Households cutting back on gas and electricity use to save money are being stung by “standing charges” that are applied no matter how much energy they use.
Standing charges – also known as ‘daily unit rates’ – are set by energy companies, and are added to customers’ bills at a flat rate.
Speaking on BBC’s Today programme, Emely Seymour, an energy expert at Which?, said high standing charges were frustrating to households who were being charged despite their attempt to save money through reduced usage.
Standing charges are incorporated into the price cap, set by the energy watchdog Ofgem, which limits the amount providers can charge customers on variable tariffs.
But rates can vary across the country, meaning those living in areas such as the South West, where transporting electricity is more costly, pay more than those who live in areas like London.
Most households saw their standing charge increase in April, when regulator Ofgem raised the price cap from £1,277 to £1,971.
On average, the cap for the daily standing charge is 45p for electricity and 27p for gas – or £262.80 a year.
Peter Nicholls, 46, saw his standing charge for electricity rise from 23.9p to 46p when the price cap shot up in April.
Mr Nicholls, who is incapacitated long term with chronic fatigue syndrome and fibromyalgia, said: “I really rely on being able to either cool myself in heat or warm in winter as my body is useless at temperature regulation.
“I’ve got a meter monitoring device. I’m on low power devices, LEDs that I have dim, automated smart home stuff, an intelligent thermostat. I’ve done everything I can.”
One for re-tweet perhaps!: Energy - I'm on dual fuel, my standing charges have gone from £62 p.a. to £255 p.a. and I'm far from alone. If all 22.5m dual fuel households are similar that's an EXTRA £4.3 billion (billion!) Energy Suppliers are making at the stroke of an Ofgem pen.
— Roger H Edwards (@SgethinH) August 11, 2022
Most providers currently charge the maximum daily unit rate, according to Joe Malinowski, of The Energy Shop, a price comparison service. Only two providers, he said, charged rates below the cap.
Mr Malinowski said it was “almost certain” energy companies would increase their standing charges after the price cap increase.
The charges are increasing, he explained, to pay for increased network increase costs and to fund investment in infrastructure. “The cost of supplier failures has also been dumped in there,” he added.
Data from Uswitch, another comparison site, shows standing electricity charges rose 80pc when the price cap was last changed in April, while the gas standing charge only went up 4pc.