Households could be charged annual ‘insurance premium’ for access to electricity grid

Posted: May 29, 2016 by oldbrew in Energy

Image credit:

Image credit:

H/T Daily Telegraph

‘If the very affluent all had solar panels and batteries and were paying relatively low bills, and the relatively less well-off were paying higher bills because they were subsidising the grid, I don’t think society would accept that’
Dermot Nolan – UK’s chief energy regulator

Every UK household could have to pay an annual “insurance premium” for access to the UK electricity grid, under plans to overhaul the way networks are paid for.

Energy regulator Ofgem is worried that people who can afford to install solar panels and generate their own power for much of the day may end up not paying their fair share of the costs of the UK’s electricity pylons and cables.

Dermot Nolan, chief executive, told the Telegraph the question of how to charge for networks in an equitable way a “huge challenge” facing the UK energy system in coming years. Currently, the cost of maintaining and upgrading the networks is factored into the prices energy suppliers charge for electricity, accounting for about £140 a year on a typical household bill.

Households that install their own panels will need to buy less electricity, so will avoid paying as much toward the costs of the network.

“One of the biggest challenges for the country in energy… is how will you charge for the grid in that kind of situation?”

Mr Nolan said the regulator was thinking about the issue “pretty intensively” and had not yet decided the solution. However, he said one option would be for households to “basically pay an insurance premium for access to the grid”.

Mr Nolan said the issue would be “difficult” to resolve as “people might feel ‘I’ll pay it when I need it’” but this would not reflect “the fact there is an infrastructure there and you have to pay for it”.

Full report: Households could be charged annual ‘insurance premium’ for access to electricity grid | Daily Telegraph

  1. Joe Public says:

    That’s what the daily Standing Charge is!

    Besides being a mechanism for suppliers to con the unaware, by focusing upon a relatively low commodity price supplemented by an up to £70 pa (or more) Standing Charge.

  2. “Households that install their own panels will need to buy less electricity, so will avoid paying as much toward the costs of the network.”

    I would argue that the Feed In Tariff subsidises owner to such an extent that the network effectively pays them for supplying the service. Such is the utter stupidity of our energy supply policy.

  3. Andrew says:

    Solar panel tax. As seen in other countries.

  4. markstoval says:

    The more I read, the more I think that Europe is not going to survive. At least not as we presently understand “Europe”.

  5. This is just practice for when they actually start handing out the poisoned Kool-Aid. Their righteous cause must not be questioned, of course, and “elections have consequences”–all that.

  6. oldbrew says:

    From MoneyExpert:

    Standing charges – what are they?

    Standing charges appear on your gas and electricity bills as a fee from your energy supplier to pay for the service of supplying your house with power.

    These standing charges remain the same no matter how much energy you use. They pay for costs such as meter readings and being able to keep your house connected to the main electricity and gas supply.

    There will also be costs related to government schemes included in your standing charges. Examples of these schemes include ones that aim at CO2 reduction and ones that are designed at aided homes in need.
    Sounds a lot like the proposed ‘insurance premium’? Maybe the insurance would be even more expensive.

  7. p.g.sharrow says:

    Typical Bureaucrat, “We need to ADD another fee that I just invented!”

    Too ignorant to know that everyone that has a hookup to the grid already pays a monthly charge for that privilege. Electricity provided is an extra charge for that usage. I wonder who reads and pays for his electrical service.

    We don’t need more ignorant bureaucrats regulating our lives and demanding more fees…pg

  8. Same thing is happening with electric cars in the US—they don’t buy gasoline, so they don’t pay the road taxes and still they drive on the road. In part, this is the result of the monopolistic nature of utilities and transportation. Plus the belief that people are “owed” the roads, the electric lines, etc.

    A monthly fee on electricity doesn’t come close to paying the cost of the lines. However, it is very convenient for raising versus the actual per watt cost of electricity. That happens frequently in the US—raise the monthly fee and then point out the per-watt amount is still the same. Sounds good to a lot of people.

