My first thought was how could they write this entire article without mentioning the link to gas prices? 

My second thought was.... Telegraph? Seriously?

Like all our infrastructure the grid is on its last legs and I guess this puts plasters over a few of the measles, but I'm sceptical.

We need more localised production for sure. But every time I hear mention of 'data centres' it makes me shudder. 

Very interested to hear thoughts on this?

Don't we already pay different pricing and standing charges based on location? Even with the same wholesale pricing. So not sure why that would change, just more opportunity for energy suppliers to make more profits.

@johnmo I’m with OE and I note that the standing charge varies with different tariffs - how is that then?! Toodles the Curious.

Think they are using the standing charge as a lever to more profits. Back in 2021 my standing charge for electricity was 25p now 60p, why such a big change? the infrastructure hasn't changed or improved.

The increase in standing charges is allegedly to pay for the present and proposed upgrades to the distribution systems, so that everyone will be able to run their heat pumps and charge their EV's and battery storage systems, all at the same time.

Posted by: @lucia

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There are broadly two types of locational pricing: zonal (regional) and “nodal”, a far more granular, street-by-street system.

I don't know from where the Telegraph sourced those definitions.
That's not what I'm hearing from National Grid in their briefings.

Nodal pricing is the original term, and can be at any level of granularity.
Locational is used in an attempt to tell less-technical people what nodal means.

It has to be based on the junctions/transformers in the UK electricity network, rather than on a geographical location.
Those are the Nodes on an electricity grid.

Ofgem proposed using the Grid Supply Points as the node for pricing purposes.
But that's pretty coarse and their spacing on the grid doesn't best reflect the 'local' supply of renewable energy.

The better choice would be one level down... the Bulk Supply Points (BSPs).
Those are the points on the Distribution Grid which yield the most data because they're fully monitored.

Depending on which region you're living in, there are a number of software tools which allow you to see which BSP feeds your electricity and the energy-mix it's currently handling.

Going down to street level is ludicrous. There are 550,000 local-substations (11kV) input, and less than 500 have ever had any monitoring equipment on them.
We can't afford to install smart-monitoring at that level, let alone process the enormous volume of data such a system would produce.

I can receive data from a few of those local substations, which allows me to detect issues such as losses due to phase imbalance, and the effect of adding EV chargers to single-phase properties. But I don't need hundreds more substations to tell me what I need to know. I can see solutions to these problems with the samples I already have.

I should point out that the previous Secretary of State for Energy, Rt Hon Claire Coutinho MP, made an announcement on 12th March which excluded the possibility of having nodal pricing for consumers. Instead, the concept was only to be applied to the wholesale market.

That may be a policy supported by the Energy Suppliers, but it's poor science.
It will need to be overturned if we're going to reach Net Zero.

Posted by: @johnmo

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Think they are using the standing charge as a lever to more profits. Back in 2021 my standing charge for electricity was 25p now 60p, why such a big change? the infrastructure hasn't changed or improved.

 

I've asked this question so many times and still don't have a clear answer. Before the energy crisis, we used to switch electricity providers regularly to get cheaper rates. But it wasn't just the tariffs that varied—the standing charges were also different, which I never fully understood (and still don’t). How is it possible that my neighbour might be paying a different standing charge for the same portion of the grid that we're both contributing to for upkeep?

Posted by: @johnmo

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Back in 2021 my standing charge for electricity was 25p now 60p, why such a big change?

Hah! You only pay 60p ?!

That's because the rest of us are subsidising your region!
Those of us living in regions which produce the most electricity from renewable sources must pay for the infrastructure upgrades to send that energy to London.

Here's the DSC %rise for just four of the DNO regions over that timescale.

The sudden rise may at first glance be due to the global energy crisis, fuelled by Russian income from gas/oil exports allowing them to attack Ukraine. So The West applied sanctions to cut off their energy revenue.

However, that's only part of the story. In March 2022, Ofgem had just received the 'final' RIIO-ED2 Agreements from the 14 regional DNOs. Those applications were to form the basis of the DNO contracts to commence 1st April 2023 and last 5 years. To allow the DNOs to fund all that was required of them (in their own applications) Ofgem raised the Cap on the Standing Charges.

[Ofgem then pranged them on 3rd May'22 by changing the rules by which DNOs could request contributions for Access Charges when 3rd parties required commercial grid connections. But that's another story.]

