Standing Charges to Get the Chop?

Energy firms in the UK could soon be required to offer tariffs without standing charges following a proposed overhaul by Ofgem, the country’s energy regulator.

This move could give consumers more control over their energy bills, addressing frustrations about fixed daily charges that apply regardless of usage.

What Are Standing Charges?

Standing charges are fixed daily fees, typically over £300 annually, which British households pay to cover the costs of maintaining an energy supply. These charges are separate from the cost of energy usage and have long been a source of contention. Particularly among low energy users, such as those living alone or making significant efforts to reduce consumption.

Under the current system, standing charges have risen by a staggering 43% since 2019. When Ofgem sought public feedback, it received an unprecedented 30,000 responses, with most calling for these charges to be scrapped.

The Proposed Solution

Ofgem plans to introduce a dual pricing system by the end of 2025. Suppliers will be required to offer:

1. A price-capped tariff that includes the standing charge

2. A price-capped tariff that excludes the standing charge but adds costs to rates

This additional option would allow households to choose the tariff best suited to their needs. Those who consume less energy might benefit from the second tariff, while high energy users might prefer the traditional model.

While these options aim to empower consumers, some campaigners argue that vulnerable groups might struggle to make an informed choice. Energy suppliers, represented by Energy UK, have warned that implementing this change will require extensive education to ensure customers understand their options.

Other Concerns

In addition to tariff reforms, Ofgem is attempting to tackle the energy debt crisis. British households owe suppliers nearly £3.8bn, which has doubled in two years. The regulator plans to introduce a “debt guarantee,” encouraging suppliers to accept repayment plans and ensure consistent customer support.

However, the new proposals fail to address regional disparities in standing charges, with some areas of the UK paying significantly more. Ofgem has stated this issue will be part of a future inquiry.

The proposed changes aim to provide a fairer billing system that reflects individual needs. While the transition may pose challenges, it offers a step towards greater flexibility and control for consumers.

How Can I Save Money on Energy Bills?

With uncertainty over high energy bills and the current state of the UK energy market, consumers are looking for ways to save money on their energy more than ever. At UKPower, we can help you compare gas and electricity suppliers to find the cheapest energy prices, switch to a better deal and cut the cost of your energy bills.

Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.

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