Ofgem has announced plans to require suppliers to offer at least one tariff with a low standing charge from January and it has opened a consultation on the proposal.
Standing charges cover the fixed costs of delivering energy to peoples’ homes and businesses, including the cost of essential maintenance and infrastructure upgrades. The regulator has reviewed how essential costs are shared across the system.
The regulator said this change was unlikely to reduce bills, as tariffs with a lower standing charge will have a higher unit rate. Customers would consider their circumstances and seek advice from their supplier or consumer groups.
Tim Jarvis, Director General, Markets, at Ofgem said: “After examining all the options available to us, we believe that the right way forward is to require all major suppliers to offer at least one tariff with a lower standing charge. This will deliver the choice we know customers want, without having a detrimental impact on customers that have high energy needs, like those who rely on energy for medical reasons.
“The sector has already shown us it’s possible with some suppliers voluntarily offering low or no standing charge tariffs, but we need to see widespread availability across the market so this choice is available to everyone.”