Martin Lewis has welcomed a new announcement from Ofgem which says it will review the standing charge on energy bills.
The energy regulator said it wanted to open the debate over the charges, including opinions on how to change the system. Ofgem has asked billpayers, suppliers, charities and consumer groups for their views adding that it was the “right time” to look at standing charges due to wider cost of living pressures.
The standing charge is a fixed amount that customers must pay on their energy bill no matter how much gas and electricity use. Since October, the standing charge for direct debit customers sits at 53.37p per day for electricity and 29.62p for gas - so around 83p for both.
This means if you use no energy whatsoever for an entire year and your usage costs sit at £0, you will still need to pay around £300 to cover the standing charge. Standing charges are used to pay for things such as the upkeep of the energy grids and the amount varies depending on where you live in the UK.
The Money Saving Expert (MSE) website founder has long been an advocate against the standing charge and has previously called for the charge to be reduced labelling it a "moral hazard" which "disempowered" energy customers. In a post shared on X (formerly Twitter) today, Martin thanked Ofgem for listening to the calls but noted that they needed to listen to the feedback.
His post read: "Finally energy standing charges are to be reviewed. Thank you @Ofgem for listening at last, I hope you will listen in the review too. 90% want standing charges lowered or scrapped, though we need to protect vulnerable high users with illness or disability. It has been a long fought campaign to get this morally hazardous energy poll tax looked at, a flat £300 a year just to have energy meters is too much. I will put more info out in future on how you can feed into the consultation."
Martin then linked to a news report from his MSE website which went into greater detail on what he hoped for from the review and how he and his MSE team will respond to the consultation. He also issued an official comment which reads: "Keeping the standing charge high means lower users can save proportionately less and less by reducing usage – that disempowers them – and is a disincentive to energy reduction generally, which is not great for the environment.
"It also means that prepayment users can find themselves in energy debt in the summer, because they're not using energy but the meter is still ticking over because of the standing charge – a terrible, unnecessary situation for the payment type used by many of the most vulnerable. I have long campaigned for lower standing charges."
In a blog post on the MSE website earlier this year, Martin suggested Ofgem lower the standing charge by moving some of the costs to the unit rate. He also noted that those who are likely to have higher usage - such as people with disabilities or health conditions - receive more targeted support for their bills.
He explained: "This would mean cutting usage has more impact on cutting bills – that empowers people to take action that's good for themselves and likely the environment too."
The call for input on standing charges is open now until Friday, January 19, 2024, and people can send their views to the regulator by emailing StandingCharges@ofgem.gov.uk before the closure date.