Which? calls for Government to scrap standing charges

The energy market is still too “confusing and bewildering” for consumers to find the best deal, especially with the vast range of standing charges, according to Which? New research by […]

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By Priyanka Shrestha

The energy market is still too “confusing and bewildering” for consumers to find the best deal, especially with the vast range of standing charges, according to Which?

New research by the consumer watchdog found more than 109 different tariffs with around 75 variations of standing charges are currently available. They range from zero up to £402 a year on individual gas and electricity deals combined and as much as £373 on a dual fuel tariff.

Which? is calling for Ofgem to scrap standing charges and make tariffs simpler by displaying them in the style of petrol forecourt prices – which has been backed by EDF Energy – to make it easier for consumers. It claims Ofgem’s current reforms to simplify the energy market means suppliers can still include a standing charge as well as a unit price in their tariffs which will not help in making it simpler for consumers to spot and switch to the cheapest deal.

The consumer body’s survey found eight in 10 consumers could identify the cheapest deal when using the petrol forecourt style single unit price, with more than 10,600 people joining the campaign in support of the change.

Which? Executive Director Richard Lloyd said: “Ofgem’s current plans to reform energy tariffs do not go far enough to simplify the market for consumers. If the Government fails to take more radical action, people will not feel confident that they are paying a fair price for their energy.

“At a time when consumers are struggling with the cost of living and rising energy bills are one of peoples’ biggest financial worries, the Energy Secretary must step in to make it easier for consumers to work out the cheapest deal.”

The Government said it has been working with Ofgem to make it simpler for consumers and introduced powers in the Energy Bill to make sure the reforms are introduced.

Energy Secretary Ed Davey added: “Complex tariffs will be banned and all tariffs will have the simple structure of a standing charge and unit rate. Allowing suppliers the flexibility to offer tariffs with different standing charges has benefits for consumers. Consumers with low energy consumption could get better value from tariffs with a zero or low standing charge. Consumers that have high energy consumption could find tariffs with a higher standing charge better value.”

Power supplier E.ON last week said it is introducing a flat rate electricity and gas standing charge to make prices easier for small businesses.

Do you think standing charges should be scrapped for both householders and businesses? Is Ofgem doing enough to make the market simpler and fairer for consumers?

Come along to Energy Live 2013 to see what Energy Secretary Ed Davey as well as industry experts have to say on current issues in the sector.