Thousands of households whose fixed-rate energy contracts are about to expire from April are to face a major rise in their monthly bill.
The standing charge is a fixed amount that you pay on your energy bill every day, regardless of your usage.
It covers “non-energy” costs of both gas and electricity, such as the using and maintenance of the energy networks and the cost of carrying out meter readings.
This charge went up by around 80% last year, according to research by the charity the Centre for Sustainable Energy.
It will once again increase in April when the Government Energy Price Guarantee rises from £2,500 to £3,000.
Each energy supplier charges a different amount depending on a variety of factors including the tariff you select and where you live.
If an energy customer has been locked into a fixed tariff since before the energy crisis began, the rates they fixed at – including standing charge costs – would have been much lower than they are now.
If you are coming off a fixed-rate deal after April, then your standing charge will increase.
The energy regulator says the standing charge has been capped at 46p for electricity and 28p for gas - however, this is only for customers on "default tariffs" and paying by direct debit.
The standing charge can be much higher for those who pay for their energy through other means of payment.
Octopus Energy's CEO Greg Jackson has previously described the charge as "pernicious" as it disproportionately affects the poorest households using prepayment meters.
This is because the customer is able to reduce their consumption which will lower their energy bill but is unable to reduce the standing charge which means they have to spend more on energy when they are actually using less.
There has not been a confirmation from the Government or the energy regulator that a standing charge cap would be introduced in April to protect vulnerable customers.
The energy regulator recently consulted on proposals to blend the standing charge into the unit price so customers pay in proportion to what they use however this was rejected by the regulator.
The regulator said although a usage-based method would benefit some vulnerable customers, others, who use lots of energy, would end up paying more.
An Ofgem spokesperson said:“We recently looked at moving some costs from the standing charge to unit costs, but found it would have a significant and disproportionate impact on some of the most vulnerable consumers including the elderly and those living with disabilities with only very small savings of around £1 a month for others.
"Our priority is to protect the interests of consumers and we’ll continue to keep standing charges under review and consult widely on any future possible changes.”
