Energy price increases - why has the standing charge increased so much?

[jpd]

When I compare the prices of my electricity bill in May 2022 with my bill in May 2021, I can see that

1. The unit price increase from 19.08 cents/kWh to 30.34 cents/kWh - an increase of 60%
2. The standing charge increased from 44.43 cents/day to 70.66 cents/day - an increase of 60%

I also know that the world price of oil has increased from $ 60-70 per barrel to $ 100-110 - an increase of 60%

So while I am not happy with that, electricity and gas, prices tend to follow the world price so an increase of 60% is believable - just about

But how does that justify the increase in the standing charge?

To quote Bord Gaís from their comment on my last bill

The Standing Charge is an annual charge included in your Price Plan and it is for the fixed costs associated with providing electricity supply

Surely the fixed costs are mostly independant of the cost of oil or gas?
How can this increase be justified other than "because we can"?

 

[mathepac]

When did "fixed costs" become variable with the cost of the fuel/energy supplied?

 

[Baby boomer]

Good point. The standing charge supposedly covers the cost of the network infrastructure, and not variable fuel costs.

Worse still, you can expect this to increase in coming years. It's happened already in California to "compensate" the utilities for loss of income due to householders installing solar PV.

California regulators propose raising fees on owners of rooftop solar systems. (Published 2021)

The plan was welcomed by the state’s electric utilities while a solar industry association leader called it a “disaster.”

www.nytimes.com

 

[joe sod]

Ireland has the third highest electricity prices in Europe after Denmark and Germany. What do we all have in common though ,the very high amounts of wind energy on our grids and the high cost associated with balancing this variable source with conventional power mostly gas generation.
You have the cost of installing all those wind turbines combined with the cost of needing 100% conventional back up with all the fixed costs including labour associated with that even when you have alot of wind power.

 

[jpd]

Yes, but the cost of installing and maintaining the network has not gone up by 60% in the last 12 months

 

[Peanuts20]

Fixed costs are rarely fixed. In this case it will be more expensive to maintain the infrastructure because the cost of doing so will have gone up, for example, the cost of putting diesel into their vans will have increased, cost of spare parts have increased and staff costs are also going upwards. The misnomer here is the use of the word "fixed" in their description

 

[joe sod]

There is alot of stuff hidden in that standing charge, for example the generous free electricity allowance given to current and even retired esb staff. Sure you might aswell use your full allowance on electric heaters for your house rather than more efficient heating that you would have to pay another supplier that's not electric.
Barry Coventry has ordered an investigation into the Irish electricity market by none other than commissioner vesteburg of the apple tax case fame

 

[mathepac]

You have the cost of installing all those wind turbines combined with the cost of needing 100% conventional back up with all the fixed costs including labour associated with that even when you have alot of wind power.

So all this nonsense's about "green, renewable, zero carbon, sustainable" energy sources is all hoo-hah, buzz-words and PC posturing. For each wind-farm manufactured and erected at enormous expense there must be a corresponding spend in traditional energy generation technology, thereby doubling the capital expenditure to supply the same energy to the grid. This doubles the "fixed costs" to the consumer with no environmental saving what-so-ever.

I think my thesis is supported by the evidence from our energy bills.

 

[jpd]

Fixed costs are rarely fixed. In this case it will be more expensive to maintain the infrastructure because the cost of doing so will have gone up, for example, the cost of putting diesel into their vans will have increased, cost of spare parts have increased and staff costs are also going upwards. The misnomer here is the use of the word "fixed" in their description

I un derstand that, but fixed costs have not gone up by 60% - for example, I don't think that the workers have got a 60% increase in their pay, or that the cost of maintaining wind farms has increased by 60%

 

[jpd]

So all this nonsense's about "green, renewable, zero carbon, sustainable" energy sources is all hoo-hah, buzz-words and PC posturing. For each wind-farm manufactured and erected at enormous expense there must be a corresponding spend in traditional energy generation technology, thereby doubling the capital expenditure to supply the same energy to the grid. This doubles the "fixed costs" to the consumer with no environmental saving what-so-ever.

I think my thesis is supported by the evidence from our energy bills.

Correct, but this is a different argument - the increase in the "Standing Charge" is just a con to make more profit

 

[peemac]

Ireland has the third highest electricity prices in Europe after Denmark and Germany. What do we all have in common though ,the very high amounts of wind energy on our grids and the high cost associated with balancing this variable source with conventional power mostly gas generation.
You have the cost of installing all those wind turbines combined with the cost of needing 100% conventional back up with all the fixed costs including labour associated with that even when you have alot of wind power.

If you took the lowest discounted prices on offer Ireland would be one of the lowest if not the lowest price in Europe.

Just as "cashback" deals on mortgages inflate the average mortgage rate, the large discounts on electricity and gas for switching and new customers gets reflected in the high unit price.

If a cap was put on discounts and all adverts had to prominently display/state the standard unit cost you would find rates would drop.

Oil price has no reflection on electricity as it is not used in generation. Gas prices have quadrupled in the past 12 months and that is the cause of huge increases around the world. I think the cheapest deal in the UK is about 28p a unit and set to rise substantially again in October.

