Ofgem urged to cut standing charges to help cash-strapped households

Ofgem is urged to cut standing charges to help cash-strapped households through winter

• Standing charges is the part of a bill paid regardless of how much energy is used
• Octopus Energy boss said customers couldn’t understand why they were so high
• Octopus is to cut 4 per cent off standing charge for those affected by price cap 
• Boss said Government is right to help with energy bills but needs plan for future

The energy watchdog should cut standing charges, one of Britain’s biggest suppliers said yesterday.

Octopus Energy boss Greg Jackson said customers could not understand why standing charges – the part of a bill they pay regardless of how much energy is used – were so high.

Octopus is to cut 4 per cent off the standing charge for those affected by the price cap set by the regulator Ofgem. Mr Jackson said: ‘Customers want to see standing charges come down. Octopus can take a lead on it. I hope Ofgem follows.

An elderly woman warming herself by an electric fire amid ongoing soaring energy bills

Octopus Energy boss Greg Jackson (pictured) said customers could not understand why standing charges – the part of a bill they pay regardless of how much energy is used – were so high

‘Standing charges are pernicious for low-energy users. If you reduce energy consumption, you’re still paying standing charges, so it reduces the incentive to save energy. And saving energy has got to be the biggest thing this winter.’

He said the Government was right to help people with energy bills, but it needed a plan for the future, adding: ‘We should treat this with the same urgency as the vaccine during the pandemic. You can build a wind farm in less than a year – it takes on average maybe seven years to get grid connections and planning permission.’

Ofgem recently consulted on changes that would move part of the standing charge to the per-unit cost for electricity.

The regulator said that the consultation found that it would disproportionately impact some of the most vulnerable who struggle to reduce their energy use.

Mr Jackson said: ‘I think the big question now is, how do we come out of this as a nation, so we don’t end up kicking energy bills into the long grass forever?

‘I think it’s entirely right that the Government has brought in a scheme of this scale, to help absorb what’s happening in the global gas market, driven by the war in Ukraine.

‘Now what we need is an exit ramp, through greater energy security … market reform and through energy efficiency.’

He added that by adjusting boiler flow temperatures many households could save 5 per cent to 10 per cent on their gas bills ‘without affecting your comfort’.

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