Households up and down the country breathed a sigh of relief last month when Chancellor Jeremy Hunt cancelled the £500 Energy Price Guarantee (EPG) rise. However, daily fixed rates known as standing charges have increased, with new research showing the poorest being the hardest hit. Added to the removal of the rebate, a national energy charity believes an additional 800,000 households have fallen into fuel poverty this month.
The price cap on energy bills set by state regulator Ofgem fell by around 23 percent last Saturday to £3,280. However, while the Government’s EPG remains lower – and it will be so for the next three months following the Spring Budget pledge to keep it at £2,500 – that is what matters most.
Alongside limiting the amount suppliers can charge per unit of gas and electricity used, the EPG also caps standing charges for households on a default tariff or with a prepayment meter. These represent the fixed daily amount levied regardless of consumption.
The standing charge covers the cost of getting energy to the home – the wires and pipes but also the expense of meter readings and Government-mandated upgrades.
While the ceiling for unit costs under the EPG has remained the same, standing charges are tied to the Ofgem cap and went up on April 1. In Great Britain, they are now at £0.53 per day for electricity and £0.29 for gas, an increase of £0.07 and £0.01 respectively.
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These figures are only nationwide averages. In practice, standing charges vary by region depending on the complexity of the infrastructure required to supply homes in the area. While the EPG gas standing charge was capped at £0.29 across the country, the rate for electricity can differ substantially.
At £0.67 per day, electricity standing charges in the North Wales & Mersey energy supply region are the highest of all for prepayment customers – followed closely by Southern Scotland. The cheapest rates are in London, at just £0.43 a day.
Adam Scorer, NEA chief executive said: “For years, the standing charge has been growing. It makes life worse for low-income households who cannot afford the cost of a warm, safe home and have no choice but to cut back on their energy consumption — “It is high time for change.”
In the Spring Budget, the Government announced that between July 2023 and March 2023, prepayment customers would be compensated for their higher standing charges relative to direct debit payers – at a cost of £200million. For the following three months, however, they have no such support.
