(Bloomberg) — Power customers would pay nothing or significantly less to connect to the grid under proposals to lower UK energy bills.
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Energy regulator Ofgem wants standing charges, fixed costs added on top of bills to cover grid connection, to be scrapped or lowered for some customers as it addresses record public debt. The charges have almost doubled since 2019 and make up about 20% of customer bills.
The UK saw bills rise sharply during the energy crisis, and although they now have declined, they remain high compared to historical levels. The Labour government was elected on a promise to lower electricity bills and help those struggling to pay them.
UK energy debt reached £3.82 billion ($4.9 billion) in September, according to Ofgem, a 91% increase in two years.
Standing charges have been criticized as they penalize people who use very little energy yet still pay a daily rate just to be connected to the grid. The proposals, which also include more allowances for customers in debt, are under review and would be enforced next winter if approved.
Removing the standing charges is seen as a risk by some noting because they are seen as a key way of funding the essential infrastructure. “Ensuring suppliers can recoup these costs in way that is fair to all customers is a difficult balance,” said Dhara Vyas, chief executive officer of the trade group Energy UK.
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