In February 2025, Ofgem, the UK’s energy regulator, proposed a significant reform to energy tariffs, suggesting that all energy suppliers offer options with low or zero standing charges.
Related Posts
This initiative aims to provide consumers, especially those with low energy consumption, greater flexibility in managing their energy expenses. However, the proposal has ignited a debate between consumer advocate Martin Lewis and industry representative Energy UK.
Martin Lewis, founder of MoneySavingExpert, has long criticised standing charges, describing them as a “moral hazard” that disincentivises energy conservation and disproportionately affects low-usage households. He welcomed Ofgem’s proposal but expressed concern that requiring consumers to opt into these new tariffs might exclude vulnerable individuals who are less engaged with the energy market. Lewis advocates for automatically enrolling eligible households into these tariffs, allowing them to opt out if they choose. He stated, “This is progress… It costs in excess of £300 a year just to have the facility of gas and electricity, even if you don’t use any.”
On the flip side, Energy UK, which speaks for energy suppliers, raised concerns about how complicated this proposal could get. CEO Dhara Vyas pointed out that making customers choose between different price cap tariffs might create confusion and unintended issues. Vyas explained, “Customers would have to actively pick which price cap tariff suits them. We worry that some households could end up on the wrong one and end up paying more as a result.”
The consultation period for Ofgem’s proposal is currently open, inviting feedback from stakeholders. As discussions continue, it remains essential to balance the objectives of consumer protection, market simplicity, and fairness to ensure that the reforms benefit all segments of the population without introducing additional complexities or unintended disadvantages.
To be fair, this price cap thing is far too complicated for my liking.
Positive Panda thoughts?
References:
Energy Live News. (2025, February 21). Martin Lewis and Energy UK clash over Ofgem’s standing charge shake-up. Retrieved from https://www.energylivenews.com/2025/02/21/martin-lewis-and-energy-uk-clash-over-ofgems-standing-charge-shake-up/
Google. (2025). Gemini (Imagen 3) [AI image generator]. https://ai.google.dev/gemini-api/docs/imagen
MoneySavingExpert. (2025, February 20). Martin Lewis’ take on Ofgem’s standing charges announcement. Retrieved from https://www.moneysavingexpert.com/news/2025/02/martin-lewis-zero-standing-charges-ofgem/
Ofgem. (2025, February 20). Ofgem drives forward plans to introduce zero standing charge tariffs. Retrieved from https://www.ofgem.gov.uk/press-release/ofgem-drives-forward-plans-introduce-zero-standing-charge-tariffs
Reuters. (2025, February 20). UK energy regulator plans to introduce zero standing charge tariffs. Retrieved from https://www.reuters.com/world/uk/uk-energy-regulator-plans-introduce-zero-standing-charge-tariffs-2025-02-20/