Keeping it Simple – the Boring Footnote

This was in response to an email I sent to Ofgem querying the imposition of daily standing charges on my electricity bill.  For the sake of clarity I should say that I am an Npower customer, and the arrival of a single ‘simple’ tariff in my life doubled my bill.  My concern is two-fold.  Firstly, the money is a factor.  While I can just about support the cost, my Gran, for example, lives entirely on state pension and benefits and this sort of sudden escalation in costs would be crippling to her.  Secondly, environmentalism is a factor.  I go out of my way to use minimal energy.  I turn off lights, turn off the TV, always put on 3 jumpers before I turn on heating – I turn off everything I can, whenever I can, sometimes to the exasperation of those around me.  I am a low-energy user, but for my thriftiness I am now being penalised with a heavy bill hike.  If I were a high-energy user, I might not notice the standing charge so much, as in the grand scheme of thing it’s not so much – but as someone with half an eye to the environment as well as my wallet, I am offended to find myself suddenly paying so much, for using so little.

Pasted below is a section from Ofgem’s reply to these concerns:

“For clarity our proposals are not yet in place and I can confirm that Ofgem has not instructed any supplier to apply a standing charge to their tariffs or increase their tariffs. Suppliers are still responsible for setting their prices and therefore the level of their standing charge. You do not specific what the specific increases in your bills are- i.e. if they are a standing charge or just the overall unit rate- but the cause will in fact be due to a decision by your supplier to increase their prices, and not directly due to our proposals. I would be interested to know who advised you these increase were due to our work.

Clearly, one of the best ways for consumers to signal dissatisfaction at prices increases or poor service is to vote with their feet. There are suppliers that are not currently applying a standing charge, and of the suppliers that have one, they can vary greatly in size. Our proposals would actually make it easier to determine what suppliers are charging in the future as they would allow consumers to compare like with like and establish the level of each suppliers charges.

If you would prefer to look at more detailed information about our proposals they can be viewed on the following page of our website: http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?docid=460&refer=Markets/RetMkts/rmr. The following extracted paragraph is relevant:

‘2.10. We propose to have tariffs with a simple two-part structure, i.e. a standing charge (which can be zero) and a unit rate. Suppliers will no longer be allowed to offer complex tariffs which vary the standing charge or unit rate for different levels of consumption. Suppliers will need to reflect in the standing charge or the unit rate any charges that are related to energy supply.’”

While I’m grateful that Ofgem replied, I must admit there were certain things there I found contradictory.  Mainly, in fact, that they state they are NOT imposing mandatory fixed charges, only to then highlight a reference in which it is their proposal.  Either way, I can’t quite shake the feeling that once again, the energy companies are clawing more money from us and, more importantly, once again the poor are suffering disproportionally to the rich.