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Electricity standing charges soar

A recent analysis reveals that energy companies have amassed over £420 billion in profits since the onset of the energy crisis, with a significant portion attributed to inflated standing charges

Energy companies have accrued over £420 billion in profits since the beginning of the current energy crisis, according to an analysis by researchers affiliated with the End Fuel Poverty Coalition.

This analysis examined financial reports from various entities in the energy sector.

Approximately £30 billion of these profits come from the entities responsible for transmitting and distributing electricity and gas, known as “network costs,” which are covered by standing charges on consumers’ energy bills.

In recent years, there has been a significant increase in electricity standing charges, with a projected 147% rise starting 1st April.

This increase is driven by various fees, including 14 concealed charges within each bill for network costs. Gas standing charges have also risen by 15% since 2021.

Researchers estimate that the average household’s contribution to gas network costs has increased from £118.53 annually in 2021 to £163.69 as of April 1st, 2024, marking a significant 38% rise.

Simon Francis, coordinator of the End Fuel Poverty Coalition, commented: “As standing charges go up today, households will have to cut back on their energy use just to keep their bills the same.

“This means households continue to suffer as a few energy firms make billions in profits from running the electricity and gas networks.

“These numbers may look like fantastic amounts to shareholders, but the reality is that these profits have caused pain and suffering among people living in fuel poverty for the last few years.”

In a letter sent to Ofgem Chief Executive Officer Jonathan Brearley, Energy Secretary Claire Coutinho said: “There is concern about how standing charges going up may limit consumers’ ability to reduce household costs.

“And in addition to minimising costs, some of the growing numbers of energy users striving to consume energy more efficiently and help towards achieving net zero see standing charges as a disincentive to doing so.”

An Ofgem spokesperson told Energy Live News: “The standing charge is covered by the price cap, which sets a ceiling on how much should be paid. Energy companies do not have to set a standing charge.

“We know the standing charge is an emotive issue and are carefully considering next steps following our call for input. However, there are no easy answers as the costs covered by it have to be paid. Moving them onto the unit rate may help some households but it would leave others significantly worse off.

“Where we can take action we have, such as equalising standing charges because we don’t think anyone should have to pay more because of the payment method they use. We are required under the price cap to allow the recovery of reasonable costs, which includes inflationary pressures and the costs of maintaining and upgrading the network to ensure a safe and secure energy supply.”

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