Today came the news that the UK regulator permitted gas and electricity bills to be increased substantially. Many people are concerned about their ability to pay to cook and keep warm this coming winter.
This increase has been talked about for a couple of months and the amount by which it has increased has not been a complete surprise although it is, of course, very disappointing. The effect it will have on fuel poverty in the UK is very concerning.
What is the price rise?
For an average UK consumer with Direct Debit the price rise per kWh (unit) is +24p (now 52p, up from 28p) for electricity and +8p (now 15p, up from 7p) for gas. The standing charges are 46p/day for electricity (was 45p/day) and 28p/day for gas (was 27p/day).
To read the full details from Ofgem please see their website.
The Standing Charge
It was somewhat disappointing that the very poorest have been ignored by keeping the high standing charges for gas and electricity. Standing charges are the fees everyone pays every day irrespective of the amount of energy we actually use. A millionaire will pay the same as the poorest in society*. The millionaire will probably not notice the standing charge. But the poorest will. It would be more equitable if we simply pay for the energy we actually use. If the standing charge were scrapped, someone who only heats a single room through the toughest winter nights might be able to do it at a similar cost to last winter.
Last winter, the gas standing charge was 27p/day and the unit charge was 7p day. If someone used 4kWh a day to heat a little a single room and prepare a warm meal, it would have cost them 55p per day. That is £16.50 per month. This coming winter it will probably cost them 28p + 15p per kWh * 4kWh = 88p or £26.40 per month.
It is likely that someone who chooses to partially heat a single room will not have an extra £10 a month.
If we had scrapped the standing charge then this coming winter would cost 0p + 15p per kWh * 4kWh = 60p per day. Or £18.00 per month. A slight increase, but more manageable.
Even Ofgem’s own economists have previously written how the standing charge is inequitable.
Write to your MP to ask that the standing charge be scrapped. It’s time to see the standing charge for what it is: a private Poll Tax on energy.
* Actually the poorest often pay higher standing charges than others as often they are on pre-payment meters.
To convert a standard gas unit as measured on a gas meter to kWh you multiply by around 11.3. The actual number will be printed on your bill.
See our previous post on removing the standing charge here.