Martin Lewis spots 'problem' with new British Gas, OVO, EDF, EON, Octopus rule

Martin Lewis has issued a warning over the "problem" with zero standing charge tariffs being offered under Ofgem rule changes. The BBC and ITV star spoke out after zero standing charge tariffs were announced by Ofgem, the regulator, last week.

Martin said of the new rule, which will impact the biggest suppliers like British Gas, EDF, Ovo, Octopus and Eon: “This isn’t the perfect solution that I would have liked to happen but I think it’s the best solution that Ofgem can do unilaterally without government intervention.

“£338 a year is the average standing charge on Direct Debit. You pay that whether you use anything or nothing. It’s a disincentive for those who have lower bills to cut their use any more. It’s terrible for people who only use their gas central heating in the winter, which is many elderly people. Because it means they’re paying all the way through the summer for gas central heating.

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“They’re paying every day even though they don’t use it. It’s awful for people on pre-payment tariffs. IT means when they’ve got no money and they’re not using any energy, the meter’s still ticking. So when they want to use energy again, they have to put money in to cover the standing charges. Even though they don’t have the money. So I’ve long campaigned for change.”

He continued: “Here’s the problem. And here’s why what I would really like to see which is lower standing charges on the Energy Price Cap that dictates the price 80% of homes in England, Scotland and Wales pay hasn’t happened. Many charities who represent people with disabilities and illnesses which have to have high energy usage didn’t want the standing charge to be lowered, understandably. I’m not having a go at them.

“Because if you’ve got an electric wheelchair for your child or a dialysis machine or something that means you have very high energy usage, if you lower the standing charge, where does the cost go to? It goes onto the unit rate, the amount that you pay for each unit of gas and electricity. So vulnerable higher users would suffer from this.

“The regulator to be fair to it, and I’ve kicked Ofgem many times in the past when I think it needs it but I’m not doing it this time, the regulator felt and I thought that what was going to happen, that it couldn’t lower the main standing charge because of the impact on those vulnerable people, what we needed is the government to work in concert with the regulator for that to happen.

“And the government hasn’t announced support for those vulnerable high users. I think there’s a chance it may do it next year and this could change again but it hasn’t happened yet." Martin added: “This is the difficult bit - who chooses? Because the price cap was set up as a safety net tariff if you like for people who don’t switch.”

He continued: “What I will be lobbying for is by the time this comes in at the end of next year, is that firms must default people if they’re on the Price Cap to the cheapest tariff, or at the very least, firms must default the most vulnerable, those on the priority services register, to the cheapest tariff.

“So low users will automatically be put on the new no-standing charge tariff.”