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Energy bills: Martin Lewis and charities seek standing charge changes as Ofgem plans reforms

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·3-min read
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Energy bills Money Saving Expert's Martin Lewis during a joint press conference with Facebook at the Facebook headquarters in London.
Money Saving Expert's Martin Lewis. Energy bills have skyrocketed in recent months as household budgets are squeezed. Photo: PA

Martin Lewis and representatives from charities including Citizens Advice and StepChange met with CEO’s of OVO, British Gas, Octopus, E.ON (EON.BR), EDF (EDF.PA) and Shell (SHEL.L) to find ways to support struggling customers with their energy bills this winter.

The roundtable on Friday proposed clarity on how direct debits are set, working together to ask Ofgem to shift the burden away from standing charges.

It also suggested creating a unified tool to help vulnerable households get the support they need, and called for energy firms to provide more direct support to consumer debt charities.

The energy price cap jumped 54% in April and average bills rose by £693 ($834) a year for around 18 million households on standard tariffs, and £708 for 4.5 million prepayment customers.

"This roundtable highlights the important role businesses have to play in tackling the cost of living crisis, and it is encouraging to see energy suppliers working with charities and consumer groups," said Rocio Concha, Which? director of policy and advocacy.

"The steps being taken to improve energy bill transparency and ensure help reaches those who are struggling could make a real difference."

In June, Ofgem proposed changes to tighten rules on the level of direct debits suppliers can charge in an effort to protect credit balances when firms fail so the costs are not passed onto customers.

Around 28 energy suppliers have gone bust since September 2021, in the wake of soaring wholesale energy prices.

Consumers paid, on average, an extra £94 each to cover the costs of moving to new suppliers.

Read more: Energy bills direct debit: What Ofgem announcement means for consumers  

It comes as Britain's energy watchdog has proposed a series of potential reforms to reduce the UK's reliance on gas imports after the Ukraine war fuelled an energy crisis.

Ofgem, which regulates bills for 23 million households, said the reforms could help deliver more than £10bn a year savings to customers by 2050.

A string of high profile closures linked to high wholesale oil and gas costs, exacerbated by Russia's invasion of Ukraine, has driven energy bills to record highs, crippling households and industry.

Ofgem's plans on Friday include splitting the wholesale electricity market to reduce the potential for the gas market to set prices in the power market.

"Using pricing signals could include moving from setting wholesale electricity prices at a national level to either a regional or local level," the watchdog said.

It also made suggestions to "accelerate the transition towards cleaner, more secure and affordable supplies of home-grown energy".

The regulator added existing market, regulatory and institutional arrangements were "not geared up" to running a net-zero power system in the most cost-effective way.

Ofgem will discuss the feasibility and benefits of the potential measures with the government and stakeholders.

Read more: Cost of living: Britons buying less food, ONS survey finds

It comes as analysts at Cornwall Insights forecast the government price cap on energy prices will rise by more than 60% in October to an average of £3,244 a year, largely due to soaring gas prices.

This up from £1,971 per year at the moment, delivering another blow to struggling households.

Cornwall estimates the default tariff cap to increase again, to £3,363 per year, in January-March 2023, under Ofgem’s new quarterly cap changes.

Watch: Why are gas prices rising?

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