Which? published its response on 18 August 2022 to Ofgem's decision to continue recovering the costs of energy supplier failures through the standing charge, the fixed daily amount paid by households regardless of how much gas or electricity they use1. The consumer body said the regulator had chosen to take no action on the way those costs are collected1.
Rocio Concha, Which? Director of Policy and Advocacy, said consumers were facing rising wholesale energy costs while also paying for the collapse of energy firms after what she described as years of regulatory failure1.
"This decision from Ofgem to take no action may be the right one if changes would have had a negative impact on vulnerable consumers, but the regulator must work with others to urgently look at how bills can be made fairer."
Which? said a more thorough review was needed to support low-income consumers who pay substantial bills through the standing charge despite using less energy1. It added that such a review should also address protections for vulnerable customers with unavoidably high usage, including people who are housebound or who need to run medical equipment1.
The statement does not set out the level of the standing charge, the size of the supplier failure costs recovered through it, or a timetable for any review1. Ofgem's own reasoning for taking no action is not reproduced in the statement, and the regulator's decision document is not among the published material1.
Why it matters for households
The standing charge is charged every day whatever a household uses, so costs recovered through it fall on homes that have cut their consumption as well as those that have not. That links the cost of supplier failures to standing charges on energy bills and to the wider question of why the standing charge is so high. For a household trying to reduce its exposure by using less energy, a fixed daily charge limits how far that effort can cut the bill, which is the argument behind standing charge reform and zero standing charge tariffs. The costs themselves arise from the arrangements for supplier licensing, supplier failure and supplier of last resort, which sit within Ofgem's remit as energy regulator.
Which?'s statement draws a distinction between households that use little energy but still pay a substantial fixed charge, and households whose usage cannot be reduced because of medical equipment or because they are housebound1. Both groups are affected by the same mechanism in different ways, and the statement asks for the review to cover the second group as well as the first1.
What happens next
Which? has called for the regulator to work with others to look urgently at how bills can be made fairer, and for a more thorough review covering low-income consumers and vulnerable customers with unavoidably high usage1. No date, scope or responsible body for that review is given in the statement, and no further steps have been reported1.