]
Highlands and Islands Greens
Highlands and Islands Greens

Greens Invite Office of Fair Trading to Investigate Ofgem Requirement for Inclusion of Standing Charges in Domestic Energy Tariffs

Tuesday, December 10th, 2013

Highlands and Islands Greens have called upon the Office of Fair Trading (OFT) to investigate Ofgem’s statutory requirement, announced earlier this year [1] for energy supply companies to include standing charges in their new domestic tariff structure.

“OFT’s remit is to make markets work well for consumers, by promoting and protecting consumer interests throughout the UK,” said Anne Thomas, Secretary of the Scottish Green Party – Highlands and Islands.

“Ofgem’s statutory requirement for energy supply companies to include standing charges in their new domestic tariff structure, with its consequent discriminatory impact on smaller lower-usage gas and electricity consumer [3], is therefore a highly appropriate investigation for OFT to undertake.

Notes

  1. See para 2.13 of Ofgem’s Retail Market Review (27 August 2013 https://www.ofgem.gov.uk/sites/default/files/docs/decisions/the_retail_market_review_-_implementation_of_simpler_tariff_choices_and_clearer_information.pdf )
  2. Our approach to the OFT is part of our campaign for Ofgem to withdraw its standing charge requirement.
  3. Our concerns are that while we broadly welcome the principle of simplifying tariff structures, the standing charge measure will have a discriminatory and adverse impact on millions of small-use and/or energy efficient domestic consumers, who will – in effect – be paying a higher overall unit-price for their gas and electricity than will larger-users, because any standing charge will form a larger proportion of their overall energy bill.  This means that those domestic customers who consume the most energy will have their gas and electricity costs subsidised by smaller-users – the more you consume, the more you’re subsidised by others.  The standing charge requirement is also liable to perpetuate fuel poverty and act as a potential barrier to the benefits of smart metering.