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Energy consumers will soon have the opportunity to opt for a new, lower standing charge tariff by the end of January, according to recent plans. However, it’s important to note that this change may not necessarily lead to savings on energy bills. The fixed daily charges that make up the standing charge cover the costs associated with connecting to a gas and electricity supply, and those who use relatively little energy have expressed frustration with these fees.
To address these concerns, the regulatory body Ofgem has put forward a proposal that would require all energy suppliers in England, Scotland, and Wales to offer at least one tariff with reduced standing charges. While this may result in customers paying more for each unit of energy used, the aim is to offer more flexibility and choice in billing structures. Despite this move, advocacy groups have cautioned that the root issue of high energy bills remains unaddressed.
The new proposals introduced by Ofgem are seen as a less disruptive alternative, incorporating a minimum usage level requirement in addition to lower standing charges. Ofgem has emphasized that the costs covered by standing charges must be accounted for somehow, even if they are shifted to a different section of the bill. Meanwhile, consumers on tariffs linked to Ofgem’s price cap are facing a 2% increase in energy bills this October, partly due to rising standing charges.
Standing charges play a crucial role in covering the expenses associated with transporting energy to households, maintaining the security of the energy supply, investing in the energy network, and supporting various bill relief schemes. While changes are on the horizon to offer more choice to consumers, there are concerns that a focus solely on standing charges may not alleviate the financial burden faced by many households. The plans are now up for consultation before a final decision is reached
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