The Warm This Winter coalition has released its third Tariff Watch report, revealing covert charges keeping electricity bills high.
What is Tariff Watch?
Produced in partnership with Future Energy Associates (FEA) it highlights how our broken energy system prioritises profit over people’s ability to heat their homes.
It shows urgent government action is needed to introduce tariff reforms which could bring down bills and help people stay warm this winter.
What do I need to know?
- The latest report examines the electricity network costs added to customers’ standing charges.
- It has uncovered 14 obscure charges which are being passed onto our bills through the Ofgem price cap, leading to Electricity Standing Charges surging 119% since winter 2020/21 and accounting for £194 a year per household.
- Among these, customers are paying for “Line Losses” - energy lost while transmitting electricity around the network - but are being charged a set amount, rather than the cost of the actual amount of electricity lost.
- Energy network operators forecast budgets in advance, but complex rules mean that if they overestimate costs, they only have to return a portion of the leftover budget to customers, and get to keep the rest.
- Between 2015 and 2022, these operators spent £933 million less than they forecasted - but only gave around half of that money back to customers.
- Energy firms have underspent on grid upgrade plans, and this lack of investment is keeping electricity prices high, hobbling Britain’s access to cheap, renewable energy despite a thriving industry.
Can I get a better deal on my energy tariff?
- There are more tariffs on the market, but few worth switching to, all of which come with complex conditions or caveats.
- Two groups which continue to lose out are those who pay on standard credit terms and are subject to a 6.2% premium and those on Economy 7 tariffs.
- One EDF overnight tariff, aimed at EV owners, offers an average nighttime electricity unit rate of just 8.00 pence per kWh across all DNO regions.
- Think carefully and always check the small print for unit rates, standing charges and exit fees.
What can we take away from this?
These concerning findings point to the need for a review into these charges, and highlight how our current energy system is actively hampering Britain's access to cheaper, renewable energy through the failure to invest in the grid.
Simon Francis, coordinator of the End Fuel Poverty Coalition, commented:
"There must be a review into how we have arrived at so many covert charges and Ofgem must improve the transparency in the calculation of how our standing charges are arrived at.
"Of particular concern is the system whereby we are paying upfront for vital infrastructure upgrades which could help bring down electricity bills, but which are then not delivered.
We need a full audit of what has been charged, what has been spent and what is owed back to the bill payer."
Fiona Waters of the Warm This Winter campaign, which commissioned the report added:
"Hardup households are being punished multiple times by energy giants. Our energy bills are still forecasted to remain well above 2021 levels for the rest of the year and the vital grid infrastructure upgrades needed to bring electricity costs down are not being delivered.
"Perversely, the failure to upgrade and maintain the grid then results in line losses, which consumers also have to pay for via their bills."
You can read the full report here.
