O’Shea: Scrap standing charge to make bills fairer

Centrica group chief executive Chris O’Shea has called on Ofgem and the government to streamline the billing system to make it fairer for everyone.

The parent company of British Gas has called for three principle reforms which O’Shea claims will “make the system more affordable, fairer and easier to understand”.

The reforms requested by Centrica are:

• Abolishing the standing charge from the price cap. Removing the standing charge and rolling the costs into the unit cost of the price cap will reduce complexity on energy bills, and ensure those who carefully manage their energy see the benefits of their choices.
• Examine the benefits of moving from regional to national pricing. Moving to a flat national pricing tariff – which is the same wherever you live in the UK – removes further unnecessary variations from bills. The impact of this change would need to be carefully studied but we believe the regulator should look at this.
• Introduction of a progressive social tariff. Implement a progressive social tariff so that those who most need additional support to pay their bills can receive it.

On the standing charge, O’Shea added that it is “really unfair” and “hits people who are careful about their energy use hardest”. He added: “These people are often from low-income households, and prepayment meter customers in particular.

“I know from conversations with prepayment customers that the standing charge can see them unknowingly building up debts over the warmer summer months.

“So why don’t we simply get rid of this charge and roll the costs into the unit cost of the price cap instead, then those who more carefully manage their energy use could see really big benefits.”

On the need for a progressive social tariff, O’Shea said that the current system “where the rich get as much support paying their energy bills as the poor […] is just plain crazy”.

“The introduction of a social tariff should be a game changer for consumers who are struggling with energy costs, food bills, higher rent, and soaring mortgage rates,” he added.

“Existing energy bills are way too complicated – we’ve got to change that. Any customer should be able to pick up their bill and easily understand how it is calculated, and how they can get help if they need it.

“It should be simple and straightforward. There are three things we want Ofgem and the Government to change to make the system more affordable, fairer and easier to understand.”

The stance taken by O’Shea aligns with Utility Week’s Action on Bills campaign, which is calling on government to urgently set out its plans for targeted support before winter is upon us.

Through the campaign Utility Week is also calling for a greater focus on energy efficiency as a long-term solution to cutting bills and for government to share data on vulnerable customers so support can be targeted.

Support for vulnerable customers will be a key part of the debate at Utility Week Forum on 4-5 October. Find out more here.