Power bills shake-up will leave pensioners having to pay MORE… while rich families in large homes will SAVE cash
- New Ofgem rules are set to change the way energy firms charge customers for the cost of sending gas and electricity to homes
- As a result, low users’ bills will typically rise by about £13 a year
- But heavy energy users will see their bills fall by an average of £21
Millions of pensioners and poorer households face paying more for energy under a shake-up by the industry regulator.
The plans, which are being finalised by Ofgem after years of consultations, would change the way energy firms charge customers for the cost of sending gas and electricity to homes.
Instead of including these costs in the price per unit of energy that customers use, they will be split out into a ‘fixed charge’ per day that will appear on energy bills.
The poorest families who use the least energy are likely to pay more than they do today
This daily fee will be averaged out so that every customer pays the same fixed cost per month, with their gas and electricity usage added on top.
As a result of loading these fixed costs on to bills, the poorest families who use the least energy are likely to pay more than they do today.
According to an analysis of the plans by a former Ofgem executive seen by The Mail on Sunday, low users’ bills will typically rise by about £13 a year, and one in four households with an annual income below £15,000 will end up paying £38 a year more.
By contrast, heavy energy users will benefit from the move to a fixed charge with those with larger homes seeing their bills fall by an average of £21.
In extreme examples, millionaires heating an array of swimming pools, TVs and other electronic gadgets could save nearly £200 a year.
Ofgem says the overhaul is necessary because big companies exploit the current charging system to pay less for the upkeep of Britain’s energy network.
The regulator claims its proposals would stop companies avoiding these fixed costs and save the average customer £15 a year.
But Maxine Frerk, an energy consultant at Grid Edge Policy who spent 15 years at Ofgem, warned: ‘The impacts on low-income households should be a central consideration in the policy proposals, which they are not.’
The costs of maintaining and using the energy pipes and cables owned by companies such as National Grid are paid by energy suppliers such as British Gas or Eon. However, this cost is passed on to all households and businesses on their bills.
Currently, about 26 per cent of home energy bills are made up payments for network costs. Every home in the country connected to the grid pays a daily ‘standing charge’ of between 5p and 10p, which accounts for some of the cost. The remainder is calculated based on the customer’s energy usage.
The regulator wants to change the rules because the upkeep fees are being avoided by industrial businesses through exploiting a series of loopholes.
Its proposals would see the entire cost be added to the existing ‘standing charge’.
Ofgem says the overhaul is necessary because big firms exploit the current charging system
Ofgem first announced plans to change the way the networks can charge customers in August 2017. Last November officials published what is known as their ‘minded to’ decision for how they want to change the charges for customers, leading to a consultation which closed last month. Industry experts say a ‘minded to’ decision is rarely changed.
The decision is expected to be rubber-stamped within weeks.
Gillian Guy, chief executive of Citizens Advice, the consumer watchdog, said: ‘Any reforms that place unnecessary costs on those who can least afford it are unacceptable.’
A spokesman for Ofgem said the changes are ‘designed to make sure grid costs are spread fairly among all consumers’.
He added that ‘the majority of households will save as a result of these proposed changes’ and ‘those with typical consumption would save around £15’.