OVO Energy has announced higher daily standing rates under October’s price cap will not be passed on to customers, in an act of defiance against regulator Ofgem and the government.
Though Ofgem’s price cap will fall in October, meaning consumers pay less per unit of energy, daily standing charges for electricity and gas are set to remain the same and actually rise respectively.
Households on standard variable tariffs will pay 53p and 30p each day regardless of their energy consumption from October.
Overall, standing charges are set to cost each household £300 over the year, according to OVO, suggesting that the daily costs were unfair for the most vulnerable households.
“Energy bills are set to stay high despite the recent price cap reduction,” OVO chief executive Raman Bhatia said. “This leaves many households with stretched finances struggling to pay”.
Households are using less energy on average than in 2019 directly as a result of price increases, according to University of Oxford academics.
Given standing charges will not fall come the winter months, regardless of lower unit costs, those using less risk missing out on any substantial savings.
“The government could remove the standing charge from bills […] and target this at the most vulnerable households,” Vikki Brownridge, boss of OVO partner StepChange, said.
Several across the industry have urged the government to introduce a social tariff, which would grant the most vulnerable cheaper bills, with OVO joining the calls.