Are standing charges about to go? In an enormous shake up the regulator is looking at ditching them as a separate charge from tariffs and also writing off debt from the energy crisis.
Key among the proposals is a consultation on zero standing charge tariffs, allowing consumers to choose tariffs that suit their circumstances. While standing charges currently cover fixed network costs, many consumers argue their removal would ease bill management.
Standing charges – currently about £300 a year, are paid irrespective of how much energy households use.
Choice
Ofgem is proposing a choice for consumers where suppliers offer a tariff with the standing charge added to the price of the units, or one where it’s separated. There is no proposal to scrap them.
However, concerns persist that transferring these costs to unit rates could harm vulnerable, high-energy users, such as those with medical needs.
Debts
Ofgem’s new debt strategy addresses rising household energy debts and aims to create lasting changes in how suppliers support customers struggling to pay.
Proposed standards include consistent assessments of customers’ ability to pay, developed with input from charities and debt support agencies.
Suppliers would also need to provide clearer guidance on debt repayment options and ensure repayment plans are affordable.
The regulator is tackling unsustainable debts accumulated during the energy crisis by proposing a one-off intervention, to reset system-wide debt, aiming to reduce overall costs for consumers in the long term.
Plans also include a “Debt Guarantee” to ensure suppliers provide tailored, compassionate support.
Suppliers may be required to accept repayment offers from third-party organisations and improve collaboration with charities and advice services, streamlining access to assistance.
Unfair
Tim Jarvis Director of General Markets said: “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.”
Consultations on the proposals close in February.
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