The boss of Centrica, owner of British Gas, has called for the elimination of standing charges in energy bills, citing the need for a simpler and more transparent pricing system.
Chris O’Shea argues that the current practice unfairly burdens customers, especially those from low-income households and prepayment meter users, who are obligated to pay a fixed fee regardless of their actual energy consumption.
By removing standing charges and incorporating the costs into the unit cost of the price cap, O’Shea believes that energy bills can become more understandable and equitable.
O’Shea said: “The standing charge hits people who are careful about their energy use hardest – and these people are often from low-income households, and prepayment meter customers in particular.
“I know from conversations with prepayment customers that the standing charge can see them unknowingly building up debts over the warmer summer months. So why don’t we simply get rid of this charge and roll the costs into the unit cost of the price cap instead, then those who more carefully manage their energy use could see really big benefits.
“Customers also currently face a postcode lottery of regional electricity pricing. This means for example that someone in London or Leeds will be paying less for their electricity than a customer on the same tariff with the same usage in Liverpool or Edinburgh.
“Moving to a flat national pricing tariff – which is the same wherever you live in the UK – removes further unnecessary variations from bills. The impact of this change would need to be carefully studied but we think it’s something the regulator should look at.
“Finally, we need to take the opportunity to implement a progressive social tariff so that those who most need additional support to pay their bills can receive it.”
