Energy minister urges regulator to act on high standing charges following calls from Martin Lewis and MSE to lower them

MSE and Martin Lewis have long campaigned for standing charges to be lowered, arguing that they unfairly penalise households on lower incomes and those looking to cut their usage – see Martin's 'Why are energy standing charges so high? What can be done?' blog for more info.

Energy Secretary: 'Standing charges should be kept low to make it fairer for consumers'

In an open letter to Ofgem, which you can read in full on Twitter, Ms Coutinho advised that the regulator must:

• Ensure standing charges are kept as low as possible. Ms Coutinho explained: "There is concern about how standing charges going up may limit consumers' ability to reduce household costs. And in addition to minimising costs, some of the growing number of energy users striving to consume energy more efficiently and help towards achieving net zero see standing charges as a disincentive towards doing so." 

• Encourage suppliers to make energy bills more understandable, including transparency on how they are calculated. Ms Coutinho added that it's crucial consumers are made aware of why they pay standing charges and what they are used to fund – for example; covering the cost of running networks, the roll out of smart meters, and support schemes, such as the warm home discount. 

• Increase efforts to help suppliers offer a diverse range of tariffs, including options with lower standing charges. In particular, Ms Coutinho highlighted the "disproportionate impact" standing charges have on vulnerable households and those in rural communities.  

Ofgem launched a review into standing charges last November, after it admitted it was aware of the "huge amount of debate" around the charges. The review closed on 19 January 2024, though we're still awaiting the regulator's final response.

Martin Lewis and MSE have long campaigned for standing charges to be lowered

Martin met with the Energy Secretary just five days prior to her letter to Ofgem being published. During this meeting a range of issues were discussed, including Martin pushing on standing charges being too high. Afterwards, Martin tweeted to say the conversation had been constructive: 

Standing charges are the daily cost you pay for the facility of having gas and electricity, even if you don't use any. The charges have increased significantly over the past two years, and can vary hugely depending on where you live.

As of 1 April 2024, electricity standing charges have risen from 53p a day on average to 60p a day, while standing charges on gas have risen from 30p a day to 31p a day.

The rates are now the same for all households, including those on prepayment meters. Between 1 October 2023 and 31 March 2024, those on prepayment meters had paid lower standing charges than those on other payment methods.