EDF customers save £676 on energy bills after Ofgem standing charge rule change
by Claire Schofield · ChronicleLiveEDF Energy clientele could see a £676 reduction in their annual energy expenditure following the abolishment of a routine charge.
Energy watchdog Ofgem has put forward fresh guidelines obliging utility firms to present customers with an option for "zero standing charge" tariffs in addition to the ones available at present. The policy shift is one segment of broader measures aimed at addressing the surging debts faced by many households over energy, and it will be complemented by new benchmarks requiring providers to facilitate access to assistance for those in financial difficulty.
According to the pricing limits set by Ofgem, standing charges have witnessed a 43% upsurge since the year 2018, and they are slated to cost dual fuel homes an average of £338 annually starting from January 2025. These levies have a greater impact on low energy-consuming residences as these fixed prices represent a larger fraction of their full billing sum.
Nevertheless, with Ofgem's intentions in motion, energy companies are to introduce zero standing charge tariffs, which could yield EDF users on a two-year fixed plan savings of a significant £676 should these fees be eliminated presently, reports the Express.
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Standing charges constitute a regular fee applied to your power invoices by providers, irrespective of the quantity of energy you consume. At this juncture, homes subject to standard variable rates are paying approximately 24.5p for every unit of electricity with a standing charge of 60.99p daily, while for gas, the typical rate is 6.24p per unit accompanied by a daily standing charge of 31.66p.
Commencing on January 1, the daily standing charges will experience a minor reduction, falling to 60.7p and 31.65p per day for electricity and gas, respectively. Notably, a selection of suppliers currently provides tariffs with either minimal or no standing charges.
While such options may present costs at least 10% below the price cap, they correspondingly come with increased unit rates, thereby benefiting consumers with lower energy consumption needs. According to Ofgem, there has been an outcry from tens of thousands of consumers urging the outright abolition of standing charges. However, households relying heavily on energy for medical and health purposes stand to encounter significant surges in their bills as a consequence.
Therefore, the decision has been made to preserve the ability for households to choose between available tariff options. Tim Jarvis, Ofgem's Director-General for Markets, weighed in on the development: "We know that many households continue to struggle with bills after the events of the energy crisis, which is why earlier this year, we took steps to consider all the issues around affordability and debt including the impact of the standing charge."
"Many people feel very strongly that standing charges are unfair and prevent them from being able to manage their bills effectively. We want to give consumers the ability to make the choice that's right for them without putting any one group of consumers at a disadvantage. And by having a zero standing charge tariff, we would create that choice for everyone."
Ofgem has outlined plans to introduce a "debt guarantee" aimed at enhancing the quality of service provided by suppliers to customers struggling with debt, ensuring households receive "consistent, compassionate and tailored support". Additionally, suppliers may be mandated to accept debt repayment proposals from trustworthy third-party organisations, such as debt counselling agencies or consumer advocacy groups.
According to National Debtline, an advice service, energy debt ranks as the second most prevalent type of debt among those it assists, surpassed only by credit card debt. The average amount owed in energy arrears has surged by 37% over the past year, reaching £1,541. Peter Smith, the charity's director of policy and advocacy, stated: "There is significant public concern around how high standing charges are. All major political parties made promises in their manifestos to reduce standing charges."
He further highlighted that households relying on prepayment meters are disproportionately affected by the persistence of high standing charges. Despite identifying several alternatives to better safeguard these households, Ofgem has chosen not to act, leaving vulnerable families in often desperate circumstances.
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