Is it time to remove permanent fillers? A third are expected to be in ‘fuel poverty’ by Christmas as rising bills push households over the limit
- Fuel Poverty Action calls for permanent charges to be removed in the face of rising bills
- More than a third of households will be in ‘fuel poverty’ by winter, charity says
- Four out of five in favor of removing ‘grotesque’ and ‘unfair’ mandatory charges
- Ofgem reluctant to switch to unit rate model, to protect large energy consumers
An energy campaign group is calling for the removal of ongoing charges on electricity and gas bills as many customers grapple with rising prices.
Ofgem’s price cap, which applies to those paying by direct debit, rose by more than 50% in April, meaning household could pay up to £1,900.
But, with the price cap set to rise further in October to a staggering £3,200, Fuel Poverty Action has predicted that more than a third of all households will face ‘fuel poverty’ by Christmas.
Permanent charges are charges added to your energy bill to pay for essential services. They vary depending on your location and usage, but average around 45p per day
To help households cope with rising bills, he is asking energy companies to cut permanent charges.
Ongoing charges are additional daily expenses that are added to an energy bill and are charged regardless of how much energy a household uses that day.
Currently, standing charges are capped at an additional 45p for electricity, based on a customer with typical use, and 27p for gas.
This equates to an extra £163 for electricity and £98 for gas on household energy bills.
The ongoing fee is used to pay for things like supplier administration costs, which currently include collecting debt from the 30 energy suppliers that went bankrupt in 2021.
It was around this time that the ceiling for permanent charges rose by around 20 pence a day.
FPA says more than 80 percent of people supported the abolition of permanent charges. The charity also wrote to industry regulator Ofgem, saying the extra charge was a “grotesque injustice”.
Jonathan Brearley, chief executive of Ofgem, recently said the regulator would consider whether the cost of the permanent fee could be reduced, but he shows no signs of removing the fee just yet.
A spokesperson for Ofgem said: “Protecting consumers and making this energy market fair for all is our top priority and that is why we are looking at the issue of ongoing charges, as our CEO has pledged to do. during a recent parliamentary hearing.
“Currently, some supplier default costs are recovered from ongoing electricity charges, and contributions are level for all customers, regardless of how much energy they use.”
The regulator said it was considering collecting the debt in other ways, but warned it could mean higher bills for those who use a lot of energy.
He said: “We will consider whether another option, such as recovery through unit rates, might be considered fairer by consumers.”
Ongoing charges for electricity have risen by around 20p to an average of 45p earlier this year, to help recover the debt left by the 30 failures of energy suppliers in 2021
“A unit rate model would mean that contributions are linked to energy consumption, so users who consume less pay less for those costs.
“As with all trade-offs, some would pay more, with heavy energy consumers seeing an increase.”
But Ruth London of Fuel Poverty Action said: “It’s unfair to put more and more of a load on the bill that no one can avoid, no matter how little energy they use.”
“Permanent load is a killer for people who have reduced their energy use to the bone but still face heavy daily loads. People using prepayment meters may end up having to find substantial sums of money before they can draw heat or electricity.
> Read our guide: Everything you need to know about your energy bills
“The permanent charges are balanced against the tariff paid per unit of energy. Ofgem says they try to keep the unit rate low for the sake of people who need a lot of energy, for example for health issues.
“But that does nothing for the many vulnerable customers who fail to use a lot of energy even though they desperately need it.
“Clobbering millions of people cannot be the answer to ensuring people who need more energy can afford to stay warm or cool.”
As part of Ofgem’s review, it asks customers for their views on ongoing charges.
The Ofgem spokesperson said: “This is an open letter and draft consultation at this stage, and we welcome all views.”
Ofgem’s contact details are available on its website.
#Waive #permanent #energy #charges #prevent #fuel #poverty #charity