Electricity: Prices
The question
To ask the Secretary of State for Energy Security and Net Zero, what assessment his department has made of the case for extending the Common Tariff Obligation to apply across the whole of the United Kingdom, so that no comparable domestic consumer is charged higher electricity prices solely on the basis of their geographic location.
Answered by Martin McCluskey
Standing charges vary by region because the costs of the transmission and distribution networks differ from place to place; a ‘common tariff’ for the most isolated areas would smooth out those higher local costs so customers there avoid very high prices, but it would also mean more of those costs are shared across the wider customer base, putting some upward pressure on prices elsewhere.
The Government knows that, for many consumers, too much of the burden of the bill is placed on standing charges. We are working constructively with Ofgem to bring down the cost of standing charges.
Through its Cost Allocation and Recovery Review, Ofgem has also been reviewing how ‘fixed’ costs, which tend to be funded through standing charges, should be recovered in the future energy system.
The most recent update on this can be found here: Energy system cost allocation and recovery review - Ofgem - Citizen Space.
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