Energy Standing Charges to Hit Record High, Pushing More UK Households into Fuel Poverty
A new report by Ideal Economics and National Energy Action (NEA) reveals that energy standing charges will reach their highest level since 2019, with the poorest households hit hardest. The Ofgem energy price cap increase on 1st April 2023 sees standing charges rise by 50%, pushing more UK households into fuel poverty.
The report shows that a standing charge of £350 per annum accounts for 41% of what the poorest 10% of households have available to spend on energy. The author, David Osmon, suggests that more than 13% of the typical dual fuel energy bill is unavoidable due to standing charges. This increase will disproportionately affect low-income households, particularly prepayment customers, who will face high standing charges for three months until July 2023.
The number of UK households in fuel poverty is set to increase from 6.7m to 7.5m from 1st April 2023. The government will compensate prepayment customers for higher standing charges from July 2023 to March 2024, costing £200 million. However, critics argue that Ofgem's policies have consistently favored energy companies over vulnerable consumers, leading to increased standing charges. Energy bills for average households are expected to increase by 40% a year due to the end of the Energy Bills Support Scheme and standing charge increase.
The rising energy standing charges, coupled with the end of the Energy Bills Support Scheme, will significantly impact UK households, particularly the most vulnerable. The government's compensation scheme for prepayment customers offers some relief, but further action is needed to protect low-income households from spiraling energy costs.
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