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Ofgem defends standing charges

Energy regulator says new system does not represent a ‘disastrous setback’ for fuel poverty

gas flame burningOfgem has defended new reforms which aim to simplify the energy market for consumers by reducing the number of plans on offer and incorporating standing charges.

The changes will see energy providers drop existing two-tier unit price plans in favour of standing charges and fixed energy unit prices. The energy regulator hopes the reforms will make it simpler for customers to compare tariffs.

New standing charges ‘discriminate against energy-efficient consumers’

Anne Thomas of the Highlands and Islands Green party recently criticised Ofgem’s reforms for discriminating “against small-use or energy-efficient consumers, who will in effect pay a higher overall unit price than bigger users, because any standing charge will form a larger proportion of the overall energy bill”.

Maxine Frerk, Partner, retail markets and research, Ofgem recently wrote a letter to The Guardian disputing the criticisms.

She said: “A standing charge is just a way of recovering overheads that are unrelated to energy use. However, there is nothing in our reforms that stops suppliers setting the standing charge at zero. Some suppliers are doing this, and if there is consumer demand for such tariffs we would expect this to continue.”

Prior to the changes, energy suppliers were able to structure tariffs in a wide variety of ways. Some contracts charged customers standing charges whereas others operated tariffs which charged per unit energy rates which varied depending on the amount of energy consumed.

Energy suppliers commit to reforms

British Gas, npower, and SSE have announced plans to reduce the overall number of plans available and will also roll out energy bills designed to be easier to understand.

Simpler energy bills are likely to be welcomed by majority of the British population with a recent uSwitch survey revealing that 86% of Brits feel the latter are too complex.

Read more

British Gas to simplify energy tariffs

npower and SSE commit to simplifying energy bills

Baffling bills leave consumers vulnerable to over-charging

  • Luap

    Scottish Power have just communicated the changes due to this policy with the result that as an average user I will pay 7% more because of the standing charge. As a pensioner on a fixed income thank you Ofgem. Thank you so much!

  • Astronomy

    Thanks Ofgem, you’ve just allowed my energy company (Scottish Power) to double my gas bill by forcing them to include a standing charge which I previously didn’t have (which they are of course more than happy to add). The 10% price increase is now dwarfed by the approx 100% increase in my total bill thanks to your standing charge nonsense.

    Thought Ofgem’s mission was to protect the public against the energy cartels, not join the assault on peoples income. We need a regulator to regulate the regulator…

  • Astronomy

    Careful where you switch to. I almost went to Ecotricity as their website (and the switch sites) still say there is no standing charge on their gas. However a quick call to a very helpful Customer Services lady told me that next month (December) they will be introducing a Standing Charge on their gas supplies.

    Ofgem’s fault apparently, but when I mentioned that Ofgem say companies are providing a zero charge standing charge they (like Scottish Power) informed me they were would not be offering that at this time.

    So, Ofgem (or anyone), which companies are ‘opting out’ of the standing charge by reducing it to zero? Please tell me as that’ll be who I switch to and since you’ve disturbed the long term, very happy relationship I had with Scottish Power and forced me to spend time searching out another supplier, I think the least you could do would be to let the public know who’s reducing your mandatory charge down to zero.

  • PhilT

    Another very unhappy customer of Ecotricity – they gave just increased my gas charge by 50% (almost) by introducing a standing charge, So annual cost on my likely usage up from about £102 to £150. This is NOT the small charge they mentioned in their covering email. It also says prices fixed to new year – and then that the changes start on Dec 18!
    If anyone finds a ‘no fixed charge’ or ‘zero fixed charge’ offer that is likely to continue please publicise widely.
    I am still waiting for Ecotricity to respond to my email of complaint.

    • Thomas Lankester

      Just 50%? Mine has gone up 700%, almost £100 pa extra.
      It feels like a poll tax by another name. Not exactly progressive.

  • kellie

    As the owner of a second (unsellable it seems & mortgaged) property with zero usage of gas and electric my bill will apparently increase from £0 to £200 per year. The home I occupy is unheated as I cannot afford to put in a heating system and I use electric fan heaters as my only source of warmth. I will now have to reduce my occupied house bill by £200 in order to pay the bill on an unoccupied house (which I also have to pay 150% council tax on) and so this year my children and I will be very cold.

