British Gas customers will save on their energy bills thanks to the standing daily charge that is set to be axed.
New plans drawn up by Ofgem aim to have energy suppliers offering zero standing charge tariffs alongside existing ones as a way of dealing with household energy debt. These plans will likely go into effect next winter.
What is a Standing Charge?
Standing charges are a households fixed daily amount that is added onto your energy bill, no matter how much energy you consume.
Those currently on standard variable tariffs pay 24.5p per unit of energy with standing charges of 60.99p, whilst gas costs 6.24p per unit with a standing charge of 31.66p a day.
They have risen a whopping 43% over the past 5 years under Ofgem’s energy price cap and January next year will see dual fuel households paying £338 on average a year.
If standing charges were scrapped, it would see British Gas customers on a two-year fixed tariff earn a saving of £676!
Stand Up to Standing Charges
Consumers have requested that standing charges are axed completely, however those who use a significant amount of energy would see their bills rise massively. Ofgem decided it was vital for households to have a choice of tariff:
Many people feel very strongly that standing charges are unfair and prevent them from being able to manage their bills effectively. We want to give consumers the ability to make the choice that’s right for them without putting any one group of consumers at a disadvantage. And by having a zero standing charge tariff, we could create that choice for everyone.
Tim Jarvis, Director General of Markets, Ofgem
Money Saving Expert Martin Lewis thinks that the best option would be to cut standing charges within the price cap. However, this would rely on government support for vulnerable high-energy users.
He claims that standing charges punish those who only use their central heating in the winter, many of which are elderly, by still making them pay in the summer.
Energy Bills Made a Little Easier
Regardless of the standing charge being scrapped for households struggling with energy bills, it could be worthwhile checking your eligibility for government-funded energy grants. This can improve the overall efficiency of your home but also massively cut down your energy bills!
With renewable energy methods like air source heat pumps to heat your home, solar panels to independently power them, and insulation to blanket and retain the heat in your home, worries about energy bills would be a thing of the past.
To see if you are eligible, try our free eligibility checker now by clicking the button below!
