Standing charges threaten energy tariff simplicity

The price comparison website said that the RMR proposals, which have abolished two-tier charging rates in favour of a single rate for all usage and allow a standing charge to be set, suppliers could introduce a “plethora” of standing charges “leaving consumers facing a bewildering maze of charges”. 

Currently, energy consumers face a choice of 45 different standing charges, with only EDF Energy from the big six suppliers offering a single standing charge across tariff and payment types.

British Gas is set to reduce its standing charge range from a total of eight to one by the end of the year.

The price comparison site also has concerns about the price differential between the costs of the standing charges, with the average difference between the cheapest and most expensive being £68.

Ann Robinson, director of consumer policy at Uswitch.com, said: “With standing charges we are in danger of seeing one layer of complexity being replaced by another.”

She added: “There is a warning here for Ofgem too – it has one shot at getting this market right for consumers, which is why it must keep a close watch on standing charges to ensure that complexity isn’t allowed to creep back in.

“Failure to remove complexity could see its vision for the competitive market derailed once-and-for-all.”

A spokesperson for Ofgem said the RMR proposals will ensure tariffs all have the same structure – a standing charge with a single unit rate – “means that complex, multi-tier tariffs will be banned as customers have told us that they are far too confusing.

“These reforms, which also include other ways of simplifying energy tariffs by limiting suppliers to offering a maximum of four core tariffs per fuel, will make it far easier for customers to compare deals across the market.”