Martin Lewis reacts to Ofgem’s plans to introduce energy tariffs with no standing charge

Martin Lewis responds to Ofgem’s plans to introduce energy tariffs with low or no standing charges.

Under plans announced by the energy regulator, every supplier could be required to offer a tariff with either a low/no standing charge starting from this winter. Households would then be able to choose the tariff that best suits their needs, with low energy users likely to benefit most from the move.

Martin Lewis, founder of MoneySavingExpert.com, said: “This is progress. Standing charges are by far the most complained-about part of an energy bill. It costs in excess of £300 a year just to have the facility of gas and electricity, even if you don’t use any. They’re a moral hazard that disincentivises lower users from cutting their bills, and leaves many older people, who only use gas for heating in the winter, still paying for it every day in summer.

“However there is one big hole in what’s currently proposed. The new ‘low or no standing charge’ Price Cap option should reduce costs for lower users – my guess is perhaps those paying under £120/mth – but to get it people have to opt in. Yet the Price Cap’s primary purpose is to protect those who don’t, can’t or are scared to switch or change tariff – and it’s many of those people for whom this option will be most suitable and needed. Thus, there’s a risk many vulnerable lower users may miss out.

“In our consultation response I will propose that firms must move vulnerable lower users to the ‘low or no standing charge’ tariff by default (using an opt-out mechanism) if their prior year’s usage indicates they would be materially better off on it than the standard Price Cap.”

-ends-

For further comments and interviews, please contact:
Press Office
Tel: 0203 846 2796
press@moneysavingexpert.com

Notes to Editors:

• As included in previous press releases, we proposed this dual-standing charge Price Cap option to Ofgem in our original consultation response, and we welcome Ofgem adopting it.