Why is Ofgem refusing to ban hated energy standing charges? The people have spoken so why is the regulator not doing its job?
Ofgem has run a consultation on standing charges that received an unprecedented number of responses: 30,000.
And do you know what? The majority of those responses called for the standing charges to be scrapped altogether.
Most people see the charges as serving no useful purpose – they cover connection fees but you only have to be connected once; they cover the costs of installing, maintaining and reading meters but most of us have smart meters which take second to plug in and provide their information direct to the company; and they cover government schemes like renewable energy projects and the Warm Homes Discount but this means people who need the discount because they cannot afford bills are actually paying more; the government should be funding it through general taxation.
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There are some costs that do deserve to be paid – towards the upkeep of the grids that ensure energy can be supplied to our homes, for example.
The charge absolutely hammers those who use smaller amounts of energy because they pay the same amount as everybody else. Remember the Poll Tax that brought down Margaret Thatcher’s premiership? It was based on the same principle – that those who used the least (the poorest) subsidised those who used the most (the richest). That is totally unfair.
Look at me. In the summer, when I don’t have to heat my flat, I can expect to pay around 40p per day for the actual electricity I use. The standing charge is nearly a pound. That’s crazy.
And the charge prioritises the well-being of the profit-making companies that supply energy over that of those who have to pay their exorbitantly-high bills (bear in mind that standing charges have risen by 43 per cent since 2019); the charge ensures that they have a predictable income stream.
And in 2023, while the poorest of us struggled to make ends meet, British Gas made almost 10 times as much profit as it reported the year before – £969 million, compared to £98 million. SSE’s operating profits for the year ending March 2023 were £2.18 billion.
This is a service industry. Profits should be minimal – if any are to be made at all. Instead, shareholders are sucking us dry, via a standing charge that has clearly been inflated far beyond the costs it is supposed to cover and does not reflect the energy usage of service users.
That’s why so many of us (yes, myself included) used the consultation to protest against it.
And Ofgem’s response?
It has been described as “complicated and misplaced”.
It proposes a dual pricing offer that supplier must make to users. One would continue with the standing charge – even though the only people who want it are (logically) those who would lose money if it was removed (in other words, the rich).
The other would ditch the standing order, replacing it with one of three options:
- Charging in blocks – so customers pay a higher unit rate until a certain amount of energy is used, then a lower price thereafter;
- A block system in which customers pay a lower unit rate until a certain amount of energy is used, and a higher price thereafter; or
- Simply increasing the price of each unit of energy.
None of the options eliminate the unnecessary or unfair elements of the current standing charge.
The BBC says charities, along with the industry’s trade body, have criticised the plans, saying they fail to address the basic cost of standing charges and complicate the situation for bill-payers, rather than helping them. It continues:
Concerns about the proposals include:
-
A failure to reduce standing charges to make them more affordable – the plans simply shift them to another part of the bill
-
Concern that vulnerable customers will unwittingly make the wrong choice, meaning they will pay more for their gas and electricity
-
No changes to the postcode lottery element of standing charges, where customers pay different standing charges based on where they live in the country
-
Added complexity to the system of billing, when the price cap was supposed to act as a backstop to avoid customers who do not switch tariffs being ripped off
The point of having a regulator is to ensure that privatised utility companies don’t rip us all off – but these proposals actually make it easier for them to fleece us.
Ofgem is a travesty.
With customers already – collectively – £3.8bn in debt to suppliers, the regulator should be helping us, not them.
Clearly it is not up to the job and whoever is running it now should be removed and replaced with somebody who understands the meaning of public service. Am I right?
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Why is Ofgem refusing to BAN hated energy standing charges?
Why is Ofgem refusing to ban hated energy standing charges? The people have spoken so why is the regulator not doing its job?
Ofgem has run a consultation on standing charges that received an unprecedented number of responses: 30,000.
And do you know what? The majority of those responses called for the standing charges to be scrapped altogether.
Most people see the charges as serving no useful purpose – they cover connection fees but you only have to be connected once; they cover the costs of installing, maintaining and reading meters but most of us have smart meters which take second to plug in and provide their information direct to the company; and they cover government schemes like renewable energy projects and the Warm Homes Discount but this means people who need the discount because they cannot afford bills are actually paying more; the government should be funding it through general taxation.
Buy Cruel Britannia in print here. Buy the Cruel Britannia ebook here. Or just click on the image!
The charge absolutely hammers those who use smaller amounts of energy because they pay the same amount as everybody else. Remember the Poll Tax that brought down Margaret Thatcher’s premiership? It was based on the same principle – that those who used the least (the poorest) subsidised those who used the most (the richest). That is totally unfair.
Look at me. In the summer, when I don’t have to heat my flat, I can expect to pay around 40p per day for the actual electricity I use. The standing charge is nearly a pound. That’s crazy.
And the charge prioritises the well-being of the profit-making companies that supply energy over that of those who have to pay their exorbitantly-high bills (bear in mind that standing charges have risen by 43 per cent since 2019); the charge ensures that they have a predictable income stream.
And in 2023, while the poorest of us struggled to make ends meet, British Gas made almost 10 times as much profit as it reported the year before – £969 million, compared to £98 million. SSE’s operating profits for the year ending March 2023 were £2.18 billion.
This is a service industry. Profits should be minimal – if any are to be made at all. Instead, shareholders are sucking us dry, via a standing charge that has clearly been inflated far beyond the costs it is supposed to cover and does not reflect the energy usage of service users.
That’s why so many of us (yes, myself included) used the consultation to protest against it.
And Ofgem’s response?
It has been described as “complicated and misplaced”.
It proposes a dual pricing offer that supplier must make to users. One would continue with the standing charge – even though the only people who want it are (logically) those who would lose money if it was removed (in other words, the rich).
The other would ditch the standing order, replacing it with one of three options:
None of the options eliminate the unnecessary or unfair elements of the current standing charge.
The BBC says charities, along with the industry’s trade body, have criticised the plans, saying they fail to address the basic cost of standing charges and complicate the situation for bill-payers, rather than helping them. It continues:
The point of having a regulator is to ensure that privatised utility companies don’t rip us all off – but these proposals actually make it easier for them to fleece us.
Ofgem is a travesty.
With customers already – collectively – £3.8bn in debt to suppliers, the regulator should be helping us, not them.
Clearly it is not up to the job and whoever is running it now should be removed and replaced with somebody who understands the meaning of public service. Am I right?
Vox Political needs your help!
If you want to support this site
(but don’t want to give your money to advertisers)
you can make a one-off donation here:
Be among the first to know what’s going on! Here are the ways to manage it:
1) Register with us by clicking on ‘Subscribe’ (bottom right of the home page). You can then receive notifications of every new article that is posted here.
2) Follow VP on Twitter @VoxPolitical
3) Like the Facebook page at https://www.facebook.com/VoxPolitical/
Join the Vox Political Facebook page.
4) You could even make Vox Political your homepage at http://voxpoliticalonline.com
5) Follow Vox Political writer Mike Sivier on BlueSky
6) Join the MeWe page at https://mewe.com/p-front/voxpolitical
7) Feel free to comment!
And do share with your family and friends – so they don’t miss out!
If you have appreciated this article, don’t forget to share it using the buttons at the bottom of this page. Politics is about everybody – so let’s try to get everybody involved!
Buy Vox Political books so we can continue
fighting for the facts.
Cruel Britannia is available
in either print or eBook format here:
The Livingstone Presumption is available
in either print or eBook format here:
Health Warning: Government! is now available
in either print or eBook format here:
The first collection, Strong Words and Hard Times,
is still available in either print or eBook format here:
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