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Energy companies will be forced to offer their customers tariffs without ongoing charges, under a proposed bill shake-up by regulator Ofgem.
All households pay a fixed daily charge to cover the costs of connecting to a network, but there have been many calls for these charges to be scrapped.
Ofgem suggests that suppliers offer a capped tariff which includes fixed costs, and another which charges these costs against energy consumption charges. Customers can choose what suits them best.
The planned overhaul, for next winter, also raises the possibility that some unpaid bills accumulated during a recent high-price crisis could be canceled.
Permanent Charge Anger
When Ofgem asked for the public's views on the continuing accusations, it received an unprecedented response of 30,000 responses.
The majority were against standing charges – fixed charges, typically amounting to more than £300 a year, which are paid regardless of how much energy households use.
Under Ofgem's price cap, ongoing charges have increased by 43% since 2019.
Those with low energy consumption, such as people who live alone, argued that even if they reduced their gas and electricity consumption further, they saw little difference in their bills. They wanted more control over their bills.
However, those with high energy needs could see their bills increase significantly if these fees were instead included in the price of each unit of energy used. This would lead to higher bills for disabled people who need to charge specialist equipment.
“We hear from people who have turned off their heating, rationed their hot water and avoided charging their essential mobility devices, but still feel like they are fighting a losing battle with their energy bills,” she said. said Alex Belsham-Harris of Citizens. Advice.
Ofgem's proposed solution is to ask energy companies to come up with a dual price offer – one with and one without an ongoing charge. Both would be subject to the existing price cap system.
Such rates already exist, but only with a handful of providers and are not accessible to everyone.
Joanne Wilkinson says energy bill is depressing
Customers will have to make a choice, but some campaigners want those who use low energy to automatically benefit from a permanent no-cost offer.
“The problem with presenting a choice of price caps is that many vulnerable people will not make that choice,” said Martin Lewis, founder of Money Saving Expert.
One of those who could benefit would be Joanne Wilkinson.
“I try not to watch (the continuing accusations) because it’s depressing,” she said.
She said she had enough to worry about with her little daughter Adeline, but she noticed how quickly the meter was going through the money loaded into it.
Lower wages in the north of England make it even harder for parents like her to pay their energy bills, she said, especially as she is still on maternity leave.
But Energy UK, which represents suppliers, said such a fundamental change proposal required careful consideration.
“It would be a major undertaking to make all customers aware of this change and ensure that they then choose the best option based on their circumstances,” said the trade body's chief executive, Dhara Vyas.
The proposals also fail to address the variation in fixed charges in different parts of the UK, with bill payers in some areas paying significantly more. Ofgem intends to incorporate this as part of a wider, separate investigation.
Debt Repayment Plan
The amount of money owed to suppliers by customers has almost doubled in two years, now totaling around £3.8 billion.
The regulator is also presenting a plan for next winter which would make it possible to remedy part of this debt, accumulated during a period of high prices, and which is unlikely to be repaid.
It plans a “debt guarantee” to improve the level of service offered by providers supporting indebted customers, which it says would provide households with “consistent, compassionate and tailored support”.
Providers may also be required to accept debt repayment offers from reputable third parties, such as debt counseling agencies or consumer organisations.
One option to address arrears linked to the energy crisis could be debt matching, which would see customers repay a portion of the debt, with energy companies writing off an equal amount.
Some of these costs are already covered by an allowance, but could fall on all customers and finance them through higher bills.
