Major overhaul to standing charges could help SLASH energy bills
A MAJOR overhaul to standing charges could help to SLASH energy bills.
Ofgem's boss said this morning that the energy regulator will look to see if standing charges can be reduced as energy bills soar.
The energy watchdog's chief executive Jonathan Brearley said the charge would be reviewed as the energy price is due to increase to £2,800 in October.
The next price cap hike means households could see their bills go up by a further £830.
The standing charge is a cost applied automatically to your energy bills before any gas or electricity is used.
The standing charge for electricity rocketed by 25p to 45p a day in April, while households now by 27p a day for gas.
It means even if you use ZERO energy, you'll still face a bill of around £260 a year.
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You then pay a unit rate on top of this for the actual energy you use - this is 7p per kWh for gas and 28p per unit of electricity.
Billpayers were furious about the hike in April, and said they were confused over what the standing charge actually covers.
But Mr Brearley told BBC Breakfast that Ofgem could potentially slash this charge - meaning some customers could pay less on their bills.
He said: "One thing we are doing is looking at how that standing charge is made up.
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"We are looking at components of it to see, potentially, if it can be reduced."
He added that Ofgem is looking into how it can ensure households are paying a "fair" price for their energy bills.
The standing charge is a fixed cost so unfortunately you can’t reduce this part of your bill by using less energy.
Standing charges cover the cost of running and maintaining the energy network, a bit like line rental with a landline phone.
It also covers the cost of failed energy firms and more than twenty have gone bust recently because of rocketing wholesale prices.
The amount charged varies across the country but the energy price cap does still apply.
For example, British Gas customers in the south west of England pay 49p a day for electricity, while the standing change is just 31p in London.
Meanwhile, EDF has a standing charge of 47.67p for customers in Scotland and 36.11p for those in the East of England.
Ofgem said suppliers can set their own standing charge and tariff rates, as long as bills don't exceed the average total amount.
It means the south of England often has higher standing charges as well as remote parts of Scotland and Wales.
What help is there if I'm already struggling with my energy bills?
Households are already struggling to cover the cost of their energy bills, so further rises will only mean they need more support.
Your first step should be to contact your energy supplier.
They may be able to change your payment plan or check if you're eligible for their hardship fund.
For example, British Gas and Octopus have both set up funds to help customers who are struggling with their bills.
You should also check that you're getting all the benefits you're entitled to.
Use an online benefits calculator to make sure you're not missing out on any extra cash.
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Similarly, you can that can help you pay for gas and electricity bills.
You'll also be in line for a £400 energy bill discount from October.
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