Energy: Standing Charges

Department for Business, Energy and Industrial Strategy written question – answered on 15th March 2018.

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Photo of Priti Patel Priti Patel Conservative, Witham

To ask the Secretary of State for Business, Energy and Industrial Strategy, whether he has powers to restrict above inflation increases in daily standing charges on (a) electricity and (b) gas bills.

Photo of Claire Perry Claire Perry The Minister of State, Department for Business, Energy and Industrial Strategy, Minister of State (Business, Energy and Industrial Strategy) (Energy and Clean Growth)

The setting of a standing charge is a commercial matter for individual energy supply companies. Typically standing charges recover the fixed costs to suppliers, such as accounting and billing, in addition to the unit rate charged for energy consumption. Suppliers are free to offer tariffs with a low standing charge or, even set the standing charge at zero to attract low energy users, with the fixed costs included in a higher unit rate which customers only pay when using energy.

The Domestic Gas and Electricity (Tariff Cap) Bill will introduce an absolute temporary price cap on standard variable and default tariffs for domestic customers. The cap, set by Ofgem, will regulate the maximum amount that standard variable and default tariffs can charge, including the combined standing charge and unit rate.

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