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Ofgem, the UK energy regulator, is proposing a shake-up of energy bills that could see energy firms forced to offer tariffs with no standing charge. All households currently pay fixed daily charges for connecting to a supply regardless of how much energy they actually use. Under Ofgem’s proposed plan, suppliers would offer one tariff that includes the standing charge and another that loads these costs on energy usage charges. Customers would have the option to choose which one suits them best.
The regulator would also like to write off unpaid bills that built up during a recent high-price crisis. While this strategy provides greater control for customers with low energy usage, those who depend on high energy use for specialist equipment are concerned their bills may dramatically increase. The cost of being connected to energy, which is covered by standing charges, has increased by 43% under Ofgem’s price cap since 2019.
Ofgem consulted with the public about standing charges before making this proposal and received more than 30,000 submissions. Unpaid energy bills total about £3.8bn and have doubled in two years. To create a solution for customers in debt, Ofgem plans a “debt guarantee”, which would improve the quality of service offered by suppliers supporting customers in debt and provide tailored, compassionate and consistent support.
Martin Lewis, founder of Money Saving Expert, commented that the issue with presenting a choice of price caps is that many vulnerable people won’t make that choice, requiring suppliers to make all customers aware of the change and ensure they choose the best options for their circumstances. Energy UK warned that any fundamental proposed change should be carefully considered, as the addition of a zero standing charge price cap option would “quite significantly change the nature of the price cap
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