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The Markets
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The Markets
by Proactive
Proactive UK has moved.
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Energy

Ofgem gets huge response from public over standing charges

Energy regulator Ofgem has said thousands of people have responded to a review on the use of daily standing charges in bills.

Some 20,000 people have contacted the regulator during a consultation which is due to end on Friday, Ofgem said, reflecting mass discontent towards the fixed costs.

Daily standing charges are included in consumer bills to cover the likes of networking and the costs of supplier failures.

Given they are fixed depending on where customers live, typically costing 53p for electricity and 30p for gas per day respectively, such charges have been criticised for reducing the effectiveness of cutting down on energy usage to save on bills.

This is likely to affect the most vulnerable, critics have argued, with daily standing charges having doubled over the past two years.

"We know that with wider cost of living pressures, people are concerned about their bills,” an Ofgem spokesperson said on Friday.

“We will now use these responses to inform how we approach this complex issue and set out next steps in due course.”

Ofgem has proposed to hike standing charges come April to allow suppliers to recoup debt, after the amount owed to energy firms climbed to nearly £3 billion toward the end of last year.

This would coincide with an anticipated fall in gas and electricity prices themselves, worth hundreds of pounds in Ofgem’s price cap, which are expected to feed through to lower bills.

Centrica PLC (LSE:CNA) boss Chris O’Shea said subsidiary British Gas would favour allowances to cover such debt being included in energy unit prices rather than standing costs on Friday.

“The unit rate would have to go up to compensate for that,” he said on BBC Breakfast, “but it means those who use more pay more, those who use less would pay less.”

British Gas was among energy suppliers to benefit from Ofgem allowing companies to charge more to recover debts in the first half of 2023.

Alongside the likes of Eon which scored a 40% increase in pre-tax earnings, British Gas generated an 889% jump in pre-tax profit of £969 million as consumers were allowed to face inflated prices.

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