Their new low standing charge tariff is good news for customers in England, Scotland and Wales. This option is truly built for high gas, low-electricity-using customers. This new iteration of the initiative will cover every household in the city by the end of January 2024. It’s a continuation of their big-picture effort to address the surging energy costs that are crushing consumers.
As it stands, all households—regardless of their engagement with smart technology—are able to access the low standing charge tariff. No difference whether you pay by direct debit or opt for quarterly billing. The tariff will provide much-needed relief. It is merely a proposal and still open to consultation, meaning changes can still be made based on the input received from stakeholders.
Ofgem, the independent regulator for Great Britain’s electricity and gas markets, has a big decision. This means that suppliers could now reasonably decide to start offering zero standing charge tariffs. However, these all will come with much, much higher unit rates. Ofgem’s Tim Jarvis pointed out that someone has to pay the costs hidden within the standing charge.
“Plans to offer a lower standing charge may provide more choice to consumers, but won’t bring down people’s bills,” said Gillian Cooper from Citizens Advice. Our focus is on households that use less energy. The new standing charge pays the costs of connecting these consumers to gas and electricity supplies.
Starting October 1, 2023, many households on variable tariffs will see a steep rise in their energy costs. These hikes will be limited to 2% or so, as they are linked to Ofgem’s price cap. Direct debit customers are often charged 53.68 pence per day for electricity. For gas, the daily fixed charge tends to be 34.03 pence. This adjustment happens just as families are feeling the heat of high energy prices, adding to the financial pressures many households are already struggling with.
A number of electricity suppliers have already begun offering standing charge-free or low standing charge tariffs. The new international framework will soon make this practice standard across all suppliers. By the end of January, every billpayer will have the opportunity to switch to a low standing charge tariff if they choose.
Even with the expansion of these changes, advocates worry that they won’t do enough to deliver meaningful relief. Martin Lewis, founder of Money Saving Expert, was less than optimistic about the plan’s potential impact. He labelled it as “disappointing” and “much, much more significantly watered down” than proposals laid out in the fall.
“I worry Ofgem has picked an easy route to appease suppliers’ concerns, that doesn’t help the most vulnerable,” Lewis stated. He further remarked on consumer sentiment: “I get more complaints about standing charges than anything else in energy bills.”
Dhara Vyas of Energy UK was on the same page with these worries. She warned that while the proposals would give Americans greater selection among health care options, they won’t result in significant savings. “Ofgem admits this will only be temporary and merely move costs around on the bill, so delivering a limited benefit to customers,” she remarked.
To counteract soaring energy costs, low standing charge tariffs are being offered as an option. This step is intended to bring some financial relief back to households. Cooper from Citizens Advice warned that these changes don’t go far enough. As a result, millions of households may still struggle to make ends meet this winter.
Time is running out to avoid October’s price increase. We know that lowering standing charge tariffs will do nothing to help the majority of the 6 million households currently predicted to spend another winter with eye-watering energy bills. Cooper added.
