British Gas, OVO, Octopus, EON, EDF customers to notice extra £152 in bank account

Energy bill payers could save £152 under new plans to cut an "unfair" tax. British Gas, OVO, EDF, Octopus customers could save a stack of cash if standing charges are scrapped under a major Cost of Living boost, amid calls to scrap the "unfair" system.

The proposals could see standing charges - the fixed amounts you have to pay no matter how much you use - drop for both electricity and gas by just over £152. The cost would fall from £334.08 a year to just £183.02 - a near half (46%) reduction.

Dylan Johnson, one of the analysts involved in the report, said: "The comprehensive changes we have suggested would bring down standing charges and could also mitigate negative distributional impacts of standing charge reform previously identified by Ofgem. We would urge new ministers to meet with industry, consumer groups and experts to analyse how we can change standing charges in a way that is fair to all households."

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Simon Francis, coordinator of the End Fuel Poverty Coalition, added: "Standing charges are an unfair flat tax on every energy consumer. Every household pays through the nose just to be connected to the grid, even if they use no energy. In the past there has been caution about reform due to the potential impact of change on households with a high dependency on energy for medical needs, we still need further detailed analysis of these options by Ofgem to ensure that this group is not penalised.

"However, this report does indicate that reform of standing charges may actually be possible in a fair way. It will need Ofgem, the next Government, energy industry and consumer groups to work together to make it happen. The prize of cutting standing charges in half before this winter should be one which new Ministers seize upon." Warm This Winter campaign spokesperson Fiona Waters said: "The energy crisis has already left bill payers £2,500 out of pocket since it started three years ago and we know energy bills will go up again in October.

"People up and down the country are literally at breaking point, are still paying 50 per cent more for energy and at the heart of these unfair bills are the standing charges. The public are crying out for action now. The next UK Government will need to act quickly, bring down bills for good, end energy debt, improve housing standards through insulation and ventilation and also make Britain a clean energy superpower so we are not at the mercy of profiteering global oil and gas giants."

Campaigners have also urged for a universal, consistent, nationwide, debt matching programme funded by the £1.3bn customers are paying through bills for energy debt costs this year, to support customers in energy debt.