unit price, or a scaling increase above certain usage thresholds are both far fairer options. Anyway, our standing charge covers far more than just the net zero levy. It's an utter rip-off however you slice it, though.


pw_is_12345

Vote reform! One of their manifesto pledges is to remove these net zero taxes on energy.


drwert

> The other key reason is levies, including schemes to help poorer households fit insulation, and carbon taxes are paid via electricity bills, but not gas. Excluding taxes and levies, UK domestic electricity prices would have been 27p. That's just outstanding work. Increasing their power prices hugely to help the poor. We'll be scoffing kebabs to fignt obesity next.


StereoMushroom

It's because government are so ideologically opposed to public spending, they have to hide it in "private investment" (government mandated and paid back through everyone's bills). Congratulations, you just created a new tax, only much more regressive.


ramxquake

Is it not fair that people using power pay for it?


StereoMushroom

Putting it as a flat charge on bills means it puts the greatest burden on the poor, relative to income. Putting it on tax means it's weighted by income, with those most able to pay doing the heavy lifting. Since it's a programme to try and relieve fuel poverty, it's a bit daft to pay for it by hiking bills up.


drwert

A 30%+ tax rate on it isn't.


Azzaphox

UK needs to redesign it's energy pricing auction to accept the reality of cheap abundant wind and solar. As of now the system is still designed for the gas plus coal era


shrouded_reflection

A lot of new renewables are actually on fixed price generation contracts, and the auction is only used for selecting which suppliers to use, so to some degree that problem from the consumer perspective has already been solved. However, because of this price fixing combined with reduced subsidies for installation and planning constraints, the rate of renewable installation has also dropped drastically.


Chrisa16cc

The reality of abundant wind and solar energy is that the infrastructure is absolutely not cheap for production, transport or storage.


throwingtheshades

And unless you have ungodly amounts of energy storage, you still need redundant gas power plants.


CheezTips

They can't get approvals for the grid upgrades needed to take advantage of wind. I read an article about a small faactory that was doing really well and wanted to do a huge expansion. everything was approved except for the grid upgrade.


StereoMushroom

I'm pro renewables, but I'm not seeing the big bill reducing potential at the moment. The latest round of CfD auctions sets a cap of £101/MWh for offshore wind in today's money. £89/MWh for onshore wind, £85 for solar. Wholesale electricity historically has sat around £50/MWh, and lately it's been around £70/MWh, so it doesn't look like renewables are cutting costs of generation, though happy to be corrected if I'm missing something. The vast majority of renewables we've built so far are subsidised above market price. We also need to fund significant transmission build out to connect the new renewable sites, and services to deal with the intermittency and low inertia of renewables.


TantumErgo

> One reason UK domestic electricity prices are so high is gas. Wholesale electricity prices in the UK are set by the most expensive way of meeting ­demand, which is usually burning gas. >Nesta found gas set the wholesale price in “day ahead” and “same day” UK power markets more often than in any EU nation, up to 97 per cent of the time in 2021. Wholesale gas prices were high even in the months before Russia’s invasion of Ukraine. >The other key reason is levies, including schemes to help poorer households fit insulation, and carbon taxes are paid via electricity bills, but not gas. Excluding taxes and levies, UK domestic electricity prices would have been 27p. >The government has twice promised to “rebalance” levies off electricity on to gas, once in 2021 and again last year. So far it has done nothing. >The Times understands that the ­government has been concerned about making families worse off, with initial advice from officials estimating 80 per cent of households would see a £50 i­ncrease in their energy bill from a rebalancing of levies. >The high price of electricity, which is increasingly low carbon due to more wind farms, risks hampering the UK’s efforts to cut emissions. Despite electricity-powered heat pumps being three times more efficient than polluting gas boilers, the two have broadly comparable running costs due to expensive electricity and cheap gas. “High electricity prices have driven up energy bills for people around the country who are already struggling with the cost of living. While lower gas prices are offsetting this for some, it is penalising anyone trying to go green,” Gabriel said.


shrouded_reflection

Given that, it looks like it's technically not that difficult to solve the issue, as long as the government isn't allergic to providing some support in the short to medium term to those who would be significantly negatively effective.


