Although Ofgem has called on energy suppliers to simplify gas and electricity tariffs for domestic customers, research carried out by uSwitch has revealed that suppliers currently offer no fewer than 45 types of standing charge.
In its Retail Market Review, Ofgem targeted standing charges as part of a wider attack on the industry. The regulator hopes that suppliers implement billing systems that are fair, simple and easy to compare. If Ofgem achieves its objectives, energy customers in the UK should encounter less confusion when they attempt to compare tariffs from rival operators.
But the study by uSwitch suggests that suppliers have largely ignored Ofgem’s calls for more simplified billing.
The difference in cost between standing charges can be significant. uSwitch discovered that standing charges applied to tariffs offered by First Utility vary by more than 100 a year. The average difference among suppliers is 68.
Consumer Policy Director at uSwitch, Ann Robinson, said: “With standing charges we are in danger of seeing one layer of complexity being replaced by another. The end result could be that consumers will still be left facing a minefield. It will just be a different minefield to the one they were trying to navigate before”.
One supplier may have been paying attention to uSwitch, however. British Gas aims to implement the changes proposed by Ofgem in the third quarter of 2013.
A spokesperson for the supplier said: “Following a review, British Gas will move to offering customers a single standing charge per fuel. This will apply to all new products launched from today. By the end of August, British Gas will have completed the rationalisation for all but one of its current products and will have one standing charge by the end of 2013”.
Standing charges are not exclusive to the energy industry, but they are an oddity of a market that has developed such a confusing system of billing. Many households in the UK pay over the odds for electricity and gas central heating because they are not on the most suitable tariff for their needs. Standing charges add to the confusion if different rates for different services are bundled with different tariffs.