Peter Clarke

WHY ARE ENERGY STANDING CHARGES SO HIGH? The high energy standing (daily) charges are a moral hazard and should be reduced. It is outrageous that people have to pay £300/yr just for the facility of having gas & electricity even if they use none. While energy price cap & bills drop an avg 17% this Sat, that ISN'T equal for all:- - Standing charges remain unchanged - Elec unit rate is dropping roughly 10% - Gas unit rate is dropping roughly 25% So higher users, especially with gas will see a bigger than 17% drop. Lower users, especially electricity only, will see a lower than 17% drop. Keeping the standing charge high means lower users can save proportionately less and less by reducing usage - that disempowers them. I have long campaigned for lower standing charges. MSE is submitting a consultation on this about shifting some of the cost the the unit rates. The reason Ofgem mandates firms to have high standing charges in the price cap is because they use it to pay for the 'fixed costs' of energy (distribution, transmission etc) - which it believes should be mostly shared equally. It is especially loaded onto the electricity standing charge as that is 'more universal'. I think a more progressive split would be better, by putting a bigger proportion of the cost on the unit rate. And in past polls I've done on here the huge majority agree. One stumbling block is the argument from Citizens Advice, an organisation I have great respect for. Its concern is that if you shift the burden, some vulnerable people with disabilities and medical issues that make them high users will suffer. Of course the correct solution to that is lower the standing charge but give them separate support. Yet that would involve an energy market that wasn't broken and the regulator and government to operate in concert. So we're in a chicken and egg situation. Still on balance I think the fair thing to do is lower the standing charge (and campaign for help for the high using vulnerable at the same time). Yet I wanted to bash this out quickly as I saw much debate on it after my earlier tweets, and I wanted to explain some of the bigger picture.