Electricity: Standing Charges
The question
To ask the Secretary of State for Energy Security and Net Zero, what discussions he has had with Ofgem on the potential impact of changes to electricity standing charges on SMEs.
Answered by Martin McCluskey
Standing charges predominantly recover ‘fixed’ costs that do not vary by energy use. This includes supplier’s operational costs for serving each customer and the cost of essential network maintenance and upgrades, which are necessary to keep all consumers connected, minimise constraint costs, meet the capacity needed to deliver clean power by 2030, and help bring down bills for households and businesses for good.
However, we know that too much of the burden of the bill is placed on standing charges, and we are committed to ensuring that standing charges are fair to all consumers, including SMEs. As part of this, Ofgem have launched a Cost Allocation and Recovery Review (CARR) to consider how energy system costs can be recovered from consumers, including from SMEs, in a fairer and more efficient way and DESNZ will continue to engage closely with Ofgem on the work.
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