April 16, 2024
Approximately £30 billion of these profits come from network costs included within energy bills, such as standard charges. These costs cover the expenses related to transmitting and distributing electricity and gas.
Recent years have seen standing charges increase significantly, and they are predicted to soar an additional 147% as of April 1st. This increase has been attributed to various fees, including 14 undisclosed network cost charges that are embedded within each bill. Gas standing charges have also increased by 15% since 2021.
Researchers claim that the average annual contribution of households to gas network costs has surged from £118.53 in 2021 to £163.69 as of April 1st, 2024, marking a substantial 38% increase.
The coordinator of the End Fuel Poverty Coalition, Simon Francis, has expressed concern about the situation. He said:
“As standing charges go up today, households will have to cut back on their energy use just to keep their bills the same. This means households continue to suffer as a few energy firms make billions in profits from running the electricity and gas networks. These numbers may look like fantastic amounts to shareholders, but the reality is that these profits have caused pain and suffering among people living in fuel poverty for the last few years.”
Energy Secretary Claire Coutinho has highlighted concerns about the potential limitations imposed on consumers’ ability to mitigate household costs due to the escalating standing charges in correspondence to Ofgem Chief Executive Officer Jonathan Brearley. She also noted that standing charges may act as a deterrent for energy users striving to enhance energy efficiency and contribute to achieving net-zero emissions.
Responding to these concerns, an Ofgem spokesperson stated:
“The standing charge is covered by the price cap, which sets a ceiling on how much should be paid. Energy companies do not have to set a standing charge.
“We know the standing charge is an emotive issue and are carefully considering the next steps following our call for input. However, there are no easy answers as the costs covered by it have to be paid. Moving them onto the unit rate may help some households but it would leave others significantly worse off.
“Where we can take action we have, such as equalising standing charges because we don’t think anyone should have to pay more because of the payment method they use. We are required under the price cap to allow the recovery of reasonable costs, which includes inflationary pressures and the costs of maintaining and upgrading the network to ensure a safe and secure energy supply.”
