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Energy tariffs simplicity threatened by standing charges

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Man Shocked at his bill

Ofgem’s Retail Market Review (RMR) plans to simplify the number energy tariffs available to consumers are being threatened by standing charges, according to Uswitch.com.

The RMR’s proposals have abolished the two-tier charging rates in favour of a single rate for all usage and allow a standing charge to be set, but Ofgem have warned that suppliers could introduce a “plethora” of standing charges which could leave “consumers facing a bewildering maze of charges”.

At the moment, energy consumers have a choice of 45 standing charges, with EDF Energy being the only of the big six who offer a single standing charge across tariffs and payment schemes.

British Gas is due to reduce down from eight to one standing charge by the end of the year.

There are a large difference between many of the standing charges with the difference between the cheapest and the  largest being a whopping £68.

Ann Robinson, director of consumer policy at Uswitch.com, said: “With standing charges we are in danger of seeing one layer of complexity being replaced by another.”

She added: “There is a warning here for Ofgem too – it has one shot at getting this market right for consumers, which is why it must keep a close watch on standing charges to ensure that complexity isn’t allowed to creep back in.

“Failure to remove complexity could see its vision for the competitive market derailed once-and-for-all.”

An Ofgem spokesperson said that the RMR proposals will ensure that all tariffs have the same structure, a standing charge with a single unit rate, with confusing multi- tiered charges being banned as they confuse customers.

“These reforms, which also include other ways of simplifying energy tariffs by limiting suppliers to offering a maximum of four core tariffs per fuel, will make it far easier for customers to compare deals across the market.”

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