New research shows overwhelming support for scrapping the flat-rate daily standing charge on our energy bills, as thousands share their experiences of the energy crisis. It comes energy suppliers have hiked the fixed charges to around £300 – leading one campaign group to say they are causing “widespread energy starvation”. However, will the regulator Ofgem listen?
Standing charges: a rip off if ever there was one
As Ofgem itself wrote:
The standing charge is a cost that is included in each electricity and gas bill. It is a cost set by your supplier. It is also included in the energy price cap that we review and set every three months. Your supplier will charge you this cost each day, even if you do not use any energy on that day. The amount you pay will depend on your supplier and where you live within England, Scotland or Wales.
The charge covers the cost to maintain the energy supply network, take meter readings, and support government social schemes, for example helping people that cannot afford energy, and environmental schemes.
Of course, what standing charges also do is help energy firms make huge profits while leaving millions in poverty. However, people are growing wise to this effective con – as a new survey shows.
Campaign website Organise surveyed 45,000 of its members on standing charges. The results revealed the tough reality that many people across the UK are facing due to the energy crisis, compounded by unfair standing charges that disproportionately affect low-income households.
Leaving millions in fuel poverty
Organise’s research showed that standing charges impact adequate heating for 90% of people, with:
- 84% forced to cut heating, showers, baths, washing, and drying.
- 72% left in debt or unable to top up a prepayment meter.
Those on prepayment meters are one group hit hard by standing charges.
534,462 electricity customers and 269,351 gas customers were cut off between January and March 2023. However, this Ofgem data only covers 4% of households, so ignores millions of other low income struggling households. This includes the two million homes without gas supply that pay the higher electricity standing charges and unit costs.
Ofgem data shows low Economy 7 users suffering energy deprivation of only 2200 kWh per year versus 9300 kWh total for dual fuel.
Moreover, energy companies also use the standing charges from poorer households to effectively fund their own operating costs. This is a further kick in the teeth, given the poor standards of customer service companies provide and their marketing and advertising spend which is often wasteful.
The real-world impact of standing charges
Organise member Joan said:
I am having to be extra careful with my consumption, even though I have a disability which is made worse by the cold due to spasms. The standing charge on top of the crippling cost per unit of energy means I have no choice but to cut back.
Another member of Organise, Jack, said:
I do anything to keep the costs down, I’m disabled and housebound most of the time. I therefore do not put my heating on and spend most of my time in bed with an electric blanket on as it is the cheapest way of keeping warm. I also eat mainly microwavable meals as it’s cheaper than putting the oven on. Standing charges soon add up eating into what money I’ve put aside for fuel bills.
Standing charges also undermine energy efficiency by punishing low users and subsidising energy waste. This conflicts with government policy and Ofgem’s new statutory net zero duty.
Ofgem has previously resisted calls to reduce or remove standing charges, instead increasing them to pay the £2.7bn bill from supplier failures that many blame on poor Ofgem regulation. But increasing public pressure and a report from the Energy Security and Net Zero Committee has forced it to do a review of standing charges.
This is how you can get involved – but you only have a matter of days to do so.
Tell Ofgem to sort it out
Ofgem is coming under mounting pressure to scrap the charge, and has asked for input from consumers and other stakeholders to help them decide what to do.
The consultation closes on Friday 19 January. However, campaign group Fuel Poverty Action has organised an online template for you to complete. It will then send it to Ofgem on your behalf. You can fill the letter out here. Alternatively, Organise has a pre-composed letter you can sign here.
Fuel Poverty Action spokesperson Stu Bretherton told the Canary:
Standing charges bear a huge cost on families and individuals, at around £300 a year that’s wiping out the income of someone on Universal Credit. But that money doesn’t even buy you any energy, it’s a poll tax on something that’s an essential need and a human right. And we’re all forced to pay them even if cut off from your energy supply or forced to switch off the heating and everything else due to mounting energy debt.
Fuel Poverty Action says this is causing “widespread energy starvation”.
Outrageous and a scandal
Bretherton noted that:
It’s outrageous that people living in tiny flats pay the same as someone heating a mansion and swimming pool. This isn’t just unfair but goes against economic and environmental imperatives to invest in energy efficient housing and heating systems.
Fuel Poverty Action has long campaigned for standing charges to be abolished and replaced with a national Energy For All guarantee to ensure everyone has their essentials covered according to each household’s needs. Winning change on standing charges is a key step to fixing our upside-down energy pricing system, we’ve pressured Ofgem into this review, so we want to build as much engagement as possible with the consultation while the option is there.
So, if you’re quick you can get your views on standing charges into Ofgem. Energy companies are ripping us all off, but hitting the poorest the hardest. So, we must take action over this scandal.
Feature image via Rawpixel – Envato Elements
