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Campaigners ask Ofgem to reduce energy standing charges claiming not doing so could cause deaths



Fuel campaigners have written to Ofgem and asked it to reduce standing charges that are increasing rapidly.

These charges are set to soar by 80 per cent as of Friday, at the same time energy bills are also set to soar, as a result of over half the suppliers in the market going bust earlier this year.

Prices are due to rise from 0.25p to 0.45p with collapsed providers accounting for £68 of the £75 increase to the standing charges.

Fuel Poverty Action called the standing charges “regressive” and said “the poorest consumers are paying for negligent policymaking.”

What are standing charges?

These charges are a fixed daily amount consumers pay to cover the costs to supply gas and electricity, no matter how much energy they use.

The charges pay for costs that are fixed for a supplier, including service administration fees and connections to and maintenance of the energy network.

There are regional differences as suppliers generally set prices based on differences in network charges and the complexity of the network infrastructure in different areas.

This means the price you pay reflects how much it costs to transport energy to where you live.

What do campaigners want to change?

Fuel Poverty Action is now calling on Ofgem to reduce these standing charges, or get rid of them entirely, claiming they hit the poorest the hardest.

It said fixed charges are well known to penalise the poorest energy users, who consume less energy.

Research from Ideal Economics shows the poorest 10 per cent will now spend almost a third of their energy payments – around £265 – on merely connecting to the energy system.

In its place, campaigners are asking for Energy For All, giving everyone a free energy allowance to cover the basics of heating, cooking and lighting, taking account of their needs related to their age, health, and housing.

It said it could be funded at least in part by a windfall tax on energy and withdrawal of the fossil fuel subsidies that cost the UK Government millions of pounds every day.

More from Bills

Additionally, it proposes that wealthy consumers who can afford it pay for their higher energy usage, above this basic allowance, via an increase in the unit charge.

It said increasing the unit charge in this way has the additional benefit of incentivising reduced energy use, and therefore reduced fossil fuel consumption.

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 also 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 also calling on Ofgem to reconsider the use of prepayment meters. These meters are more expensive than standard ones but are often used by the most financially vulnerable to help them budget their spending.

It said in the letter: “To continue these punitive policies on standing charges and prepayment meters in the face of the current price rises is unacceptable. It will cause deaths. We ask you to urgently reconsider.”

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