Ofgem plans for standing charge reforms come under fire

(Sharecast News) - Plans by the UK's energy regulator to reform standing charges on consumer bills came under fire on Wednesday amid charges that the changes didn't go far enough or protect vulnerable customers. Ofgem said it wants suppliers to offer at least one tariff with lower standing charges. The daily controversial fee is levied on all customers whether they use energy gas and electricity or not.

However, campaigners said the new rules would make no difference to household bills as energy providers would just ramp up unit costs to recoup the cash.

Consumer affairs campaigner Martin Lewis called the proposals "disappointing". "The core problem is it doesn't look like it'll be under the price cap mechanism. That leads to two big possible problems," he told ITV on Wednesday.

Gillian Cooper, director of energy at Citizens Advice said: "Plans to offer a lower standing charge - the fixed cost of being connected to the electricity supply - may provide more choice to consumers but won't bring down people's bills."

"There's a real risk that those with higher energy needs, like some older or disabled people, could end up paying more if they choose one of these tariffs, so it's crucial people are supported to make the right choice when this option becomes more widely available from January."

Ofgem said it would start one final consultation on the plans and aimed to make a decision by the end of the year, meaning the new tariffs could be available by the end of January. .

The proposals come ahead of a two per cent rise in energy costs when the next price cap change takes effect on 1 October, which will see the bill for a typical household rise from £1,720 to £1,755 a year.

Reporting by Frank Prenesti for Sharecast.com