Money Saving Expert Martin Lewis has called for the energy standing charge to be slashed. The £300 charge is a compulsory payment for all customers, but the financial expert has now described the payment as "morally hazardous."
The £300 charge must be paid regardless of how much gas or electricity a customer uses. So this means even if a customer uses none for an entire year, they will still be asked to pay £300. Now Martin Lewis has called for the charge to be scrapped, reports the Mirror.
In a tweet, he said: "The high energy standing (daily) charges are a moral hazard and should be reduced. It is outrageous that people have to pay £300/yr just for the facility of having gas & electricity even if they use none."
The Money Saving Expert noted that the higher the standing charge means lower users save "proportionally less and less by reducing usage". He added: "I have long campaigned for lower standing charges. MSE is submitting a consultation on this about shifting some of the cost the unit rates.
"The reason Ofgem mandates firms to have high standing charges in the price cap is because they use it to pay for the 'fixed costs' of energy (distribution, transmission etc) - which it believes should be mostly shared equally.
"It is especially loaded onto the electricity standing charge as that is 'more universal'." Martin Lewis is not the only one called for a change as recently the boss of Centrica, the company which owns British Gas, said those who were attempting to save were being hit the "hardest" due to the standing charge.
He told the Sun newspaper: "The standing charge hits those who are careful about their energy use hardest – and these are often people from low-income households and prepayment meter customers. I know from conversations with prepayment customers that the standing charge can see them unknowingly build up debts over the warmer summer months.”
Martin Lewis has called for a more "progressive split" on the standing charge. He tweeted: "I think a more progressive split would be better, by putting a bigger proportion of the cost on the unit rate. And in past polls I've done on here the huge majority agree.
"One stumbling block is the argument from Citizens Advice, an organisation I have great respect for. Its concern is that if you shift the burden, some vulnerable people with disabilities and medical issues that make them high users will suffer.
"Of course, the correct solution to that is lower the standing charge but give them separate support. Yet that would involve an energy market that wasn't broken and the regulator and Government to operate in concert."
The Money Saving Expert noted that the UK was stuck in a "chicken and the egg situation" however the "fairest" thing to do was to lower the charge and provide help for the high using vulnerable at the same time.
He added: "Yet I wanted to bash this out quickly as I saw much debate on it after my earlier tweets, and I wanted to explain some of the bigger picture."
