Money saving expert Martin Lewis has provided a crucial update for millions of UK households regarding the future of daily energy standing charges.
What Are Standing Charges And What's Changing?
The update follows the energy regulator Ofgem's announcement that suppliers will be required to offer tariffs with low or even zero standing charges from next spring. These daily levies are currently set at 53.68p for electricity and 34.03p for gas per day, paid regardless of actual energy usage.
Martin Lewis, founder of MoneySavingExpert.com, has been a long-term campaigner for these fixed charges to be scrapped. He addressed the upcoming change during his ITV1 show, The Martin Lewis Money Show Live, on Thursday.
Should You Wait For The New Deals?
When asked by a viewer if it was best to wait until spring for standing charges to fall, Lewis gave a frank response. "Standing charges aren't coming down in the spring on the price cap," he clarified.
He explained that the new rule means firms must offer a "low or no standing charge switchable deal" from that point. However, he warned consumers that the details remain unclear. "We just don't have a clue at what rate they're going to offer those and how much they're gonna charge on the others," he stated, referring to the unit rates for energy consumption.
Lewis advised that some low-energy users might want to explore existing low-user options now, rather than waiting. "I simply don't have the data to be able to answer that properly I'm afraid," he concluded, highlighting the uncertainty surrounding the new offers.
Energy Industry Perspective On Fixed Costs
Octopus Energy CEO Greg Jackson later echoed the complexity of the issue. "I don't know yet. We're working on it," he said, when questioned about how the deals would work.
Jackson pointed to the fundamental problem of fixed costs in the energy system. He explained that when a customer switches supplier, the company incurs around £200 of fixed costs over the following year, even if that household uses no power.
His concern is that to recoup these guaranteed costs from customers on tariffs with minimal standing charges, companies would have to significantly increase unit rates. "It will end up being not good value for most people," Jackson cautioned, suggesting the new deals may only benefit a very specific group of extremely low users.
The situation leaves consumers with a difficult choice: switch to a current tariff or gamble on waiting for the new regulated deals, whose true value remains unknown.
