Households are facing increased energy costs due to 14 hidden charges outlined in the Warm This Winter Tariff Watch Report by Future Energy Associates.
These charges, incorporated into standing charges through the Ofgem price cap, include items like ‘Non-Locational demand residual banded charge’ and ‘Available Supply Capacity Charges.’
The report reveals a 119% rise in electricity standing charges since winter 2020/21, costing households £194 annually.
Distribution network operators underspent by £933 million between 2015 and 2022, with only half returned to consumers, according to the report.
Simon Francis, coordinator of the End Fuel Poverty Coalition, commented: “The complex world of electricity pricing should now be firmly in the sights of regulators and ministers. There must be a review into how we have arrived at so many covert charges and Ofgem must improve the transparency in the calculation of how our standing charges are arrived at.
“Of particular concern is the system whereby we are paying upfront for vital infrastructure upgrades which could help bring down electricity bills, but which are then not delivered. We need a full audit of what has been charged, what has been spent and what is owed back to the billpayer.”
Dylan Johnson, Director at Future Energy Associates commented: “Ofgem must improve transparency around Distribution Use of System (DuOS) charges. There’s a clear need for a centralised repository on their website, detailing these costs, and the formulas used for their calculation.
“Additionally, Ofgem should revisit their methodology for Line Losses, especially as we transition to a more decentralised energy system.
“For instance, in areas like Cornwall during sunny hours, Line Loss calculations must reflect the reduced losses when electricity is generated and consumed locally. This change is crucial for a fair and efficient energy system.”
An Ofgem spokesperson told Energy Live News: “We know that standing charges have provoked a huge amount of debate in recent months, with different balances to be struck, which is why we opened a call for input, and more than 40,000 people have responded to share their views.
“We know that with the wider cost of living pressures, people are concerned about their bills so we will now use these responses to inform how we approach this complex issue and set out next steps in due course.
“Over the past 12 months, we have seen a rise in switching as competition slowly returns to the market. People should weigh up all the information, seek independent advice from trusted sources and consider what is most important for them – whether that’s the lowest price, the security of a fixed deal or a higher standard of customer service.”