Posted by: @editor

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Before the energy crisis, we used to switch electricity providers regularly to get cheaper rates. But it wasn't just the tariffs that varied—the standing charges were also different, which I never fully understood

This question exposes the method by which I'm able to create graphs such as the one above.
What I write here will be an explanation which we'll need to cross reference from a lot of other Topics in the future.
So please 'bookmark' this post and point other readers here.

1. When I comment on the Daily Standing Charge, I am referring to the DSC level of CAP which Ofgem allows Energy Suppliers to charge domestic customers.
That's because I'm usually highlighting the effect of the DSC on households in energy poverty.
They are far more likely to have pre-payment meters and be in debt to a Supplier.
I've never heard of a customer with a pre-payment meter who is being charged less than the maximum level of DSC permitted within the Ofgem cap.

2. Historically, those regions of GB which were furthest away from the central core of the National (Transmission) Grid had a higher level of DSC than those areas in which the main CEGB power stations were sited. That's because they required more infrastructure to send the electricity to their homes.

The situation is now reversed, in that the far flung regions are the main locations for electricity generation from renewables. But the regulations are made in London, and Ofgem believe that those regions with more generation should fund yet more infrastructure to connect those widespread solar/wind sites to the Distribution Grid. After all, it's a privilege to contribute to 'the greater good of the nation'!

The bias hasn't been easily noticed because

• rises in DSC are based on a percentage above the previous rate for that region. So if the DSC was already hysterically high, then the percentage increase doesn't look so bad!
• the population in rural areas with lots of green energy are lulled into a state of feeling good that they're contributing towards combating climate change. In practice that's not necessarily the case. Even if South Wales has an abundance of renewable generation from wind-turbines, that is more likely to get discarded in preference for keeping the gas turbines at Pembroke operating in 'combined cycle' overnight. It's that 'fudge' which still provides the reasoning behind the 'cheap rates' we get in the small hours of the night.

3. An electricity Supplier doesn't have to charge customers the full amount theoretically possible under the Ofgem DSC cap.
They must still pay the Generation Companies per MWh and the DNO's for their portions, but they are permitted to obtain that income by adjusting the balance of DSC and price per kWh within any of the tariffs they offer.

The DNOs are paid for Distribution Use of Service (DUoS) and Balancing. Both are based on the quantity of electricity being transported across the grid by that Supplier, but the formulae differ.

4. The DSC cap is calculated by Ofgem using a massive spreadsheet which is freely available for download. It's too large for most PCs to handle all the data simultaneously.

The DSC cap per DNO region which I used in the graph above is taken from the spreadsheet labelled Annex 9, Table 2b.
That's the portion of the spreadsheet which is most regularly updated and re-published, at present twice per year.
Go the page I've linked, and download the latest Annex 9 file.
This is just a small part of what you'll see when you click on Table 2b in the tabs at the foot of the spreadsheet.

Posted by: @transparent

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That's because the rest of us are subsidising your region!
Those of us living in regions which produce the most electricity from renewable sources must pay for the infrastructure upgrades to send that energy to London.

Funny I am in Northern Scotland, so in that region that region producing with lots of renewables.

@johnmo  - well you now have a link to check Annex-9 for yourself. 🙂 

A quick look tells me that the DSC for nil-demand in Northern Scotland comes to £232.26 per year (+5% VAT).
That equates to 64.5p per day, which is what you suggested.

Your region has abundant sources of hydro-electricity... which is connected directly to the Transmission Grid.

The DSC cap which I've been referring to applies to the Distribution Grid.
Transmission Grid construction and maintenance don't come from the DSC

The problem in Scotland is that the majority of the Transmission Grid operates at 275kV, rather than the 400kV in England and Wales.
The lower voltage constrains how much energy can be supplied to the south.

The two Scottish transmission companies are having to change this constraint by installing new Grid Supply transformers, cables and transmission towers.

A lot of the investment to perform those upgrades is being supplied by the Ontario Teachers’ Pension Plan Board because they own 75% of SSEN Transmission.
You will be paying that back over several decades.

@lucia  - Whilst looking for something else, I've come across a Submission by NG ESO to the Commons Select Committee on ESNZ last autumn, which ends with some comments on 'nodal' and 'zonal' pricing. They regard both as types of Locational pricing.

It's interesting that they see the future for the British electricity supply system being nodal.

That observations will be based on their expertise in

• how the electricity market works
• the 'value' of electricity being dependent on whether it needs to moved
• how consumers respond to market variations

Ie these are comments based on science rather than policy.