Very little renewable energy is produced in London. So why is the daily standing charge there the lowest in Britain by a country mile? You don’t have to be a "raving nationalist" to ask.
The poorest customers use pre-payment meters for electricity. Why is their daily standing charge higher than wealthier direct debit customers? You don’t need to be Jeremy Corbyn to ask.
Indeed, the far from revolutionary Jo Coburn on the BBC’s Sunday Morning Show popped the standing charge question to energy boss E.ON yesterday. His answer: not up to me guv. It’s Ofgem wot sets them.
Actually, the regulator ruled that energy tariffs didn’t need to include a standing charge in 2016. But the vast majority of energy suppliers still have them. And of course, the point about regional variations wasn’t even raised. Yet it’s high time the Great British Standing Charge Rip-off was ended – for prepayment customers and for Scots.
Firstly, what’s the rationale for regional variation? It’s hardly that electricity supplies are higher quality in the south of Scotland, South Wales and south-west England all of whom have seen 100% charge rises. It’s not even that these areas make the smallest contribution to green energy production. Au contraire.
Scotland is a net energy exporter and the wind-farm-covered south of Scotland helps keep lights on across the whole UK – yet its people are paying disproportionately for the privilege. London, by contrast, was ranked the worst city in England and Wales for renewable energy use in 2016 and green energy production is still negligible.
But energy price structures aren’t about today – they’re about the last century when governments wanted to deter coal, oil and gas power stations from being located beyond cities to minimise energy loss through transmission.
Times have changed. Then fossil fuel power stations could be built anywhere. Now renewable energy resources are generally located in remote, non-urban locations. That’s why the UK Government has finally spent millions strengthening the Scottish Grid. It used to be a one-way street – sending supplies from the energy-rich south to the north. Now the boot’s on the other foot and northern green energy is heading south.
Reality has changed profoundly, yet the old, punitive pricing structures remain for energy producers – and for consumers. BBC analysis shows daily standing charges have increased by almost 100% in South Scotland, 83% in North Scotland and 38% in London.
Why the big difference? Analysts suggest suppliers are shifting part of the unit price for energy (now controlled by the price cap) over to standing charges. Cute.
But that still doesn’t explain these glaring geographical charging anomalies. Are Scots being made to finance ‘our’ grid improvements – even though they’re leading the green transition and keeping lights on across the UK? Whatever the real reason, Scots, with the UK’s highest levels of fuel poverty, are paying the highest electricity standing charges in Europe – along with South Western England.
For poor Scots, the standing charge rip-off is even worse. About 4.5 million people in the UK have prepayment meters, and most earn less than £18,000 a year. But while the average annual direct debit bill has just risen from £693 to £1,971, the average prepayment meter bill has risen from £708 to £2,1017. Up to £360 of that was due to standing charge rises – a regressive flat rate levy that must still be paid, even when prepayment meters are disconnected or empty. It is outrageous.
Essentially, the standing charge is the poll tax of our time – but with less visibility and a lot less political traction. Why does no-one seem to care?
Certainly, standing charges aren’t the biggest part of anyone’s bill but they may be the final straw prompting self-disconnection so people can’t cook, store food, wash themselves properly or clean clothes. Even in these extreme circumstances though, the standing charges keep racking up and since debt must be paid off before reconnection, even the ‘generous’ addition of a £30 fuel voucher will not necessarily let prepayment customers switch lights, fridges, heaters and cookers back on.
The system is stacked against the poor, Scots and rural customers. It’s a shameful situation that’s been going on for years.
Ofgem says standing charge hikes were brought in to pay for failed energy companies and charges in some regions have increased more than others because of a ‘reallocation of network costs, which differs between distribution networks.’
This is obfuscation, plain and simple. Ofgem are letting companies fleece Scots because they can. The long-term answer is to ‘take back control’ over the whole energy sector through independence so we can start asking the really big questions – should energy be re-nationalised and why do we need supply companies if smart meters can be made to work properly?
Meantime, there’s a lot of handwringing about the difficulties Rishi Sunak might encounter trying to direct assistance towards the poorest energy customers. But despite the confusion over powers and responsibilities in Britain’s energy industry, the clout of the Chancellor is clear. He could abolish standing charges on prepayment meters immediately and permanently and devise a new system without unfair regional variations or flat rate levies.
But he won’t. Nor will any other part of the broken privatised electricity market. Ofgem haven’t bothered to tackle the problem themselves, and private energy companies have serious form in ripping off the poorest customers (euphemistically dubbed ‘mis-selling). Any new pricing system they devise will inevitably contain craftily hidden charges – and if the Big Six object to their characterisation as rapacious profit-machines that fleece the poorest, oldest and unsuspecting customers, why was a price-cap actually deemed necessary by a laissez-faire Tory Government? And why – according to The Energy Shop price comparison website – have electricity standing charges almost doubled since the cap was introduced in 2019? Coincidence?
As a small gesture towards combatting destitution, Number Ten should abolish standing charges on prepayment meters. Unless ‘levelling up’ really is just hot air.
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