GMB's Martin Lewis calls Ofgem's standing charges 'moral hazard' as update could be 'months' away

Martin Lewis has called Ofgem's standing charges a 'moral hazard' as he appeared on Good Morning Britain (GMB) alongside Susanna Reid. Talking about the latest energy prices, the Money Saving Expert founder replied to an ITV viewer who asked "when will Ofgem reduce the sky-high standing charges?".

In response, the expert said: "Well people know I've been one of those leading the campaign on reduce standing charges. I think it's a moral hazard, it's a poll tax on energy use that you're paying over £300 a year even if you don't use any energy.

"There is a consultation being put out on it. The submissions to that consultation closed on September 26. They're planning to shift some of the standing charge to the unit rate which causes a problem for high users, vulnerable high users.

"But that's the nature of it. So I think we're probably still a few months away from an announcement on that [standing charges]. But at least we're in the process now."

The standing charge is a daily charge that you pay your energy supplier each day to cover fixed costs of providing gas and electricity, regardless of how much energy you use. This charged covers the fixed costs that energy suppliers have to pay for services such as providing and maintaining the wires, pipes and cables that deliver power to a customer's home, staff wages and buildings required for the energy business.

In addition to this, the standing charge is covered by the energy price cap which sets a maximum on how much suppliers can charge for it. Energy companies don't need to have a standing charge and can charge less than what is set out in the price cap.

Talking about the same issue on his MSE blog, Martin Lewis explains: "Keeping the standing charge high means lower users can save proportionately less and less by reducing usage – that disempowers them – and is a disincentive to energy reduction generally, which is not great for the environment."

He warns that some prepayment users can find themselves in energy debt during summer as despite them not using energy, "the meter is still ticking over because of the standing charge". Calling it a "terrible, unnecessary situation for the payment type used by many of the most vulnerable" Martin Lewis is now wanting for the standing charges to be lowered adding that "MSE has submitted our consultation response to a new Ofgem proposal on this about shifting some of the cost of the unit rates."