Energy bills are going up because of wholesale costs, but there's confusion on what “standing charges” are on an energy bill, and why they are increasing by a lot too.
Standing charges are a fixed daily amount that customers have to pay, no matter how much energy you use. This charge covers the cost of supplying your property with gas and electricity.
This however does vary by region due to the different costs to transport power to where you live.
The charge pays for costs such as government schemes to help reduce carbon emissions and fuel poverty, connections to and maintenance of the energy network as well as service administration charges. It's a bit like the line rental you have for your phone, but for your energy.
The costs cover maintaining and repairing the grid, essential upgrades as more people use renewable energy such as solar panels, and energy bought by providers who then close.
Like your rates for energy, standing charge costs are capped but can change as the costs to maintain the energy network change.
Why have they increased so much recently?
One reason is supplier closures.
Many suppliers have closed in the last 12 months. This means E.ON Next and the other energy providers take on their customers so their gas and electricity supply isn’t interrupted. They also take on the extra share of the energy grid costs (and pass them on to their customers).
Energy companies buy energy a few years ahead. But, when a supplier fails, if the providers taking on the customers can’t or don’t want to buy the failed supplier’s pre-bought energy, it is paid for by the energy network.
Another reason is the increasing numbers of renewable electricity sources.
The energy grid is currently built to work from a small number of very large power stations sending electricity ‘one way’ from power stations to homes and businesses at predictable time, such as when most people are at work.
However, with weather-dependent renewable electricity sources, increasing special equipment needs to be installed so power stations can know how much renewable electricity is being put into the energy grid throughout the day.
If you are or expect to be struggling from the increase in energy bills.
Our Energy Specialists are here to help if you're concerned about the impact of the increase on your energy bills. If you're struggling to pay, please visit our help page to find out more about how we can support you.
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