Rising energy prices are consistently one of our biggest worries, but many don’t switch because the market’s too complicated. And our latest research shows a huge variation in standing charges on our energy bills.
I like to think of myself as a savvy customer who gets a good deal on most things I buy. And it’s no different with energy bills. The only problem is that it’s pretty tricky to work out whether I’m paying more than I should for my gas and electricity.
When I buy a new book or DVD I can compare prices across different shops. And when I fill up my car with petrol I can avoid the really expensive garage in town. But, having just moved house, I now need to decide on an energy supplier…
Confusing energy prices
So all I need to do is look at how much suppliers charge for their gas and electricity and pick the cheapest one; right? Wrong. Most energy firms split their prices into a confusing array of different rates and standing charges; the latter being a fixed amount applied to your bill daily or annually.
So to even get a rough guess-timate of which tariff will be the cheapest for me, I need to know how much energy I use. Now, this might be just about possible for people whose energy consumption is pretty consistent. But I’ve just moved to a completely different type of house and have no idea how much gas and electricity I’m likely to use this year.
It would be like pulling up to a petrol station and the prices at the pump changing depending on how fast you drive or how many miles you cover.
Huge variation in standing charges
Our latest investigation has revealed the huge variation in standing charges for just one customer. We looked at the range of gas, electricity and dual fuel deals on offer for a specific customer in one region of the country – we found 109 different tariffs including some 75 different standing charges.
And if you think that’s mind-blowing, then factor in all the different regional variations, types of meter, payment methods and so on and you’ll find thousands and thousands of different prices across the country.
Most energy firms say that the standing charge covers fixed costs, such as bills, meters and distribution. But why would these so-called ‘fixed costs’ range from zero up to £402 a year on individual gas and electricity deals combined?
It also seems strange that standing charges can vary widely even within the same firm – leading me to question whether standing charges really relate to ‘fixed costs’ at all.
A low standing charge doesn’t mean a low bill
You can’t even assume that a high standing charge means the highest bill. As our illustration shows, a customer using a lot of gas can be better off with a higher standing charge:
This bewildering array of charges is yet another example of how the energy market’s too confusing for us to find the best deal. That’s why Which? has been calling for simple tariffs, without standing charges, displayed in the style of petrol forecourt prices, so that we can all easily spot the cheapest deal.
Ofgem’s current reforms to simplify the energy market don’t go far enough, as companies will still be allowed to include a standing charge and a unit price. If the government fails to take more radical action, such as by introducing a single unit price, we won’t feel confident that we’re paying a fair price for our energy.
Do you find gas and electricity standing charges confusing?