The Warm This Winter coalition published the third Tariff Watch report in January 2024, following the rise in the Ofgem price cap that month. The report says households are being hit by 14 obscure energy charges that are keeping electricity bills at record levels, and that these costs are passed to consumers through electricity standing charges1.
The report states that standing charges have surged 119% since winter 2020/21 because of the combined impact of these costs, and that they account for £194 a year for every household1. It also says rules allow Distribution Network Operators, the companies that maintain and upgrade the grid, to keep money charged to consumers but not spent, where they underspend on plans to upgrade the electricity network1.
"Following this month's rise in the Ofgem price cap, our latest Tariff Watch report reveals that freezing households are being hit by 14 obscure energy charges"
Tariff Watch is described as a series of quarterly reports from the Warm This Winter coalition, produced in partnership with Future Energy Associates1. Earlier editions carry figures that set the January findings in context. The October 2023 report said energy firms were spending £242 per customer on operating costs, making up 13% of customers' bills, with almost as much spent on marketing, including sponsoring football teams, event venues and creating TV adverts (around 11% of operating costs), as on operating customer contact centres (around 12%)1. The inaugural report, from August 2023, said household energy suppliers could rack up £1.74bn in profits over the next 12 months from customers' energy bills1.
The January report does not give a breakdown of the 14 charges by name, and no figure for the total cost of the January 2024 price cap itself appears in the published material1. A later Tariff Watch release, covering April 2024, said the unit costs households pay for energy fell slightly at that cap change while standing charges rose, and that the majority of households on fixed energy tariffs were then paying more than the current price cap1.
| Tariff Watch report | Figure reported |
|---|---|
| August 2023 (inaugural) | Suppliers could make £1.74bn profit over 12 months1 |
| October 2023 | £242 per customer on operating costs, 13% of bills1 |
| January 2024 | 14 obscure charges; standing charges up 119% since winter 2020/21; £194 a year per household1 |
Why it matters for households
Standing charges are the fixed daily amounts on an electricity bill, paid regardless of how much energy a home uses. The report's claim is that a large part of what those charges recover is not the cost of moving electricity but a set of separate charges, so a household's bill is shaped by costs it cannot reduce by using less. That matters for standing charges and for any household trying to work out why its bill sits above the headline cap figure, which is covered in why is my bill higher than the cap.
The wider point concerns control. If a household cannot cut a fixed daily charge by changing how it uses energy, its ability to manage its own costs is limited to the unit rate and to the tariff it holds. The report also argues that underspending on grid upgrades holds back access to cheaper renewable energy, which links the level of these charges to the energy independence question rather than to billing alone. The report calls for a review into the charges; no such review had been announced in the material published1.
What happens next
Tariff Watch is published quarterly, so a further report was due after January 2024; the April 2024 edition has since been published and reported a fall in unit costs with standing charges rising1. The January report's call for a review into the charges has no stated timetable, and no government or Ofgem response to it is set out in the published material1.
Sources1 cited
- Tariff Watch, warmthiswinter.org.uk