Responding to Ofgem’s consultation on standing charges, Energy UK’s chief executive, Dhara Vyas said:
“Introducing a new, alternative price cap option increases its complexity and should be very carefully considered given the potential risks to customers.
“At the moment, a single price cap offers a safety net for customers giving them price protection whatever their level of engagement. However, under these proposals, customers would have to make an active choice about which price cap tariff they should be on. We are concerned that it will be very hard to avoid some households, especially those in vulnerable circumstances, paying the price by ending up on the wrong tariff.
“Having two price caps in place – one of which might involve different unit rates and a minimum usage requirement – will be difficult for customers to understand, complex to implement, and will increase the challenges and risks for suppliers that come from buying energy in advance. Given that some of these proposals are at an early stage, it’s questionable whether bringing them in by next winter is either possible or desirable.
“Standing charges cover costs that are incurred by all customers irrespective of the amount of energy they use – including paying for the infrastructure necessary to deliver energy safely to our homes through network charges. These costs need to be recovered – either through the standing charge or via higher unit rates – and doing so in a way that is fair to all customers is a difficult balance.
“The huge challenges involved with implementation – and the associated risks – means that we should look long and hard at whether these proposals will deliver a significant overall benefit to customers, especially the households who are struggling the most with the cost of energy, in comparison to the urgent need to tackle record customer debt level and bring in targeted bill support.”