Fuel poverty campaigners have written to Britain’s energy regulator urging it to take action to reduce electricity standing charges, which it says are discriminatory.
When the energy price cap rises on Friday, most households will face an increase of at least 80% in the standing charges they pay for electricity, with much of the extra cost a result of the failure of 30 suppliers during 2020.
The standing charge is applied daily, and is charged regardless of how much energy the customer uses.
In a letter to Ofgem, Fuel Poverty Action said the poorest consumers were “paying for negligent policymaking”, and that the “injustice of the standing charge must urgently be addressed”.
Customers of these suppliers have been switched to new providers and their balances have been guaranteed; the cost of doing this has been added to all bills.
Analysts’ estimates of how much each household will pay as a result vary, but Fuel Poverty Action said that typically, £68 of the £75 increase in standing charges would be because of supplier failure.
Vulnerable customers on prepayment meters or those who pay their bills by cheque or cash rather than direct debit pay the highest standing charges, and are the least likely to have switched provider in the past.
The Fuel Poverty Action co-director, Ruth London, said: “Why have Ofgem decided to make the poorest customers pay for their bad decisions and for bad practice in the industry? This huge injustice must be urgently reversed.”
She added: “Prepayment meters are another way that people with the least resources – and often with the leakiest, most poorly insulated homes – are forced to pay the highest price for fuel.
“These meters are often imposed without consent, cost more than direct debit, and have the effect of cutting people off supply. As prices increase, it is absolutely urgent to end such upside down policies.
Details of average standing charges published by Ofgem show that, from 1 April, direct debit customers will typically pay 45p a day to their electricity provider, up from 25p a day now, and 27p a day for gas, up from 26p now. Those increases add £76.65 a year to an average bill.
For prepayment customers, electricity standing charges will rise to an average of 50p a day, and gas 37p. For cash and cheque customers electricity standing charges will be 51p a day and gas 32p.
Beneath these headline averages are regional differences. For direct debit customers in London, electricity standing charges are rising to 31p on Friday, while in the south-west of England they will increase to 49p.
An Ofgem spokesperson said: “Our top priority is to protect consumers including making sure bill payers pay a fair price. We know this is a challenging time. Customers struggling to pay for energy may be eligible for extra help such as debt repayment plans, emergency credit for prepayment metered customers, priority support and schemes like the winter fuel payment or warm home discount rebate.
“We are strengthening the retail market through effective stress testing of suppliers, which will reduce the cost of companies leaving the market as far as possible.”
Fuel Poverty Action is campaigning for a new pricing structure which it calls Energy for All, which gives all households energy to cover their basic requirements for free, with the cost covered by a windfall tax. A petition calling on the government to adopt this policy has attracted more than 300,000 signatures.