    • Adam

      There’s no such thing as an “unsellable” anything. Unless it has no intrinsic value whatsoever or incurs a cost through ownership the only reason something can’t be sold is because the price is wrong. If you offer to sell me your house for 15k, I’ll buy it off you – don’t care where it is. Too cheap? Start somewhere higher than that, work your way down and somebody will come along. Struggling to think of a set of circumstances in which you’d rather hold onto a superfluous asset than keep your children warm but presumably you have valid reasons

  • kellie

    my comment wasn’t showing – possibly the link so here goes again without the link! A company called Utilita seems to have a zero charge, but the tafiff date was from 01/12/13, so its possible that it would change the following week! website was a .co.uk

  • kellie

    Utilita definitely has a zero standing charge – these are smart meters – free to install – all sounds very good – just spoke to them – number: 01962397097, (I called from a mobile, but there is an 0845 number on the website if it suits people better) Good luck everyone!

  • Anne Thomas

    Letter for you to send to your energy company.
    Standing charges set, in effect, a higher cost per unit for small-use consumers compared to those paid by bigger-use consumers – because the standing charge will form a larger proportion of smaller bills than larger ones. As a consequence, smaller consumers (be that through energy efficiency or relative poverty) will continue to subsidise larger ones. Households at risk of fuel poverty are very likely to be lower energy users and therefore likely to be unfairly penalised.

    Further, due to the uptake of small-scale renewables by businesses, individuals, and community groups, there are now many who have taken the responsibility to generate much of their own energy, and fund the costs of maintaining such infrastructure themselves. Compulsory standing charges additionally penalise those such as ourselves who have taken such steps and may only need to use minimal amounts of energy from the national grid, or may even be net exporters to the grid at certain times.

    The Scottish Green Party is campaigning on this issue. I invite you to show the way to other energy companies

  • james

    After checking with offgen, it seems the energy companies are being very misleading, Offgen has clearly stated that the standing charge can be zero, and if it was zero it should stay that way.

  • tintown

    my parents live in a council house which was all electric and paid through npower, when the property was modernised a gas meter was fitted, they have now started to be billed for a standing charge from british gas even though no gas is been used.
    They have never been told they are now with british gas and have never signed any paperwork,so who has signed them up ?
    On ringing british gas they say it has to be paid but wont say who signed them up.
    This is adding another £100 a year for simply having a meter that isn’t used.
    Can this be done and can british gas just simply tell you that you are their customer without signing anything.

  • dc

    im going from age uk eon,to EBICO cheaper gas electric and no standing charges gas and elec unit price lower than e on age uk price nov 2013

  • ELTEL

    I just signed up with EBICO, straight forward and they claim no standing charges which is ideal as British Gas were charging nearly 25p per day and npower nearly 11p per day and both prices did not include VAT at 5%.

  • mike

    standing charge doubled my gas bill

  • DeadTake

    My standing charge is 67pence a day, more then my electric costs and gas per day. It should be scrapped as its just another stupid bill so fat cat energy companies can get a pay boost. Why should I pay for a meter that costs less they a Sky HD box. They send those out for free….

  • Rocket

    I have no sympathy. I manage perfectly well.

    • Bill Aitch

      Me too. i have an average memory, which serves me extremely well for most online business. So many “organisations” attempt to assist me with my finances, all hoping for insight into my finances. No of ’em are to be trusted, worst of all the civil-service variety. They are even worse than the army of ambulance chasers, and basically only wish to gain “power of attorney” over us. Even at my alarming age, I still yet run a nationwide charity, which I founded September 2005, and also still yet drive C/D+E (HGV 1/PSV) including ATP/ADR/ADI, up to 2,000 miles/week, mostly nights. I find that most of the afflicted are drinkers, most also smokers. This would certainly account for their inadequate abilities, and most of the relevant problems.

  • Bill Aitch

    I find paperLESS billing makes life so easy. It is by far the best means of home filing, and I have full 24/7 access, on any suitable machine, although, for security reasons, I prefer my own lap-top.

  • Bill Aitch

    Do not have a “smart’phone” but use a good ode fashioned 9yo lap-top, once, even twice/day, in order to keep pace with vital communications, online shopping, etc. I also use a cheap Mobi, with Bluetooth H/set, @ £12.50 last year, which replaced a 15yo, of the same make/model. Sadly, the cam is only 1.3 Mp, which is more than adequate for a desktop pic., as also for an A5 print-out. It is slightly grainy at A4. A relatively small price to pay for such durability, dependability, extreme convenience, etc. My next one will also be same make/model, in a few years time, hopefully new, @ £30/. on amazon. My monthly ‘phone bill, including text etc., is an alarming £5, my laptop is only £15/month, and my Digital 220/12/24v TV, complete with DAB, is only a TV licence. It also has USB for AV input/output, as also Bluetooth H/set. The entire gadget cost an alarming £50/., new, from maplins, and has already setrved extremely wel for several years.

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