Campaigners have written to Ofgem criticising the “gross injustice” of the current energy bills standing charges regime.
Standing charges make up a portion of the energy bill which every household user pays, regardless of how much energy they actually use.
Last week, Ofgem confirmed that the cost of market failures (e.g. energy firms collapsing) would continue to be recouped from consumers through the standing charges.
The decision comes just weeks after Ofgem confirmed an “inhumane” increase in energy bills will take place in January 2023 as well as this October. Ofgem are also now facing the prospect of legal action against its decisions following a notice of action from the Good Law Project last week.
Now Fuel Poverty Action and Disabled People Against Cuts have together written to Ofgem CEO Jonathan Brierley about present standing charges, including loading the cost of failed suppliers onto this part of people’s bills.
The letter states:
It is appalling that yet again Ofgem is punishing low income customers for its own failed regulation and the upside down priorities of the energy industry. … This is consistent with the blinkered approach that has led you to give “too much benefit to companies at the expense of consumers”, in the words of Christine Farnish, the Ofgem director who resigned recently.
Ofgem has claimed that high standing charges are the only way to protect high users, some of whom are people with health needs for electricity, e.g. for electrical medical equipment.
But the two groups suggest that Ofgem’s obligation towards vulnerable customers is being abused as an excuse for policies that impoverish and endanger thousands of people, including many who are disabled people.
They name instead several alternative ways to protect people with high energy needs – without impoverishing vast numbers of low income customers.
With Fuel Poverty Action’s proposal of Energy For All (e4a) each household would be entitled, free, to enough energy to cover basic needs, but people would pay a higher tariff for what they use above that amount. This would offer much needed security to all – including those who need more because of their health, disabilities, housing conditions, or family size. It would be paid for by the higher per-unit tariff on excess use, by windfall taxes and by ending the millions of pounds now poured daily into fossil fuel subsidies.
Other options listed include extensions of the Warm Home Discount, social tariffs, better disability benefits, and good safe insulation for vulnerable customers. And they say that companies that cannot fulfil their purpose of providing the energy people need at a cost they can afford, could – and must – be brought back into public hands.
Ruth London from Fuel Poverty Action commented:
Instead of looking at real, proportionate, workable changes to the current upside down pricing framework, Ofgem has chosen to continue hitting low income users harder than affluent neighbours. The standing charge means that however much they cut down their usage many people will never be able to pay their bills.
Paula Peters of DPAC says:
I’m a low energy user because I am terrified to switch it on and worrying about costs all the time. It’s making me permanently anxious as it is all of us. Last winter I was in a lot of pain with a cold house. I needed NHS intervention: a steroid injection and a Nebuliser at A & E.