Proposals announced this morning by the energy regulator OFGEM could see standing charges on your household gas and electricity bills be abolished
The regulator will consult on introducing an option under the price cap to include zero standing charge tariffs alongside existing tariffs, offering consumers the ability to choose what is right for them.
Some suppliers already offer low- or no-standing charge tariffs, but it is not universal, and Ofgem believes more choice is needed for all consumers, including those in debt.
Tens of thousands of consumers responded to Ofgem’s call for input on standing charges, with many asking for standing charges to be removed altogether, saying that reducing or removing standing charges would make it easier for them to manage their bills or pay back debt.
However, there was also evidence of the risk of harm to some very vulnerable consumers who are high users of energy, often for medical and health needs if the fixed costs currently covered by standing charges were moved to unit rates, which would see their bills rise significantly. So it is important that consumers have the ability to make the right choice for their own circumstances.
The regulator has also today set out its debt strategy, which aims to tackle the growing impacts of rising debt in the energy system, and to create lasting change in the way debt is managed and customers in debt are supported.
Tim Jarvis, Director General Markets at Ofgem, said: “We know that many households continue to struggle with bills after the events of the energy crisis, which is why earlier this year, we took steps to consider all the issues around affordability and debt – including the impact of the standing charge.
“Today we’re setting out the next steps in what Ofgem can do to meet these challenges, as part of our work to make sure the energy market is working in consumers’ interests.
“Many people feel very strongly that standing charges are unfair and prevent them from being able to manage their bills effectively.
“We want to give consumers the ability to make the choice that’s right for them without putting any one group of consumers at a disadvantage. And by having a zero standing charge tariff, we would create that choice for everyone.
“We have also set out plans to increase and standardise the support people struggling with energy debt will receive, as well as options for practical help for those households who are in real difficulty with debt built up during the energy crisis.
“We will continue to use all the tools at our disposal to support customers but know there is more to do, so it is important that all of us – government, the sector and charities – do everything we can to help those who need it.”