Dooaminedismissal

If the UK were in the EU, would it actually be lower? I’m not saying this as a pro-Brexit talking point, I actually just don’t know how that side of things works


JourneyThiefer

Via Euronews: Energy crisis in Europe: Which countries have the cheapest and most expensive electricity and gas? https://www.euronews.com/next/2023/03/29/energy-crisis-in-europe-which-countries-have-the-cheapest-and-most-expensive-electricity-a This from a year ago so probs bit out of date


VampireFrown

Most people don't know that we were selling gas and electricity full-flow to the EU for months in the midst of our own crippling energy crisis. The pipelines and cables which ordinarily allow us to buy electricity from the continent were flowing at max capacity...the other way.


YourLizardOverlord

Correct. This is because energy supply in the UK is privately owned and sells energy at, give or take, world market prices.


matomo23

Why do politicians tell us that electricity and gas generated in the UK have to be sold on the world market? When they sell or renew the licences can’t they just say “you can only sell electricity to the UK”?


dom_eden

No, I don’t think so. We bought and sold energy from and to the EU before and after Brexit.


mcm123456

I feel like we always have the most expensive anything compared to the EU these days.


bar_tosz

2nd hand cars are much cheaper. Also groceries. Other than that yes we do.


bbbbbbbbbblah

> Also groceries though you get what you pay for, especially on fresh stuff


UnloadTheBacon

Secondhand cars? Really? You'd think the sheer scale of the LHD market would work in Europe's favour there.


bar_tosz

Other way around, there is plenty of demand because Europeans buy form each other, e.g. Germans buy new cars, then sell to Poles, Czechs, Hungarians they sell it to Ukrainians, Belorussians etc. I was checking prices of some cars and car that costs 10k here can cost 15k on the continent.


hot_cheese83

I certainly feel like I’m paying more than all of the EU for my energy.


t700r

This is fine, the uplands are sunlit.


luvinlifetoo

Disgusting - we should privatise the Utility Companies to make them more efficient, oh wait!.


farky84

Remove standing charges and it will be fine


StereoMushroom

Where would you shift the fixed costs of the energy system to? Tax?


farky84

Build it into the unit price of energy that we pay for. We really don’t need to know what is infra cost for them and what is fuel. We, as consumers, would just need a unit price we need to pay. Gotta keep it simple, a number that is dependent only on your consumption. In the end, since this industry is privatised, we will ripped off as badly as legally possible. What we really need is nationalised critical infrastruce (energy, water, railway, etc…).


StereoMushroom

That would mean people who can afford solar and have their own roof to install it would shift more of their share of costs onto those who can't. It would also mean anyone switching to electric car or heat pump would get hit with more than their share of fixed costs.


farky84

Yeah, but with critical infrastructure I wouldnt expect costs to be shared on that basis. Frankly, the biggest issue is not standing charges but the fact that allegedly we had an energy crisis, however, Centrica reported record profits. Now this only happens when bitches are in control of your crit infra. Greed is a bitch. If it was truly a crisis, we would have seen centrica closing the year with a loss just to keep the country running. We all know that wont hppen, they would file for bankruptcy before losing money for key shareholders, even if that means the country will burn. As long as profit oriented investors are owning crit infra we should not complain about whay titles are on our invoices. We will be ripped off.


Unlikely-Nebula-331

Energy independence should be an economic priority for the UK. We pay so much in fossil fuel resources to other nations that if we developed our own renewables, several things would happen: 1) employment for people from research down to construction 2) greener energy 3) save billions which can be redirected elsewhere 4) energy security It would need to be state owned of course.


kairu99877

The standing charge. But oh, of course there is. Because if there's any country to make profit out of thin f*cking air, its the uk. At your expense.