Energy markets are highly regulated, so as an energy supplier we get charged certain costs for every single customer we have; even if they don’t use any energy. These costs are passed on to customers via standing charges.
Costs have increased to cover expanding environmental and social schemes like Warm Home Discount – which will be available to more people this year, so costing more overall – and the ECO scheme. Plus, other things, like the administrative cost of taking over the customers of suppliers who’ve gone out of business, and some distribution costs moving from unit price to standing charge.
Recent regulatory changes – Ofgem’s Targeted Charging Review – have increased those costs even more: which we opposed.
Our CEO Greg explains more here:
The electricity standing charge increase is driven by two changes to how much it costs us to supply your electricity. The first is the cost of failed suppliers (sadly its more than usual this year because half the retail market went bust in 2021). The industry has changed how customers are charged for using the distribution network – the cables that deliver electricity to your home. The costs of these networks have been moved from the unit charge to the standing charge.
Some of the increase in electricity standing charge is also due to the increase in the rollout of the Warm Home Discount which is set to be available to more people this year.
Gas standing charges have increased slightly, but not as much as electricity. This is because although the cost to cover failed suppliers is split nearly equally between the fuels, for gas this cost is added to the unit charge rather than the standing charge. The increase in gas standing charge is primarily due to extra Warm Home Discount costs.
Ofgem have broken down the up to date split of costs that make up a typical energy bill here
Why do standing charges vary based on where you live? It costs different amounts to get power to homes in different parts of the country. Each of the electricity distribution networks (DNOs) face different costs to maintain, upgrade and operate their networks. These costs are shared among their own customers, i.e people who live in the region where they operate.
