Ovo Energy is calling on the government to remove standing charges for the most vulnerable customers this winter and has confirmed it will be retaining the current standing charge level after the 1 October price cap comes into effect.
The company has also renewed its calls on the government to introduce a social tariff by next year.
Despite Ofgem’s price cap decreasing to £1,923 from next month, the standing charge is set to increase to around £275 for all households, regardless of the amount of energy they use.
Price for customers on a standard variable tariff (default tariff)
To alleviate the pressure on its vulnerable consumers, the supplier is not passing on the standing charge increase to them. A spokesperson confirmed to Utility Week that Ovo will be absorbing these costs.
In the meantime, it is calling on ministers to scrap the standing charge for all households who need the most support this winter.
The company has additionally reiterated its calls for a social tariff, targeted at the most financially vulnerable, to be in place by winter 2024.
Elsewhere, Ovo has announced a multi-million pound support package to further help its struggling customers, as well as funding charities such as StepChange.
Raman Bhatia, chief executive of Ovo, said: “Energy bills are set to stay high despite the recent price cap reduction. This leaves many households with stretched finances struggling to pay. We are calling for a reform of the unpopular standing charge and a social tariff for the most financially vulnerable.”
StepChange chief executive Vikki Brownridge added: “This winter will continue to be challenging for households across the UK. The support announced by Ovo will offer welcome relief to those continuing to struggle with the cost of living crisis.
“Government must look at all options to deliver more to support consumers – particularly those on pre-payment meters – ahead of another bleak winter. StepChange has long called for the implementation of a social tariff, which will help to shield the most vulnerable in our society from continued high energy costs.”
A Department for Energy Security and Net Zero spokesperson said in response: “Ofgem assessed the impact of removing standing charges and concluded costs would increase for people who use more energy – such as the most vulnerable who need to keep their homes warmer due to medical conditions.
“We spent £40 billion covering half a typical household’s energy bill over the winter, and additional help is available for the most vulnerable through an increase to the Warm Home Discount, which is expected to help over 3 million families.
“Energy prices have now fallen significantly, and we continue to monitor the situation and keep options under review, including for the most vulnerable households.”
Ovo is not alone in calling for a social tariff. EDF is also a keen advocate of such a measure and has released new research showing that 77% of the British public are in favour of introducing a social tariff for vulnerable energy customers – rising to 83% of those over 65.
Nearly half (49%) of those polled by EDF favour a bill reduction of between 10%-25% through a social tariff.
Of those who support a social tariff, almost six times as many say it is fairer to fund the measure through taxation than through energy bills (59% vs 9%).
Philippe Commaret, managing director for customers at EDF, said: “While prices have fallen in recent months, they’re still double what they were pre-crisis and we’re seeing more households starting this winter in debt compared to last year.
“Our research shows that support from the British public for a social tariff is strong, but that the solution mustn’t burden all customers with higher bills. We’re urging the government to push ahead with its plans to launch a social tariff next year and publish a consultation as soon as possible.
“Until then, there are many customers already struggling ahead of this winter and we think interim support from the government is needed until a social tariff can be introduced. EDF will be stepping up the support we offer to customers this winter.”
Providing vulnerable consumers with additional support this winter and beyond is a core element of Utility Week’s Action on Bills campaign.
The key asks of government are:
- A clear plan for targeted support on energy bills for vulnerable customers to be put out to consultation before the summer recess with a target of putting this into action by April 2024
- A revised Energy Bills Support Scheme to be brought in for next winter while a more targeted approach is being designed
- Defra to support social tariffs in the water sector through a clear funding commitment and a definitive stance on whether there should be a single social tariff
This topic will be explored in more detail at Utility Week’s Consumer Vulnerability and Debt conference in Birmingham this November. For more information and to book your place, click here.