  9. ivan says:

    Maybe, just maybe, if they stopped forcing the grid to pay for the unreliable energy from the alternative sources at inflated prices there wouldn’t be this problem.

    Before the green taxes and the ‘you must use green energy first at any cost’ there was not a problem.

  10. E.M.Smith says:

    I suspect the time of central power generation is being ended by govt stupidity.

    Perhaps it is time to start looking for better DIY options…

    Or just move to a place with cheap power… The South of the USA runs 7 to 9 ¢/kW-hr in many places. I think I see an RV and 5 acers of woods in my future 😉

  11. rishrac says:

    Government is like a hungry predator, no matter how much you feed it, it’s never enough. Some dogs, given enough food, will eat themselves to death. Has anyone ever seen a government that says, we have plenty, no more taxes?

    If the greens get their way you won’t be able to cut any of the trees on your 5 acres let alone burn any of it. Living off the grid, we have a tax for that. In some cities in New Jersey you need a permit to just trim a branch on a tree.

  12. oldbrew says:

    rishrac: ‘In some cities in New Jersey you need a permit to just trim a branch on a tree.’

    That’s called a job creation scheme in the UK 😐

  13. Graeme No.3 says:

    As LOUIS XIV’S FINANCE Minister, Jean-Baptiste Colbert, said “the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
    It seems that either modern governments have forgotten this, or that their spending is out of control and they are desperate for more. But when they get more…

  14. BoyfromTottenham says:

    Hi from Oz. How about this alternative: Just phase out all the subsidies / feed in tariffs for solar panels. Result: Power distributor costs fall because they don’t have to buy and deal with overpriced non-dispatchable solar power, poor people without solar panels benefit from lower power costs, wealthy people with solar panels can afford the loss of the FiT and they also benefit from lower power costs. Or is this just too damn rational? BTW – pollies and OFGEM bureaucrats should be required to read Atlas Shrugged and be tested on their comprehension of it!

  15. […] there are proposals in the UK to pay a ‘license fee’, to allow householders to purchase electricity.   That’s the next step toward communism. In Venezuela, people would be happy for an […]

  16. Bloke down the pub says:

    I have pv installed on my house. I also have my electricity billed to me on a no standing charge tariff, chosen for the very reason that as I have reduced use, it is the most efficient way. If the no standing charge tariff option was removed, I would have no issue with paying towards the upkeep of the grid. In the meantime, I’ll carry on getting the best roi that I can in order to overcome the unnecessarily high bills caused by government green policy.

  17. Bloke: Was the solar a free gift or partial gift from your government?

  18. Gerry, England says:

    The more ‘renewable’ capacity is added to the grid with either windmills, solar farms or private generation the more difficult and costly it becomes for National Grid to manage it and prevent blackouts. The new generation capacity is also remote from the users – gone are the days of power stations in towns and cities, just look at all the redundant or demolished ones in London. This means new transmission lines and increased maintenance costs. Somebody has to pick up the costs created by the government’s crazed energy policy and it is the end user as always.

  19. oldbrew says:

    Gerry says: ‘This means new transmission lines and increased maintenance costs.’

    But this means more ‘green jobs’ so it must be good, according to current ‘thinking’ (?). Bizarre but true.

  20. Gerry, England says:

    Oldbrew – comes back to the ‘broken window’ scam again and there being good jobs and bad jobs. Rather a steel industry that makes and sells products than jobs building windmills that wouldn’t exist without taxpayers’ cash so in effect they are state employees. UK job destruction rate is about 3.4 I think. There is unwise investment (HS2 for example) or wise investment (Crossrail and Crossrail 2).

  21. oldbrew says:

    At least HS2 will allow more executives to spend more time in the pub, restaurant etc. so the leisure industry should benefit.

    It’s an ill wind that blows nobody any good 😉

  22. JohnR says:

    “At least HS2 will allow more executives to spend more time in the pub, restaurant etc. so the leisure industry should benefit”

    Wine bar. Pubs are for the lesser mortals. Pubs have bar staff, wine bars have young women in short skirts and tight blouses.