‘High standing charges are egregious’: Octopus boss hits out at rising costs loaded onto supplying gas and electric into homes
- Greg Jackson says ‘far too many costs’ have been loaded onto standing charges
- They are capped at 46.36p a day for electricity from 1 October
- This is up from 25p earlier in the year
The boss of Octopus Energy has labelled ‘high standing charges’ loaded onto household gas and electricity bills ‘egregious.’
Greg Jackson says ‘far too many costs have been loaded onto standing charges – from grid and distribution charges to failed suppliers.’
Rising standing charges have been a controversial subject since the energy crisis begun.
It is a fixed daily amount on energy bills that have to paid and covers the cost of supplying homes with gas and electricity.
Making a stand: Octopus boss Greg Jackson says ‘far too many costs’ have been loaded onto the standing charge element of an energy bill
Even if usage is limited, this standing charge remains the same making it ‘more difficult for hard-pressed customers to save money through efficiency,’ according to Mr Jackson.
Octopus has now begun a ‘battle against standing charges,’ as part of a £40million package.
All customers on its standard variable tariff – Flexible Octopus – will automatically receive a 4 per cent reduction in standing charges compared to Ofgem’s price cap.
Typical standing charges range from 5p to 60p per day for electricity, and 10p to 80p per day for gas.
The average daily standing charge for dual fuel customers paying by direct debit will be to 46.36p for electricity and 28.49p for gas, inclusive of VAT, from 1 October.
Earlier in the year, that stood at 25p for electricity and 26p for gas. In July, an energy campaign group called for standing charges on electricity and gas bills to be scrapped altogether.
Fuel Poverty Action said in July that more than 80 per cent of people supported the abolition of standing charges.
The charity also wrote to industry regulator Ofgem, saying the additional charges were a ‘grotesque injustice’.
Ruth London of Fuel Poverty Action said: ‘It’s unjust to put more and more load on the part of the bill that no one can avoid no matter how little energy they use.
‘The standing charge is a killer for people who have cut their energy use to the bone but still face heavy daily charges.’
Since then, new Prime Minister Liz Truss has revealed measures that will cap energy bills at typical use to £2,500 per year from 1 October, including the standing charge cap mentioned above.
Bills will be frozen at this level for two years under the energy price guarantee.
Octopus says that 100,000 customers in greatest need will also be able to apply for ‘standing charge holidays’ of up to six months. This, it says, will enable them to benefit more from energy savings.
It says the £40million is being diverted from operational efficiency and by slashing advertising and sponsorship.
Mr Jackson adds: ‘This £40million package is the beginning of our battle to bring them [standing charges] down.’
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