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OFGEM and the Standing Charge Fiasco

FAO: Jonathan Brearley, CEO of OFGEM

26th April 2022

Dear Mr Brearley,

Having worked for several years in domestic energy supply, I am deeply conscious of the profound and destructive effect of rising energy prices upon prepayment meter users, most of whom are renters in precarious circumstances.

I understand that standing charges are set at a base rate for all energy users so that supply and infrastructure can be maintained. However, it doesn't make sense for it to be the same rate regardless of the amounts of actual energy used - since wealthier householders use a much greater supply of energy, so put far more pressure on the grid. It simply isn't fair or reasonable to expect them to pay the same amount as people who use a fraction of their supply demands.

Domestic energy supply to warm our homes, light our space and cook our meals is something that no-one in the UK can live without. We have no choice but to pay for unfair standing charges that are set by yourselves. OFGEM cannot exist as an entity to make the market more fair for consumers if we are working from a catastrophic flaw at the foundation of pricing structure.

In addition to these standing charges - and the variable and highly unpredictable costs of energy for prepayment users who cannot simply be shifted to energy plans, a new supplier or direct debit payments that are normally recommended to people wishing to save money - I am also very concerned that these users are also now expected to shoulder the costs of failed energy suppliers. Those suppliers that haven't gone into closure are passing their own costs onto their customers and raising prices - this should not be, under any circumstances, the route that we can take. People are terrified of the effects this is having on their household budgets and standard of living.

I am writing to ask you urgently to do as has been suggested by Fuel Poverty Action, which has written to you asking you to:

-Stop financing the cost of failed suppliers from the standing charge on customers’ bills.
-Drastically reduce standing charges.
-Work towards eliminating standing charges altogether, as a move towards Energy for All.
-Stop charging prepayment customers more than people who pay bills by direct debit.
-No imposition of prepayment meters - these should be a voluntary option, not a weapon against people who run into debt.
-Energy for All: free energy to cover basic needs, to be paid for by a windfall tax on energy companies’ profits, the ending of subsidies to fossil fuels, and higher prices for profligate energy use by people who can afford it.

I look forward to your addressing this unconscionable situation as early as possible.

Many thanks,

Tabi Joy

Cheltenham Green Party


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