But if you are in tune and change energy supplier every year, you are paying one of the cheapest rates in Europe.

If you are not on a discounted rate (been with same supplier for over 12 months) you are literally throwing about €1000 a year into thin air.

Switching takes about 3 minutes online.

On the fixed costs. People are using less energy, but maintaining supply has not reduced, so instead of loading the unit rate further they are increasing the standing charges as the person using 2,000 units a year costs the same to maintain supply to as someone using 20,000 units a year.

 

[llgon]

People are using less energy

But surely it's only electricity that's relevant to your point?

 

[peemac]

But surely it's only electricity that's relevant to your point?

No, current new homes are exceptionally warm along with homes that have upgraded.

I've gone from using almost 2,000l of kerosene to just over 1000 by upgrading insulation and modern boiler with zones

A window upgrade this summer should see my use drop further.

 

[llgon]

No, current new homes are exceptionally warm along with homes that have upgraded.

I've gone from using almost 2,000l of kerosene to just over 1000 by upgrading insulation and modern boiler with zones

A window upgrade this summer should see my use drop further.

What has that got to do with electricity standing charges which was the issue being discussed? Decreasing kerosene use is irrelevant.

With increasing use of geothermal heating and electric vehicles I don't think lower electricity consumption is an issue that is causing standing charges to rise.

I'd be interested to see any links you have about lower demand for electricity.

 

[jpd]

Bord Gáis replied to my query with a dismissive answer

Thanks for your recent email to Bord Gáis Energy.

I wish to confirm the standing charge is a daily charge that covers the cost of keeping you connected to the network and also general supply costs. Please note we always aim to have our standing charge as low as possible.

Tak about a rubbish answet!

 

[peemac]

What has that got to do with electricity standing charges which was the issue being discussed? Decreasing kerosene use is irrelevant.

With increasing use of geothermal heating and electric vehicles I don't think lower electricity consumption is an issue that is causing standing charges to rise.

I'd be interested to see any links you have about lower demand for electricity.

Part of the unit cost was for non generation costs. (Pass-through charges) They've simply moved them into the standing charges to increase the revenue without having to increase unit costs even further.


Here's the CRU report of what these are https://www.cru.ie/wp-content/uploads/2020/12/CRU20113-Pass-Through-Costs-for-Business-Electricity-Customers-202020212.pdf

Also when I look at bonkers.ie and do a 3 year time plan, Electric Ireland with highest standing charge comes out over 10% cheaper overall compared to some of the others with a lower standing charge and bord gais with second highest standing charge comes 2nd - the difference is the others have higher unit rates.

At the end of the day its best to look at the overall net cost and make sure you switch every 12 months. Then you end up paying some of the lowest costs in Europe

 

[Paul O Mahoney]

Got our first BGE gas bill which includes the price increases. Standing charge was an eye opener went from €.2988 to €.4258 per day (Excl. Vat) thats a 42.5% increase .
The bill itself was incorrect by €10 as they simply flatlined the usage, and I had taken a photo of the meter reading on the 14th of April, I didnt submit it as I just wanted to see how accurate their attempt on allocation over the 2 tarriffs was over the 57days billing cycle. The reduction in Vat helped to take the sting out the bill. Carbon tax was also increased

Overall the cost increased by 7.88% v old prices. We have a 40% discount too, that ends in June and the have offered us 25% discount for "smart billing ".

While there is justification on the price increases of gas and electricity due to global stressess but a 42.5% increase in the standing charge really doesnt make sense, the Network is owned by GNI and I cant find if GNI has increased its charges to the suppliers.

 

[jpd]

I replied back to Bord Gáis saying that they had not replied to my question on standing charges and they replied again, basically saying the same thing.

There is no justification at all for standing charges being increased by the amounts they have.

They have increased the standing charges to recover over and above the cost of the network so that the surplus can be used to keep unit charges lower than they otherwise would be.

So this is a subsidy from low usage customers to high usage customers who are the ones benefitting from the lower unit cost at the expense of the low usage customers.

 

[Blackrock1]

So all this nonsense's about "green, renewable, zero carbon, sustainable" energy sources is all hoo-hah, buzz-words and PC posturing. For each wind-farm manufactured and erected at enormous expense there must be a corresponding spend in traditional energy generation technology, thereby doubling the capital expenditure to supply the same energy to the grid. This doubles the "fixed costs" to the consumer with no environmental saving what-so-ever.

I think my thesis is supported by the evidence from our energy bills.

no, even if the premise were correct, which it isnt, we already have the conventional power sources in place, its not like every time you build a wind farm a new conventional plant of the same size has to be built.

 

[Páid]

I replied back to Bord Gáis saying that they had not replied to my question on standing charges and they replied again, basically saying the same thing.

There is no justification at all for standing charges being increased by the amounts they have.

They have increased the standing charges to recover over and above the cost of the network so that the surplus can be used to keep unit charges lower than they otherwise would be.

So this is a subsidy from low usage customers to high usage customers who are the ones benefitting from the lower unit cost at the expense of the low usage customers.

Have you contacted the Energy Regulator ?