The government has dismissed the idea of altering standing charges on energy bills, stating that doing so would result in trade-offs.
Labour MP Beth Winter asked the Secretary of State for Energy Security and Net Zero to assess the potential benefits of comparing energy suppliers’ standing charges to consumers’ ability to pay.
In response, Minister Amanda Solloway, responsible for Energy Consumers and Affordability, highlighted the potential consequences of changing standing charges.
The decision comes after Ofgem reviewed the components of the standing charge to determine if reductions were possible.
Ofgem’s assessment revealed that while some low-consuming users might benefit from the changes, higher-consuming users, including vulnerable individuals and those reliant on electric heating in off-grid gas areas, would likely face higher costs through increased unit rates.
As a result, Ofgem opted not to mandate alterations to the standing charge calculation methodology, Ms Solloway explained.
Despite the government’s position, calls for the elimination of standing charges persist.
The latest advocate for their removal is Chris O’Shea, Chief Executive Officer of Centrica, the parent company of British Gas. O’Shea argues that the existing system places an unfair burden on customers, particularly those from low income households and prepayment meter users, who are obligated to pay a fixed fee regardless of their actual energy consumption.
