The Committee on Fuel Poverty has recommended that Ofgem considers a tariff mandate as a replacement for standing charges in the energy sector.
As per the committee’s suggestion, introducing a variety of tariffs could enhance fairness, especially for low income households.
The committee said: “The committee would encourage Ofgem to consider mandating provision of a variety of tariffs and obliging suppliers to use data on energy use to put their customers on the best combination of unit rate and standing charge for their energy usage patterns.
“One suggestion is two standing tariffs, one with a low standing charge and one with a higher, with guidance to help consumers use the tariff most appropriate for them and their energy use.”
Research commissioned by the committee, exploring the hardships faced by fuel-poor households, indicates that during winter 22/23, low income families curtailed fuel consumption to manage costs while still grappling with standing charges.
According to the committee, the transition from standing charges might have more significant repercussions than Ofgem’s minimal modelling suggests.
Additionally, there is a suggestion that more in-depth analysis could provide insights into the financial implications of standing charges and consumer behaviours aimed at reducing expenses.
