I genuinely don’t understand standing charges. Does this make up part of the profit and if so why can’t the Government regulate these charges. Also do these companies pay tax in the UK, if they are UK-based?
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Standing charges are supposed to pay for the upkeep of the network and the costs the company incurs to keep you on the grid separate from your usage. (Or for electricity the cost the company pays to the government owned national grid to do so)
However they are allowed to set the price of the standing charge as they wish so long as the standing charge plus the prive of the amount of gas used by an average person doesn’t exceed the price cap. The idea being that say if you were a heavier than average user you could exploit this by choosing a company with a high standing charge and a low price per unit, and if you were a lower than average user exploit it by chosing a company with a low standing charge and high cost per unit.
All the companies will pay the 5% VAT charged by the government in tax as well as employer NI contributions for their UK employees. UK based ones will also pay corporate tax on any profits.
The problem lately has been they aren’t any profits to tax and indeed many suppliers have gone bust. There’s a bit of a misconception as media reports energy companies making record profits. It would be more accurate to say oil and gas companies are making record profits. Suppliers (e.g. Bulb) have to buy electricity or gas from producers (e.g. BP) and then sell it to you. Particularly at the end of last year the price they could buy it from producers for was above the price that the government price cap allowed them to sell it to you for hence why so many went bust.
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