Fair By Design responds to Ofgem's call for input on standing charges

Fair By Design, an independent organisation, published its response to Ofgem's call for input on standing charges on 19 January 2024¹. The response urges that standing charges be reduced and that the fixed costs of the energy system be recovered in a more progressive way¹.

Ofgem opened the call for input in response to concerns about the high level of standing charges¹. Fair By Design states that since 2021 standing charges for domestic electricity customers have increased significantly, and that for people paying by direct debit they more than doubled from £86 to £186 per annum on average between 2021 and 2023¹.

The organisation said it recognises that some low-income groups would be adversely affected by a change to standing charges if it were not accompanied by other measures¹. It also wants Ofgem to look at addressing standing charges that accrue when people on low incomes go off supply to save money¹.

The response quotes a participant in a lived experience focus group held in April 2023: "It's absurd that standing charges are such a large part of bill. The whole way that energy is purchased and passed to customers is absurd"¹.

Why it matters for households

Standing charges are the fixed daily amounts billed for a gas or electricity supply, separate from what a household pays for the units of energy it uses. The figures in the response cover domestic electricity customers paying by direct debit, whose average annual standing charge rose from £86 to £186 between 2021 and 2023¹. That is a fixed cost incurred regardless of how much energy is used, so it falls hardest on households that cut consumption to reduce bills.

Fair By Design's position is that the charges should be lower and that the fixed costs behind them should be recovered more progressively¹. It notes that some low-income groups would be adversely affected by such a change unless it is accompanied by other measures, and it wants Ofgem to examine charges that build up when people on low incomes go off supply to save money¹. The response does not set out which groups it expects to be affected or what the accompanying measures would be.

The response was submitted to Ofgem's call for input; the outcome of that process has not been reported¹.

What happens next

No next steps are set out in the response. Ofgem's decisions following the call for input have not been reported¹.

More on regulation and policy affecting energy and other household bills is covered in the site's guide.