Dr Craig Lowrey, Principal Consultant, at Cornwall Insight:
"Standing charges currently make up about 20% of household gas and electricity bills, as a result, those households looking to save money by reducing energy use may find no-standing charge tariffs helpful, offering a more straightforward way to manage their bills.
"However, the issue is more complex. We anticipate that zero-standing charge tariffs would come with higher unit costs, in order to cover the maintenance of the network and other expenses that would normally be included in the standing charge. As such, these tariffs may not be immediately ideal for vulnerable groups, especially those living in less energy-efficient homes or with higher energy needs.
"An alternative would be to cross-subsidise the zero standing charge tariffs for eligible households through higher standing charges for non-eligible households and/or through levels paid by business consumers. However, this is not without its own challenges – lower standing charges for one group of customers means that the revenue foregone must be recovered from elsewhere.
"Ultimately, adjusting tariffs alone is unlikely to bring significant savings for consumers. A more sustainable, long-term solution is needed to lower overall bills, one that reduces our reliance on the volatile global wholesale market and invests in homegrown, sustainable energy."
Lower standing charges for one group of customers means that the revenue foregone must be met elsewhere
Dr Craig Lowrey Principal Consultant
