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Energy Bills: New tariff plans with no standing charge


Getty Images A man sitting behind a laptop in a room with bills on his side.Getty Images

Energy firms will be forced to offer consumers tariffs without standing charges under proposed changes to bills by regulator Ofgem.

All households pay fixed daily charges to cover the costs of connecting to the supply, but there have been widespread calls for these fees to be scrapped.

Ofgem is recommending that suppliers offer a tariff with one price that includes a standing charge, and another that loads these costs onto energy usage charges. Customers can choose which one is best for them.

The overhaul, planned for next winter, also raises the possibility of some unpaid bills that were built up during the recent high-price crisis.

Standing Charge Fury

When Ofgem asked for public views on standing charges, it received an unprecedented response of 30,000 submissions.

The majority were against standing charges – fixed fees, usually more than £300 a year, paid regardless of how much energy households use.

Under Ofgem’s price cap, standing charges have increased by 43% since 2019.

Low energy users, such as those living alone, argued that they saw little difference in their bills even if they used more gas and electricity. They wanted more control over their bills.

However, the bills of those with high energy needs could see a big increase if these charges are added to the cost of each unit of energy consumed. This will mean higher bills for disabled people who have to charge for specialist equipment.

“We hear from people who have turned off their heating, rationed their hot water, and avoided charging essential mobility devices,” said Alex Belsham Harris from Citizens Advice. Yet it feels like they are fighting a losing battle with their energy bills,” said Alex Belsham Harris from Citizens. Advice.

Ofgem’s proposed solution is to ask energy firms to offer dual prices – one with, and one without, the standing charge. Both will come under the existing. Price cap system.

Such tariffs already exist, but only from a handful of suppliers and not available to everyone.

Joan Wilkinson sits in a chair holding her daughter Adeline.

Joanne Wilkinson says the energy bill is depressing.

Consumers will need to choose, but some campaigners want those who use less energy to automatically switch to a standing charge-free deal.

“The problem with offering a choice of price caps is that many vulnerable people won’t make that choice,” said Martin Lewis, founder of Money Saving Expert.

One of the beneficiaries will be Joanne Wilkinson.

“I try not to look [at the standing charges] Because it’s depressing,” she said.

She said she had enough to worry about dealing with baby Adeline, but she noticed how quickly the meter went through the amount it was loaded on.

She said low wages in the north of England made it even harder for parents like her to afford energy bills, especially when she was still on maternity leave.

But Energy UK, which represents suppliers, said such a radical proposed change needed careful consideration.

Dhara Vyas, chief executive of the trade body, said, “It will be an important step to inform all consumers of this change and ensure they choose the best option for their circumstances.”

The proposals also fail to tackle the variation in standing charges in different parts of the UK, with bill payers paying significantly more in some areas. Ofgem intends to make this part of a wider, separate inquiry.

Loan repayment plan

The amount owed by consumers to suppliers has almost doubled in two years, now totaling around £3.8bn.

The regulator is also setting up a plan for next winter that will deal with some of that debt, built up during periods of high prices, which is unlikely to be repaid.

It is planning a “debt guarantee” to improve the quality of service offered by suppliers helping consumers in debt, which it says will provide households with “consistent, compassionate and suitable assistance” will be provided.

Suppliers may also be required to accept debt settlement offers from reputable third parties such as credit counseling agencies or consumer organisations.

One option for energy crisis arrears could be debt matching — requiring consumers to pay back some of the debt, with energy firms writing down an equal amount.

Some of these costs are already included in an allowance, but they can all be incurred by financing customers through higher bills.



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