Plans for new sustainable duty-free energy tariffs

Under proposed changes to bills by regulator Ofgem, energy companies would be forced to offer customers tariffs with no fixed charges.

All households pay a set daily fee covering the cost of connecting to the supply, but there are widespread calls for these fees to be abolished.

Ofgem is proposing to offer suppliers one price-capped tariff that includes sustainable charges, and another that loads these costs onto the energy usage charge. Customers can choose the one that suits them best.

The overhaul, planned for next winter, also raises the possibility that some unpaid bills incurred during the recent high price crisis will be forgiven.

When Ofgem asked for public opinion on the standing charges it received an unprecedented response of 30,000 submissions.

The majority was against standing charges – fixed charges, usually more than £300 per year, which are paid regardless of how much energy a home uses.

Under Ofgem’s price cap, standing fees have increased by 43% since 2019.

Low energy users, such as people who live alone, argued that even if they reduced gas and electricity use, they saw little difference in their bills. They wanted more control over their bills.

However, people with high energy needs could see large increases in their bills if these charges were included in the price of each unit of energy used. This will mean higher bills for disabled people who have to charge for specialist equipment.

Alex Belsham-Harris of Citizens said, “We hear from people who have turned off their heating, turned off their hot water supply, and avoided charging essential mobility devices, yet they feel They are fighting a losing battle with their energy bills.” Advice.

Ofgem’s proposed solution is to ask energy companies to offer dual pricing – one with a standing charge and one without a standing charge. Both will fall under the existing price ceiling system,

Such tariffs already exist, but only for a handful of suppliers and not available to all.

Customers must choose an option, but some campaigners want those with lower energy usage to automatically move onto a permanent duty-free deal.

“The problem with offering the option of a price cap is that many vulnerable people will not choose that option,” said Martin Lewis, founder of Money Saving Expert.

One of those who could benefit will be Joan Wilkinson.

“I try not to look at (the standing allegations) because it’s disappointing,” she said.

She said she was worried about dealing with her daughter Adeline, but she noticed how quickly the meter passed the money loaded on it.

Low wages in the north of England made it even more difficult for parents like her to afford energy bills, she said, especially when she was still on maternity leave.

But Energy UK, which represents suppliers, said such a fundamental proposed change needed to be considered carefully.

“It will be a huge undertaking to make all customers aware of this change and ensure they choose the best option for their circumstances,” said Section Vyas, chief executive of the trade body.

The proposals also failed to deal with the variation in standing charges in different parts of the UK, leaving bill payers in some areas paying significantly more. Ofgem intends to make that part of a wider, separate investigation.

The amount owed by customers to suppliers has almost doubled in two years, now totaling almost £3.8 billion.

The regulator is also preparing a plan for next winter that would deal with some of this debt built up during the period of high prices, which has little chance of being repaid.

It is planning a “debt guarantee” to improve the standard of service given by suppliers supporting debt-ridden customers, saying it will give families “consistent, compassionate and tailored support”.

Suppliers may also be required to accept loan repayment offers from reputable third parties such as debt advice agencies or consumer organisations.

One option for energy crisis dues could be loan-matching – whereby customers would repay some of the debt, and energy companies would forgive the same amount.

Some of these costs are already included in the allowance, but the burden of financing may fall on all customers through higher bills.