Wrong way round
- Credit: Archant
Now that the government has decided to review the charges made by energy companies, it seems appropriate to review the whole structure of pricing for these so-called privatised utilities.
I understand that in Norway the pricing is the complete opposite of that which we have here in UK.
In Norway there are no standing charges and the first usage band for charging is the cheapest band.
The size of the band is geared so that someone can exist, but with care, whilst only using the cheapest band. Any extra use is charged at increasingly higher rates.
For utilities, which are really necessities of life, this seems a much more appropriate way to structure pricing.
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It means that even the poorest in society can get their utilities at the lowest rate. It also means that profligate use of increasingly scarce utilities is charged significantly more.
In the UK there are generally standing charges of around £100 or more per year for each of electricity and gas.
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Some suppliers also have two tiers of rates for gas and electricity. The first band of charges is about double that of the second band of charges for higher usage.
It has just been published that our MP (Hugo Swire) spends over £3,000 per year on energy for his second home. Presumably he is not in residence there full-time.
By contrast, my energy bills for my only home are about £800 per year. He is on a generous MP’s salary and allowances and I am a pensioner.
We both pay a proportion of our bill as standing charges and energy at the first band, highest rate.
Standing charges can be more than £100 per year each for gas and electricity, so make up a large part of my bill and a pretty small part of Mr Swire’s second home bill.
Whatever I do I can only reduce payments proportionately on about 75 per cent of my bill, whilst Mr Swire can make reductions on 93 per cent of his bill.
The same applies to water charges where the standing charges makes up a third of my metered usage bill.
It seems all the wrong way round.